Countries with highest and lowest Corporate Tax Rates in comparison to India

Countries with highest and lowest Corporate Tax Rates in comparison to India

Most companies and large businesses are familiar with the corporate tax rate, but not all of them are knowledgeable about the list of countries where corporate tax rates are high, which include the United States, Switzerland, Ireland, Singapore, and others.

One of the most underappreciated advantages of a worldwide corporate tax strategy is the ability to optimise your global tax structure and reduce your tax liabilities when a taxable event occurs.

While optimising your business operations for the benefit of your company might take a lot of time and effort, having the correct tax structure for your company and organisation helps you to receive the maximum tax advantage by including tax planning into your tax management approach.

However, according to the Tax Justice Network (TJN), at least 24 nations, including the United Kingdom (UK), Spain, Italy, Australia, and South Korea, have had their tax rates reduced since the start of 2018. And as one would expect, the average corporate tax rate in the 28-nation developed market bloc dropped from 22% in 2018 to 21% in 2019.

TJN calculates a list of 30 countries around the world that have a corporate tax rate of less than 15%, down from 43 at the start of 2018, with the high corporate tax rate in the world coming in at 30.7% in the Netherlands.

Twenty nations changed their statutory corporate income tax rates in 2021. Bangladesh, Argentina, and Gibraltar increased their highest company tax rates, while 17 nations cut their corporate tax rates, including Chile, Tunisia, and France.

Comoros (50 percent), Puerto Rico (37.5 percent), and Suriname (36 percent) have the highest corporate tax rates in the world, while Barbados (5.5 percent), Uzbekistan (7.5 percent), and Turkmenistan have the lowest (8 percent). There are fifteen jurisdictions that do not have a corporation tax.

The global average statutory corporate income tax rate is 23.54 percent, based on data from 180 countries. The average statutory rate is 25.44 percent when weighted by GDP.

Changes in Corporate Tax Rates in 2021

In 2021, twenty nations changed their statutory corporate income tax rates. Bangladesh, Argentina, and Gibraltar raised their top corporation tax rates from 25%, 30%, and 10%, respectively, to 32.5 percent, 35 percent, and 12.5 percent.

Sweden, Colombia, Switzerland, Monaco, Congo, Turkey, Indonesia, France, Gambia, Lao People’s Democratic Republic, Sri Lanka, Angola, Democratic Republic of Congo, Bhutan, Kiribati, Tunisia, and Chile cut their corporation tax rates in 2021 across five continents. The decreases in tax rates varied from a fraction of a percentage point in Sweden to a 15-percentage-point drop in Chile.

Change in CIT of UAE after Indian Budget 2022

According to a report from new outlet Financial Times, the UAE has declared that it would levy a corporation tax rate of 9%. The announcement comes as India, another major ASian economy, unveiled its union budget for 2022, which is likely to have an influence on businesses in the UAE.

Countries with the Highest Corporate Tax Rates

According to KPMG, the United Arab Emirates (UAE) had the highest corporate tax rate in the world, with a tax rate of up to 55 percent in 2019 which will be reduced to 9%. Brazil (34 percent), Venezuela (34 percent), France (31 percent), and Japan (30.62percent) were the other countries at the top of the list.

The United Arab Emirates had a corporation tax rate of up to 55 percent, although its tax structure is unusual. Oil and gas firms, as well as subsidiaries of international banks, pay the highest tax rate. This is due to the fact that the government splits tax brackets based on income for both people and corporations at the federal level.

The updated list of countries with highest tax rates are:

• Comoros(Africa) -50%
• Puerto Rico(North America)-37.5%
• Suriname(South America )-36%
• Argentina(South America)-35%
• Chad(Africa)-35%
• Cuba (North America)-35%
• Equatorial Guinea(Africa)-35%
• Guinea(Africa)-35%
• Malta(Europe)-35%
• Saint Martin (French Part)North America-35%
• Sint Maarten (Dutch part)North America-35%
• Sudan(Africa)-35%
• Zambia(Africa)-35%
• American Samoa(Oceania)-34%
• Brazil(South America)-34%
• Venezuela (Bolivarian Republic of) South America -34%
• Cameroon(Africa)-33%
• Saint Kitts and Nevis(North America)-33%
• Seychelles(Africa)-33%
• Bangladesh(Asia)-32.5%

Low Corporate Tax Rates 

On the other hand, the 20 countries with the lowest non-zero statutory corporation tax rates all have rates of 12.5 percent or less. Ten countries have statutory rates of 10%, five of them are minor European countries (Andorra, Bosnia and Herzegovina, Bulgaria, Kosovo, and Macedonia). Chile, Hungary, and Ireland are the only three OECD members in the lowest 20 nations. Due to the epidemic, Chile temporarily decreased the statutory corporate income tax rate for most enterprises. In 2017, Hungary lowered its corporate income tax rate from 19 percent to 9%. Ireland’s low 12.5 percent rate, which has been in force since 2003, is well-known.

Aside from the largely Caribbean nations that have no business taxes, numerous Eastern European countries have lower than average corporation tax rates, such as:

• Barbados(North America)-5.5%
• Uzbekistan(Asia)-.5%
• Turkmenistan(Asia)-8%
• Hungary(Europe)-9%
• Montenegro (Europe)-9%
• Andorra(Europe)-10%
• Bosnia and Herzegovina(Europe)-10%
• Bulgaria(Europe)-10%
• Chile( South America)-10%
• Kosovo,(Republic of Europe)-10%
• Kyrgyzstan(Asia)_10%
• Paraguay(South America)-10%
• Qatar(Asia)-10%
• The former Yugoslav Republic of Macedonia(Europe)-10%
• Timor-Leste (Oceania)-10%
• China, Macao Special Administrative Region(Asia)-12%
• Republic of Moldova(Europe)-12%
• Cyprus(Europe)12.5%
• Gibraltar(Europe)-12.5%
• Ireland(Europe)-12.5%

Notes: In response to the pandemic, Chile has reduced small business rates to 10% for a limited time. A tariff of 27% applies to all other firms..

Countries without General Corporate Income Tax, 2021

15 of the 225 countries surveyed do not have a general corporate income tax in place. All of these jurisdictions are tiny island states, with the exception of the United Arab Emirates. The Cayman Islands and Bermuda, for example, are well-known for their absence of corporation taxes.

• Anguilla(North America)
• Bahamas(North America)
• Bahrain(Asia)
• Bermuda(North America)
• British Virgin Islands(North America)
• Cayman Islands(North America)
• Guernsey(Europe)
• Isle of Man(Europe)
• Jersey(Europe)
• Saint Barthelemy(North America)
• Tokelau(Oceania)
• Turks and Caicos Islands(North America)
• United Arab Emirates(Asia)
• Vanuatu(Oceania)
• Wallis and Futuna Islands(Oceania

The Bahamas offer an expanded tax advantage because they don’t tax profits, dividends, or personal income. It also has no taxes on capital gains, inheritance, gifts, or unemployment.

Business licence fees and some property taxes, as well as a value-added tax, are some of the tax obligations that do exist (VAT). There are several benefits for international and foreign investors in the Bahamas.Foreign investors are protected by a veil of secrecy.

The government also provides an easy-to-use framework for forming business formations that can benefit from the 0% corporation tax rate.

With a company tax rate of 0%, Bermuda and the Cayman Islands provide similar international and foreign investment advantages.

The Bahamas, Bermuda, and the Cayman Islands are three of the most popular offshore investment locations, attracting business owners from throughout the world, particularly from the United States.

According to our analysis, the global average corporation tax rate is 23.79 percent.

Comparison with India

According to TJN, certain nations in the developed market bloc, such as the United States and Canada, have corporation tax rates of around 35%. Despite the fact that India enacted a corporate tax overhaul in July 2019 that generated protests and resulted in a political deadlock in the Indian parliament, TJN does not include India in their list of nations with lower corporation tax rates.

Even after the decreased rate was imposed in July, India’s corporation tax rate has remained at 19 percent since 2016. According to the Economic Times, India’s corporate income tax rate is “still one of the highest in the world.”. The United Kingdom is in second place, with a new rate of 12 percent.

According to TJN, certain nations, such as Italy, Ireland, France, and Poland, are considering lowering their corporation tax rates in the future. According to TJN, the tax index was established using nations that are members of the Organisation for Economic Cooperation and Development (OECD) (OECD). According to TJN’s website, the countries were chosen for their “excellent business conditions.”

The Indian Taxation Laws (Amendment) Act 2019 has proclaimed a favourable CIT rate of 15% (with a 10% surcharge and a 4% appropriate health and education cess) for newly founded domestic manufacturing businesses beginning in the tax year 2019/20. Domestic energy-generating businesses will be eligible for a 15% tax cut commencing in fiscal year 2020/21.

To provide a much-needed boost to the economy, a favourable CIT rate of 22% (with a 10% surcharge and a 4% appropriate health and education cess) was announced with effect from tax year 2019/20. 

Edited and published by Ashlyn Joy