Taxpayers are losing up to hundreds of millions of dollars of Commonwealth tax revenue from foreign investment in domestic agriculture, a senate committee says.

The Rural and Regional Affairs and Transport References Committee published its interim report on the tax arrangements for foreign investment in agriculture and the limitations of the Foreign Acquisitions and Takeovers Act 1975.

Committee chair NSW Liberal senator Bill Heffernan said the report into the Foreign Investment Review Board (FIRB) national interest test raised serious concerns of potential huge revenue loss under the current legislation.

“The evidence heard by the inquiry points to hundreds of millions of dollars of Commonwealth revenue being potentially lost through the current vagaries of present tax laws, coupled with the inadequacy of an out of date Foreign Acquisitions and Takeovers Act 1975,” Senator Heffernan said in a statement on Wednesday.

“This report touches on a much bigger issue which governments across the world must tackle the redefining of sovereignty and the impact on our national interest.”

The committee made six recommendations.

These included the government undertake a review of tax arrangements for foreign investors in agriculture to prevent tax revenue leakage.

Other recommendations included a review of local tax laws which provide exemptions for `not-for-profit’ activities for foreign entities and taxation laws to be reviewed to boost incentives for Australian investment in agriculture so local companies were not at a disadvantage to foreign entities.

Also, a review of the Foreign Acquisitions & Takeovers Act 1975 to include a definition of `rural land’ and `urban land’ and for FIRB to effectively review foreign investment in Australia.

Concerns about foreign investment were raised following the sale of Queensland cotton farm, Cubbie Station, to a joint Chinese-Japanese consortium in late August.