The Australian government is being urged to drop the corporate tax rate to 25%.
It's one of the recommendations made by the Business Tax Working Group to drive stronger economic growth and improve productivity.
But in order to preserve the government's tax haul, the group is recommending tightening interest deductions and tax depreciation rules - very much like changes made on this side of the Tasman.
New Zealand's current corporate rate is 28%, and Ernst and Young partner Aaron Quintal says foreign investors do take notice of the headline tax rate, and that could adversely affect New Zealand if the recommendations are adopted.
But he says New Zealand's current tax advantage has not translated into more foreign investment as yet.
