The Financial Services Council is calling for an overhaul of the tax system to secure the future of the Asia Region Funds Passport, which began operation on Friday.
The Asia Region Funds Passport (ARFP) allows certain Australian managed funds to be marketed to retail investors outside of Australia.
But the FSC believes the initiative will only reach its potential with tax reforms, and is calling on the Government to overhaul the tax system.
Currently, the FSC said, the taxation of Australian managed funds seems high, despite relatively low revenue being garnered from them.
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"The Australian tax regime for managed funds is complicated, with high tax rates and many exemptions - creating the impression our funds are highly taxed even though not much revenue is raised from the funds," FSC chief executive Sally Loane said.
"Addressing Australia's complex, uncompetitive tax system will enable the Passport to promote the exports of Australian funds."
Loane praised the ARFP, and said the initiative was the result of a decade of co-operation by the various sectors of the financial services industry and many governments.
"The Johnson report in 2009 recommended a package of funds management reforms to facilitate cross border funds flow for participating nations," she said.
"This led to the establishment of the ARFP and the opportunity to export Australia's highly regarded funds management industry within the Asia region."