Doing Business in Australia

Australia is a large, culturally diverse nation that offers many business advantages to growth-minded companies. Low unemployment, robust exports and a stable financial system are just some of the qualities that make Australia a top choice for business owners. The country is one of the wealthiest in the world, sustaining trade ties with many countries in the Asia-Pacific region.

Australia is the world’s eighth top economy in terms of foreign direct investment inflows as of 2018, according to the UNCTAD (United Nations Conference on Trade and Development) World Investment Report 2019. Few barriers to entry, a variety of legal and corporate frameworks, and an accommodating business culture make this country attractive to businesses looking to expand.

However, before you begin the expansion process to this jurisdiction, there are several aspects to consider both to ensure a fit with the business environment and to guarantee you meet the compliance requirements.

Challenges for doing business in Australia

Market concentration

Due to Australia’s small population and distance from other players in the world, market concentration exists in some industries with certain sectors being dominated by a few large firms. American companies moving into this market may face competition with long-established brands that have already developed a strong reputation and relationships with key suppliers.

Foreign investment in some sectors has also reduced competition, which could limit potential returns for businesses entering these spaces.

Trading across borders

Trading across borders in Australia is a challenge. The country ranks 103 for trading across borders in the World Bank Doing Business 2019 report. This ranking is based on the time and expense associated with logistics of exporting and importing goods.

Logistics is the largest cost item in the production of many agricultural industries and can account for as much as 48.5% of farm-gate costs, according to a report published by AgriFutures Australia.

A lack of digitalization in the logistics space contributes to these challenges, which manifests in inefficient and outdated practices along the supply chain.

Variable weather

Australia’s weather can oscillate wildly, which can have an effect on business. The climate varies by region, partially due to the country’s vast area, and there are frequent droughts that last several seasons.

The country also has low annual average rainfall in some areas, and seasons are opposite those found in the Northern Hemisphere.

Transportation

Large distances exist between city production centers and areas providing raw materials, resulting in high transportation costs. Businesses expanding to this region can expect that transportation expenses will take up a large portion of manufacturing and distribution budgets.

Because of the importance of moving goods quickly—and the expense of using airfreight across Australia’s massive spaces—the country has made heavy investments in its road networks.

Conclusion

Acquiring enough local knowledge to successfully operate in a new country can take years. This interval can be greatly shortened by partnering with experts who have deep knowledge of local laws and regulations. This is doubly important when it comes to the more challenging aspects of expanding operations in a foreign region.

With our experience and global footprint, CT Corporation delivers the products and services you need to keep you compliant as you do business in Australia.

Frequently asked questions about doing business in Australia

Why should I consider doing business in Australia?

Australia is a large, geographically and culturally diverse nation with many business advantages. The country is the world’s eighth top economy in terms of FDI inflows and ranked number 7 by the World Bank for starting a business. Stable fiscal management, steady population growth and close ties with fast-expanding Asian markets make Australia a favorite of expanding American businesses.

What challenges should I consider when expanding to Australia?

Intense local competition exists in some business sectors, which includes long-established brands that have strong supplier relationships. In other sectors, foreign investment has reduced competition and may limit potential returns for businesses entering those spaces.

Trading across borders can also be a challenge, with the country ranking number 103 for trading across borders in the World Bank Doing Business 2019 report. This ranking is based on the time and costs associated with the logistics of exporting and importing goods. CT can help you navigate these challenges and can provide customized solutions for all your needs.

What are the entity types available in Australia, and how can I select the right one?

The main entities are proprietary companies, public companies and branch/representative offices. Selecting the right one depends on your business needs, size, tax goals and more. CT can help guide you through the process.

What is the local tax rate?

The tax rates range from 27.5% up to 30%, depending on the revenue and structure of the company. Value-added tax rates are 10%, and tax treaties exist with over 40 jurisdictions. Learn more in our country guide.