Comparison of Corporation Tax Around the World

Corporation tax is taxable annual profit from companies operating in that country, comparable to income tax that individual citizens pay. In general, it has been reported that large developed countries have higher corporate tax rates than developing countries, as business requires a stable environment to contribute to, whether it’s a business selling software for accountants or a beauty salon.
However, according to the OECD (Organisation for Economic Co-operation and Development), corporate tax has fallen across 88 countries from high rates between 40-50% in the 1980s, driven by the belief that low rates stimulate investment and enterprise in economies.
South America’s corporation tax
According to data analysed, Puerto Rico has the highest corporation tax at 37.5%, followed closely by Brazil and Venezuela at 34%, Colombia at 33%, and Argentina at 30%, making South America the continent with the most countries in the top 10 who pay the highest corporation tax. On average, South America has the second highest corporate tax rate at 27.63%, whereas Europe stands the lowest at 20.27%. Does this contradict the claim that developed countries pay higher tax?
OECD explained that corporation tax plays a key part in government revenue. This is particularly true in developing countries, despite the global trend of falling rates since the 1980s. However, it is unclear whether South America, as an emerging continent, is charging higher taxes in order to raise government revenue or to benefit from businesses that are looking to expand internationally and enter new markets. According to research, South America is becoming a popular choice for business to enter, with strong trade links and an advantageous geographic location. Indeed, South America is a large continent where some countries are business friendly and others are harder to penetrate.
Africa’s corporation tax
Being the poorest continent in the world, Africa unsurprisingly has the highest average corporation tax at 28.45%. With the highest in this data being Zambia at 35% and the lowest being Libya and Madagascar at 20%, South Africa stands roughly in the middle at 28%, slightly above average for Africa overall. Does this mean that South Africa is the safest bet for business?
South Africa is one of Africa’s largest economies, with 54 diverse countries in terms of political stability, development, growth, and population. As South Africa has been a relatively slow growth area over the years, corporation tax dropped from 34.55% in 2012 to the current rate — but was this effective? GDP in South Africa has fluctuated quite dramatically since the 1960s. Business favours countries with political stability, which is something South Africa doesn’t currently have. Furthermore, South Africa’s government debt to GDP sits roughly in the middle of the continent’s countries — is this influencing their corporate tax rate?
While corporation tax rates are influenced by the country’s definition, there’s clearly a pattern with developing countries and emerging economies paying higher rates to sustain the country. However, the top five richest countries in the world’s corporation tax are Luxemburg at 27.08%, Norway at 22%, Switzerland at 18%, Ireland at 12.5%, and Iceland at 20%, which is relatively varied. It would appear that some countries’ cultures factor into how much tax they pay. For example, Scandinavian countries are proud to pay higher taxes to contribute to social welfare.

Country Continent Tax (%) Puerto Rico North America 37.5 Zambia Africa 35 Brazil South America 34 Venezuela South America 34 France Europe 33.3 Columbia South America 33 Morocco Africa 31 Japan Asia Pacific 30.62 Mexico North America 30 Argentina South America 30 Germany Europe 30 Australia Asia Pacific 30 Philippines Asia Pacific 30 Kenya Africa 30 Nigeria Africa 30 Congo Africa 30 Belgium Europe 29 Pakistan Asia Pacific 29 Sri Lanka Asia Pacific 28 New Zealand Asia Pacific 28 South Africa Africa 28 Luxembourg Europe 27.08 Chile South America 27 Canada North America 26.5 Algeria Africa 26 India Asia Pacific 25.17 Jamaica North America 25 Chile South America 25 Ecuador South America 25 Netherlands Europe 25 Spain Europe 25 Austria Europe 25 South Korea Asia Pacific 25 Bangladesh Asia Pacific 25 China Asia Pacific 25 Indonesia Asia Pacific 25 Zimbabwe Africa 25 Tunisia Africa 25 Greece Europe 24 Italy Europe 24 Malaysia Asia Pacific 24 Israel Middle East 23 Egypt Africa 22.5 Norway Europe 22 Denmark Europe 22 Turkey Europe 22 Sweden Europe 21.4 United States North America 21 Portugal Europe 21 Russia Europe 20 Finland Europe 20 Iceland Europe 20 Afghanistan Asia Pacific 20 Azerbaijan Asia Pacific 20 Kazakhstan Asia Pacific 20 Thailand Asia Pacific 20 Vietnam Asia Pacific 20 Cambodia Asia Pacific 20 Taiwan Asia Pacific 20 Saudi Arabia Middle East 20 Jordan Middle East 20 Yemen Middle East 20 Madagascar Africa 20 Libya Africa 20 Slovenia Europe 19 Czech Republic Europe 19 Poland Europe 19 United Kingdom Europe 19 Belarus Europe 18 Croatia Europe 18 Switzerland Europe 18 Ukraine Europe 18 Singapore Asia Pacific 17 Hong Kong Asia Pacific 16.5 Lithuania Europe 15 Georgia Asia Pacific 15 Maldives Asia Pacific 15 Kuwait Middle East 15 Iraq Middle East 15 Ireland Europe 12.5 Cyprus Europe 12.5 Bulgaria Europe 10 Qatar Middle East 10 Hungary Europe 9 Barbados North America 5.5


Corporate Tax Rates around the World, 2019

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