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Highest and Lowest Corporate Taxes in the World


Contributed by BridgeWest
August 7, 2017



The value of the corporate tax rate is one of the top criteria for investors who are choosing the jurisdiction for their businesses. A high corporate tax could be detrimental for foreign direct investments. Some experts even argue that the value of this tax is more important than other factors related to the business environment or the macroeconomic conditions. We take a look at the highest and lowest corporate taxes in the world.

Corporate taxation highs and lows

The value of the corporate income tax varies across the world with an average value of 19.71% in Europe, an average of 21.40% in Asia and a global average of 24.26%. The countries with no corporate tax are Bahamas, Bermuda, Cayman Islands, Guernsey (with some exceptions), Isle of Man or Vanuatu. Montenegro has a 9% corporate income tax while its rate in Paraguay and Qatar is 10% (not applicable to oil and gas companies). Serbia has a 15% corporate income tax, Romania has a 16% tax for companies and Hong Kong has a 16.5 % corporate income tax rate. Singapore and Taiwan have a 17% corporate income tax.

The countries with the highest corporate income tax rates are Argentina with 35%, Brazil and Colombia with 34%, Belgium with 33.99 % and Germany with 33% (or 30% in some cases).

Favorable investment jurisdictions

Some jurisdictions imposed a low corporate income tax rate while others have a medium-value rate and other appealing tax incentives for doing business.

Hong Kong is among the Asian jurisdictions with the most appealing taxation regime. The corporate income tax rate in Hong Kong is 16.5% and a lower 15% rate applies to unincorporated businesses. There is no withholding tax on dividend distribution or interest payments. Hong Kong does not impose a payroll tax or capital duty. Because of the overall low taxation regime, there are no special incentives for investments, however, certain tax deductions can apply.

Hong Kong is located in China, but the two jurisdictions are largely different in terms of taxation and the business environment. The corporate income tax rate in China is 25% and the country has a large number of foreign investments, such as projects that encourage the use of new or advanced technology or those that are related to agricultural technology as well as many others. The projects in these categories benefit from preferential tax treatment.

Dubai is an interesting destination for investments in the United Arab Emirates that does not impose a tax on company income, except for two fields: those related to gas exploration and production and branches of foreign companies. There are no withholding taxes, capital duty, stamp duty or payroll tax in the UAE.

The Netherlands is a top location for investments in Europe because of its foreign-oriented business regime. The Dutch corporate income tax rate ranges from 20% on the first 200,000 EUR of taxable profits to 25% on the taxable profits exceeding that amount. Various types of investment aid are available either for R&D projects, for employing foreign workers or for creating new jobs in the country. The innovation box regime allows for a reduction of the corporate income tax on profits made from intellectual property.

 

Tags: tax | investment | law | business | Hong Kong | China | withholding tax | payroll | environment | interest | Europe | Bermuda | Brazil | Cayman Islands | tax rates | Colombia | Dubai | Germany | Guernsey | intellectual property | Isle of Man

 

 

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