Corporate Tax Rates by Country | Corporate Tax Trends

Key Findings

• In 2020, 10 nations made adjustments to their statutory company earnings tax charges. One nation—Micronesia—elevated its prime company tax price, whereas 9 nations—Armenia, Belgium, Colombia, France, French Polynesia, Greenland, Monaco, Togo, and Zimbabwe—diminished their company tax charges.
• Comoros (50 p.c), Puerto Rico (37.5 p.c), and Suriname (36 p.c) are the nations with the best company tax charges on the earth, whereas Barbados (5.5 p.c), Uzbekistan (7.5 p.c), and Turkmenistan (8 p.c) levy the bottom company charges. Fifteen jurisdictions don’t impose company tax.
• The worldwide common statutory company earnings tax price, measured throughout 177 jurisdictions, is 23.85 p.c. When weighted by GDP, the common statutory price is 25.85 p.c.
• Europe has the bottom regional common price, at 19.99 p.c (24.61 p.c when weighted by GDP). Conversely, Africa has the best regional common statutory price, at 28.50 p.c (28.16 p.c weighted by GDP).
• The common prime company price amongst EU27 nations is 21.47 p.c, 23.51 p.c in OECD nations, and 24 p.c within the G7.
• The worldwide common statutory company tax price has persistently decreased since 1980, with the most important decline occurring within the early 2000s.
• The common statutory company tax price has declined in each area since 1980.

Introduction

In 1980, company tax charges all over the world averaged 40.11 p.c, and 46.52 p.c when weighted by GDP.[1] Since then nations have acknowledged the impression that top company tax charges have on enterprise funding selections in order that in 2020, the common is now 23.85 p.c, and 25.85 when weighted by GDP, for 177 separate tax jurisdictions.[2]

Declines have been seen in each main area of the world, together with within the largest economies. The 2017 tax reform in the USA introduced the statutory company earnings tax price from among the many highest on the earth nearer to the center of the distribution. Whereas in 2017 the USA had the fourth highest company earnings tax price on the earth,[3] it now ranks in the direction of the center of the nations and tax jurisdictions surveyed.

European nations are inclined to have decrease corporate income tax charges than nations in different areas, and lots of growing nations have company earnings tax charges which can be above the worldwide common.

As we speak, most nations have company tax charges under 30 p.c.

Notable Company Tax Charge Adjustments in 2020

Ten nations have made adjustments to their statutory company earnings tax charges in 2020. Micronesia was the one nation to extend its prime company tax price, introducing a progressive company earnings tax system with a prime price of 30 p.c, 9 proportion factors greater than the earlier flat company tax of 21 p.c.

9 nations throughout 5 continents—Armenia, Belgium, Colombia, France, French Polynesia, Greenland, Monaco, Togo, and Zimbabwe—diminished their company tax charges in 2020. The tax price reductions ranged from one proportion level in Colombia, French Polynesia, and Togo to five.3 proportion factors in Greenland.

Scheduled Company Tax Charge Adjustments within the OECD[4]

Amongst OECD nations, France, the Netherlands, and Sweden have introduced they may implement adjustments to their statutory company earnings tax price over the approaching years.

• In France, the usual statutory company earnings tax price was lowered to 32.02 p.c (together with the three.3 p.c social surcharge) in 2020. An already legislated company price discount is anticipated to progressively deliver the company tax price right down to 25.83 p.c by 2022.
• Within the Netherlands, the initially deliberate discount of the statutory company tax price making use of to earnings exceeding €200,000 was partly reversed: The company price was not decreased to 22.55 p.c in 2020 as initially deliberate. As an alternative, it stays at 25 p.c in 2020 and shall be lowered to 21.7 p.c as an alternative of 20.50 p.c in 2021.
• In Sweden, the statutory company tax price shall be lower from 21.4 p.c in 2020 to twenty.6 p.c in 2021.

The Highest and Lowest Company Tax Charges within the World[5]

100 of the 223 separate jurisdictions surveyed for the 12 months 2020 have company tax charges under 25 p.c and 117 have tax charges above 20 and at or under 30 p.c. The common tax price among the many 223 jurisdictions is 22.57 p.c.[6] The US has the 85^th highest company tax price with a mixed statutory price of 25.77 p.c.

The 20 nations with the best statutory company earnings tax charges span virtually each area, albeit unequally. Whereas 9 of the highest 20 nations are in Africa, Europe seems solely twice and Asia in no way. Of the remaining jurisdictions, two are in Oceania, and 7 are within the Americas.

The one industrialized nation[7] within the prime 20 is France (32.02 p.c).

On the opposite finish of the spectrum, the 20 nations with the bottom non-zero statutory company tax charges all cost charges at or under 12.5 p.c. Ten nations have statutory charges of 10 p.c, six being small European nations (Andorra, Bosnia and Herzegovina, Bulgaria, Gibraltar, Kosovo, and Macedonia). The one two industrialized nations[8] represented among the many backside 20 nations are Eire and Hungary. Eire is understood for its low 12.5 p.c price, which has been in place since 2003. Hungary diminished its company earnings tax price from 19 to 9 p.c in 2017.

Of the 223 jurisdictions surveyed, 15 at the moment don’t impose a normal company earnings tax. Aside from the United Arab Emirates, all these jurisdictions are small, island nations. A handful, such because the Cayman Islands and Bermuda, are well-known for his or her lack of company taxes.

Regional Variation in Company Tax Charges

Company tax charges can differ considerably by area. Africa has the best common statutory company tax price amongst all areas, at 28.50 p.c. Europe has the bottom common statutory company tax price amongst all areas, at 19.99 p.c.

When weighted by GDP, South America has the best common statutory company tax price at 31.83 p.c. Europe has the bottom weighted common statutory company earnings tax, at 24.61 p.c.

Basically, bigger and extra industrialized nations are inclined to have greater company earnings tax charges than smaller nations. The G7, which is comprised of the seven wealthiest nations on the earth, has a mean statutory company earnings tax price of 27.24 p.c, and a weighted common price of 26.95 p.c. OECD member states have a mean statutory company tax price of 23.51 p.c, and a price of 26.30 p.c when weighted by GDP. The BRICS[9] have a mean statutory price of 27.40 p.c, and a weighted common statutory company earnings tax price of 26.49 p.c.

The next map illustrates the present state of company tax charges all over the world. International locations in Africa and South America are inclined to have greater company tax charges than Asian and European jurisdictions. Oceania and North America’s company tax charges are typically near the world common.

Distribution of Company Tax Charges[10]

Only a few tax jurisdictions impose a company earnings tax at statutory charges larger than 35 p.c. The next chart reveals a distribution of company earnings tax charges amongst 223 jurisdictions in 2020. A plurality of nations (117 complete) impose a price above 20 p.c and at or under 30 p.c. Twenty-three jurisdictions have a statutory company tax price above 30 p.c and at or under 35 p.c. Eighty jurisdictions have a statutory company tax price at or under 20 p.c, and 197 jurisdictions have a company tax price at or under 30 p.c.

The Decline of Company Tax Charges since 1980

Over the previous 40 years, company tax charges have persistently declined on a worldwide foundation. In 1980, the unweighted common worldwide statutory tax price was 40.11 p.c. As we speak, the common statutory price stands at 23.85 p.c, representing a 41 p.c discount over the 40 years surveyed.[11]

The weighted common statutory price has remained greater than the easy common over this era. Previous to U.S. tax reform in 2017, the USA was largely chargeable for protecting the weighted common so excessive, given its comparatively excessive tax price, in addition to its vital contribution to international GDP. Determine 3 reveals the numerous impression the change within the U.S. company price had on the worldwide weighted common. The weighted common statutory company earnings tax price has declined from 46.52 p.c in 1980 to 25.85 p.c in 2020, representing a 44 p.c discount over the 40 years surveyed.

Over time, extra nations have shifted to taxing firms at charges of or decrease than 30 p.c, with the USA following this development with its tax adjustments on the finish of 2017. The most important shift occurred between 2000 and 2010, with 78 p.c of nations imposing a statutory price at or under 30 p.c in 2010 and solely 42 p.c of nations imposing a statutory price at or under 30 p.c in 2000.[12]

All areas noticed a internet decline in common statutory charges between 1980 and 2020. The common declined probably the most in Europe, with the 1980 common of 44.6 p.c dropping to 19.99 p.c, representing a 55 p.c price discount. South America has seen the smallest decline, with the common solely reducing by 25 p.c, from 36.66 p.c in 1980 to 27.54 p.c in 2020.

South America noticed a interval (1990-2000) the place the common statutory price elevated barely at lower than one proportion level, though the common price decreased over the total 40-year interval.

Conclusion

Worldwide and regional common prime statutory company tax charges have declined over latest a long time, with most nations following the development. Of 223 jurisdictions all over the world, just one has elevated its prime company earnings tax price in 2020, whereas 9 nations have decreased their company tax price. The development appears to be persevering with, as a number of nations are planning to cut back their company tax charges within the coming years.

Appendix

The Dataset

Scope

The dataset compiled for this publication consists of the 2020 statutory company earnings tax charges of 223 sovereign states and dependent territories all over the world. Tax charges have been researched just for jurisdictions which can be among the many round 250 sovereign states and dependent territories which were assigned a rustic code by the Worldwide Group for Standardization (ISO).[13] In consequence, zones or territories which can be impartial taxing jurisdictions however shouldn’t have their very own nation code are usually not included within the dataset.

As well as, the dataset consists of historic statutory company earnings tax charges for the time interval 1980 to 2019. Nevertheless, these years cowl tax charges of fewer than 223 jurisdictions on account of lacking information factors. Please let Tax Basis know in case you are conscious of any sources for historic company tax charges that aren’t talked about on this report, as we continuously try to enhance our datasets.

To have the ability to calculate common statutory company earnings tax charges weighted by GDP, the dataset consists of GDP information for 177 jurisdictions. When used to calculate common statutory company earnings tax charges, both weighted by GDP or unweighted, solely these 177 jurisdictions are included (to make sure the comparability of the unweighted and weighted averages).

Definition of Chosen Company Revenue Tax Charge

The dataset captures customary prime statutory company earnings tax charges levied on home companies. This implies:

• The dataset doesn’t replicate particular tax regimes, together with however not restricted to patent bins, offshore regimes, or particular charges for particular industries.
• Quite a few nations levy decrease charges for companies under a sure income threshold. The dataset doesn’t seize these decrease charges.
• A couple of nations levy gross income taxes on companies as an alternative of company earnings taxes. Because the tax charges of a company earnings tax and a gross income tax are usually not comparable, these nations are excluded from the dataset.
• Some nations have a separate tax price for nonresident corporations. This dataset doesn’t contemplate nonresident tax charges that differ from the overall company price.

Sources

Tax Charges for the Yr 2020

For OECD nations, the statutory company earnings tax charges used are the mixed company earnings tax charges offered by the OECD; see OECD, “Desk II.1. Statutory company earnings tax price,” up to date April 2020, https://stats.oecd.org/index.aspx?DataSetCode=Table_II1. The primary supply for non-OECD jurisdictions are the statutory charges offered by KPMG; see KPMG, “Company tax charges desk,” 2020, https://home.kpmg/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online/corporate-tax-rates-table.html. Jurisdictions that aren’t a part of both supply have been researched individually. The supply for every of those jurisdictions is listed in a GitHub repository; see Tax Basis, “worldwide-corporate-tax-rates,” GitHub, https://github.com/TaxFoundation/worldwide-corporate-tax-rates.

Tax Charges for the Years 1980-2019

Tax charges for the time-frame between 1980 and 2019 are taken from a dataset compiled by the Tax Basis over the past years. These historic charges come from a number of sources: PwC, “Worldwide Tax Summaries – Company Taxes,” 2010-2019; KPMG, “Company Tax Charge Survey,” 1998- 2003; KPMG, “Company tax charges desk,” 2003-2019; EY, “Worldwide Company Tax Information,” 2004-2019; OECD, “Historic Desk II.1 – Statutory company earnings tax price,” 1999, http://www.oecd.org/tax/tax-policy/tax-database.htm#C_CorporateCaptial; the College of Michigan – Ross College of Enterprise, “World Tax Database,” https://www.bus.umich.edu/otpr/otpr/default.asp; and quite a few authorities web sites.

Gross Home Product (GDP) for the years 1980-2020

GDP calculations are from the U.S. Division of Agriculture, “Worldwide Macroeconomics Knowledge Set,” Jan. 3, 2020, https://www.ers.usda.gov/data-products/international-macroeconomic-data-set/.

Listing of all Company Tax Charges in 2020

[1] Until in any other case famous, calculated averages of statutory company earnings tax charges solely embrace jurisdictions for which GDP information is obtainable for all years between 1980 and 2020. For 2020, the dataset consists of statutory company earnings tax charges of 223 jurisdictions, however GDP information is obtainable for less than 177 of those jurisdictions, decreasing the variety of jurisdictions included in calculated averages to 177. For years previous to 2020, the variety of nations included in calculated averages varies by 12 months on account of lacking company tax charges; that’s, the 1980 common consists of statutory company earnings tax charges of 74 jurisdictions, in comparison with 177 jurisdictions in 2020.

[2] Statutory company earnings tax charges are from OECD, “Desk II.1. Statutory company earnings tax price,” up to date April 2020, https://stats.oecd.org/index.aspx?DataSetCode=Table_II1; KPMG, “Company tax charges desk,” https://home.kpmg/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online/corporate-tax-rates-table.html; and researched individually, see Tax Basis, “worldwide-corporate-tax-rates,” GitHub, https://github.com/TaxFoundation/worldwide-corporate-tax-rates. GDP calculations are from the U.S. Division of Agriculture, “Worldwide Macroeconomics Knowledge Set,” Jan. 3, 2020, https://www.ers.usda.gov/data-products/international-macroeconomic-data-set/.

[3] Kari Jahnsen and Kyle Pomerleau, “Company Revenue Tax Charges across the World, 2017,” Tax Basis, Sept. 7, 2017, https://taxfoundation.org/corporate-income-tax-rates-around-the-world-2017/.

[4] See OECD, “Tax Coverage Reforms 2020,” Sept. 3, 2020, https://www.oecd.org/tax/tax-policy-reforms-26173433.htm. This part is proscribed to OECD nations as no complete supply for scheduled company price adjustments was accessible for non-OECD nations.

[5] As no averages are introduced on this part, it covers all 223 jurisdictions for which 2020 company earnings tax charges have been discovered (thus together with jurisdictions for which GDP information was not accessible).

[6] This common is decrease than the common of the 177 jurisdictions as a result of most of the jurisdictions for which no GDP information is obtainable are small economies with low company earnings tax charges.

[7] Industrialized nations are these which can be members of the OECD.

[8] Ibid.

[9] BRICS is a bunch of nations with main rising economies. The members of this group are Brazil, Russia, India, China, and South Africa.

[10] As no averages are introduced on this chapter, it covers all 223 jurisdictions for which 2020 company earnings tax charges have been discovered (thus together with jurisdictions for which GDP information was not accessible).

[11] Historic information comes from a number of sources: PwC, “Worldwide Tax Summaries – Company Taxes,” 2010-2019; KPMG, “Company Tax Charge Survey,” 1998- 2003; KPMG, “Company tax charges desk,” 2003-2019; EY, “Worldwide Company Tax Information,” 2004-2019; OECD, “Historic Desk II.1 – Statutory company earnings tax price,” 1999, http://www.oecd.org/tax/tax-policy/tax-database.htm#C_CorporateCaptial; the College of Michigan – Ross College of Enterprise, “World Tax Database,” https://www.bus.umich.edu/otpr/otpr/default.asp; and quite a few authorities web sites.

[12] This part of the report covers all 223 jurisdictions for which 2020 company earnings tax charges have been discovered (thus together with jurisdictions for which GDP information was not accessible).

[13] The jurisdictions Netherland Antilles (which was break up into completely different jurisdictions in 2010) and Kosovo (which has not but formally been assigned a rustic code) have been added to the dataset.