Recent reforms to Australia's foreign investment regime, including the Foreign Acquisitions and Takeovers Act 1975 (Cth), came into effect on 1 December 2015.
These reforms are generally to be welcomed on the basis they simplify the application process and clarify some of the ambiguities previously set out in the Foreign Investment Review Board's (FIRB) policies. However, the reforms also provide for some increased scrutiny with respect to acquisitions of land and in the agricultural sector, including agricultural land and agribusinesses. Additionally, the reforms formalise FIRB's ability to review acquisitions and investments by foreign government investors.
The February 2016 announcement by the Australian Treasurer that new tax conditions will attach to foreign investment applications may be of some concern. Some of the new requirements, like the obligation to report all transactions that the Australian transfer pricing or anti-avoidance rules may apply to, appear to be unusually broad, and the potential penalties are also significant. As with most tax changes, the devil will be in the detail, and we are seeking further guidance from the Australian Taxation Office (ATO) and FIRB as to how foreign investors will be expected to comply with these conditions in practice.
Our Changes to foreign investment regulation in Australia publication provides a summary of the key aspects of these changes, including specific issues relating to investments in the resources and infrastructure sectors.
Please download our Changes to foreign investment regulation in Australia by clicking here.
