Charts show the highest and lowest corporate tax rates in the world

Charts show the highest and lowest corporate tax rates in the world

British Chancellor of the Exchequer Rishi Sunak (center), US Treasury Secretary Janet Yellen (right) attend the first day of the G-7 Finance Ministers’ Meeting at Lancaster House in London on June 4, 2021.

Stéphane Rousseau | AFP | Getty Images

Finance ministers of the Group of Seven (G-7) advanced economies agreed on Saturday to support a minimum overall corporate tax rate of at least 15%.

United States Secretary of the Treasury Janet Yellen said such a global minimum rate would end “the race to the bottom in corporate taxation” and “ensure fairness for the middle class and working people in the United States and around the world.”

Governments of large economies have faced the challenge of taxing large companies, such as tech giants, for years Facebook and Google, which operate in many jurisdictions.

A common practice among many multinational companies is to report income, such as that from intangible sources like software and patents, in low-tax jurisdictions, regardless of where the sales are made. This allows businesses to avoid paying higher taxes in their home country.

The G-7 deal is part of a larger global effort to update tax rules around the world and will be discussed in more detail at a Group of Twenty (G-20) meeting next month. .

The Organization for Economic Co-operation and Development or OECD, an intergovernmental group, has facilitated negotiations on global taxation in recent years. He expected a global minimum corporate tax rate to account for the bulk of the $ 50 billion to $ 80 billion in additional taxes that businesses will end up paying, Reuters reported.

Highest and lowest corporate tax rates

Typically, countries in Africa and South America impose higher corporate tax rates than many countries in Europe and Asia, according to data from the Washington Tax Foundation-based think tank, the OECD and the consultancy firm KPMG.

Many low-tax jurisdictions are small nations such as Bulgaria and Liechtenstein, the data shows.

About fifteen countries do not impose general corporate tax, according to the data. This includes island nations such as Bermuda, the Cayman Islands and the British Virgin Islands, which are widely known as offshore “tax havens” – jurisdictions to which large corporations shift their profits in order to pay less tax.

These territories benefit from jobs created in the service of multinational companies, such as legal and accounting services. Tax havens also earn money from fees paid by large companies to set up subsidiaries there.

Daniel Bunn, vice president of global projects at Tax Foundation, said low-tax jurisdictions make it easier to invest in other countries with higher taxes.

Thus, applying a global minimum tax rate would increase the costs of such investments and could result in a “small economic setback,” he told CNBC.Squawk Box Asia” Monday.

Bunn said many questions remain about how this minimum tax rate will be applied and what parts of corporate income to tax. He added that tax havens might not disappear completely.

“We don’t know where things will work out in a few years,” he said. “There may still be possibilities of escape or avoidance or different countries change the rules preferentially to their jurisdictions.”

ApkGeo News

Leave a Reply

Your email address will not be published. Required fields are marked *