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Australia reviews definition of local defence company

The Australian Department of Defence (DoD) is reviewing the definition of the term ‘Australian defence company' as part of wider efforts to strengthen the way it engages with local industry.

The move is a reflection of local industry concerns about the continuing dominance of foreign-owned subsidiaries amid a military modernisation programme budgeted by the government at AUD270 billion (USD209 billion).

A spokesperson from the DoD told Janes that the review of the definition is intended to enhance the country's defence industrial participation policy, the Australian Industry Capability (AIC) programme, and related moves to update defence contracting guidelines.

“Defence is strengthening its support for the AIC [programme] in consultation with industry,” said the spokesperson. “This consultation has included seeking industry views on the definition of an ‘Australian entity'. The final definition is still subject to an internal [DoD] review taking into account industry feedback.”

The spokesperson explained that during consultation, the DoD has sought feedback from local industry on two possible definitions for an Australian business entity: one based on where an entity is registered, and the other based on the entity's tax residency.

During the consultation, the DoD has also sought views from industry on defining an Australian business entity “in the context of capturing the economic benefit to Australia of defence procurements”, said the spokesperson. The DoD is considering feedback received from local industry.

The current definition of an Australian defence company is provided in the DoD contracting guidelines, which are known as the Australian Standard for Defence Contracting (ASDEFCON). These rules state that “Australian industry” means Australian business entities that perform work in Australia with Australian-based employees, and have an Australian Business Number (ABN).

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