Small business tax one of the world’s lowest in Hungary!
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As global trade becomes more interdependent, countries have increasingly used corporate tax rates as a way to attract international business and support domestic economic activity. Corporate taxes are designed to both generate tax revenue and incentivize certain industries. They have fallen around the world in recent decades as more countries compete to create a favorable tax environment.
Effective Small Company Tax Burdens In Every Country
Tax law is one of the most complicated legal systems in the world, which makes comparing corporate tax rates from country to country relatively difficult. The ultimate tax burden a company owes the government can depend on the firm’s revenue, profit margin, employee count, and industry, as well as a host of local tax laws that vary by jurisdiction. In most countries, corporate income tax rates are determined on a graduated scale, whereby companies with lower revenue are taxed at a lower rate than companies with greater revenue – ondeck.com wrote.
Key findings
- Tax rates are lowest in the Middle East and Europe — at 17.9% and 16.2%, respectively.
- They are highest in Africa and South America –– with average rates of 27.6% and 26.1%, respectively.
- The highest effective tax rate is in Suriname (36.0%).
- A handful of small nations have established themselves as tax havens with effectively zero corporate tax rates — Bahamas, Bahrain, Monaco, Nauru, United Arab Emirates, Vanuatu, and Vatican City.
How Do Corporate Taxes Vary Around the World?
The map below shows tax rates around the globe. There is currently little international coordination on business taxation, and at the most recent G-20 conference, the leaders of the 20 largest nations called for a global minimum corporate tax rate of 15.0%.
Click here to see the map in full size
Countries are free to set corporate tax rates as high or as little as they like, which can create discord among nations and intense competition for foreign investment. The resulting patchwork of corporate tax rates can mean a difference of tens of thousands of dollars in taxes for a small company and is of interest to anyone curious about international business or politics.
