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.
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.
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%.
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.
Europe has some of the most competitive business tax rates in the world, but tax laws vary from country to country.
As the map shows, corporate tax rates are generally higher in Western Europe. Meanwhile, Eastern Europe has some of the lowest tax rates in the world. Vatican City and Monaco charge no corporate taxes to domestic companies, but the highest corporate tax rate on the continent is in Malta, where companies face a corporate tax rate of 35.0%.
HERE you can read the full report of ondeck.com
As the ability for companies to redomicile and move to a different country increases with globalization, the competition to create a favorable corporate tax environment will likely increase — pushing effective tax rates even lower in a number of countries.
Corporate tax rates have fallen by nearly half over the past 40 years.
They will likely continue to fall on average, even as leaders from the world’s largest economies call for global corporate tax minimums. Whatever the future may hold, corporate tax laws will no doubt continue to have far-reaching implications for international business and be of great interest to both foreign investors and the general public.
Data for each country’s corporate tax rates and any special tax requirements that affect the amount of taxes owed by small companies came from KPMG, the Tax Foundation, Trading Economics, PricewaterhouseCoopers, Deloitte, and various government websites.
They applied each country’s tax laws to a model company with revenue of $1 million, profit of $100,000 a year, five to nine employees, is owned by a resident of the country in question, and earns a majority of its revenue from business operations within the country in question.
They multiplied the effective tax rate by the profit to get the taxes on model company amount.
They did not include companies in the oil, gas, and mining sectors or publicly traded companies.