Top 18 Countries With Lowest Corporate Tax Rates
|Top Countries With Lowest Corporate Tax Rates - Photo KnowInsiders|
If you want to look at the difference between a developed economy and a developing economy, or a country with a high standard of living as opposed to a country with a lower standard of living, just simply look at the tax rates. In developing economies, tax rates generally tend to be quite low as opposed to say Western Europe, which has countries which boast the highest standards of living in the world, and have quite high taxes as well, which often exceed 50%.
And Scandinavian countries have even higher taxes, and yet, still have the happiest populations in the world because these taxes are spent on improving infrastructure, providing universal health care and providing high quality education to everyone, rather than just a select few.
Countries have differing corporate tax rates. Some countries focus on tighter rules and regulations, and hence, have higher tax rates without giving much space to companies to maneuver. For example, for the past few years, the European Union has pledged a crackdown on corporations engaging in tax avoidance, which has caused rifts between the EU and major tech companies such as Alphabet Inc Class A (NASDAQ: GOOGL), Facebook, Inc. Common Stock (NASDAQ: FB), Apple Inc (NASDAQ: AAPL) and Twitter Inc (NYSE: TWTR). This has even led to an effect on the relations between the US and the EU. Many believe that the latest tax laws proposed by the G-7 countries are primarily aimed at US-based tech giants, but European authorities have clarified that the new tax laws would be for every company.
Top 18 Countries With The Lowest Corporate Tax Rates:
16.Bosnia and Herzegovina-10%
8.Turks and Caicos Islands-0%
7.Isle of Man-0%
Let’s take a look at the details:
Ireland’s low corporate tax rate of 12.5% transformed its economy and attracted major companies from far and wide, and the G7's agreement for a 15% rate could impact the country greatly. Ireland is currently responsible for 30% of the EU’s digital exports, with heavyweights such as Google, Facebook and Apple choosing the country as the base for their European operations. While the Emerald Isle’s model for attracting inward investment had been imitated by several nations worldwide, the global minimum of 15% corporation tax will see Ireland's business appeal wane, and a tech exodus could be on the cards.
Bulgaria is one of the few countries in our list to have taxes in the double digits. The country ranks 17th in our list of the countries with the lowest corporate taxes.
16.Bosnia and Herzegovina-10%
Bosnia and Herzegovina has a population of just 3.3 million people. The country has suffered a lot in recent history, with the Bosnian War costing the country 200 billion euros in damages and devastating the economy of the country. However, it is on the track to development and recovery, especially thanks to tourism to the picturesque country. The country ranks 16th in our list of the countries with the lowest corporate taxes.
Andorra is a small European country, with just 80,000 people. In fact, it is the sixth smallest country in Europe and receives 10 million visitors annually. In fact, 80% of the GDP is dependent on tourism for the small country, with the banking sector also being a primary contributor due to the company’s tax haven status. In the past, several media reports have suggested that companies like Alphabet Inc Class A (NASDAQ: GOOGL), Facebook, Inc. Common Stock (NASDAQ: FB), Apple Inc (NASDAQ: AAPL), Twitter Inc (NYSE: TWTR) and major banks tend to avoid taxes by using tax havens such as Andorra.
Montenegro is one of the few European countries in our list, as European countries actually tend to have higher taxes. The country has only 620,000 residents, which is extremely low and its economy is mostly based on services. Montenegro is also dependent on tourism. Europe has been very strict in terms of taxes. That’s why most of the tech innovation and companies like Alphabet Inc Class A (NASDAQ: GOOGL), Facebook, Inc. Common Stock (NASDAQ: FB), Apple Inc (NASDAQ: AAPL) and Twitter Inc (NYSE: TWTR) have been basing their operations outside of the continent. The country ranks 12th in our list of the countries with the lowest corporate taxes.
In 2017, Hungary reduced its corporate tax rate from 19% to 9%, and now has the lowest rate in the EU. The move came as part of Prime Minister Viktor Orbán's mission to attract significant foreign investment. As an EU country Hungary is also set to see the impact of the G7 agreement to create a minimum 15% corporation tax rate, although the nation's authorities have been talking about its desire to rein in big tech and in January this year its Justice Minister Judit Varga had expressed its intention to submit a bill to regulate businesses such as Facebook in the country.
Switzerland boasts the lowest corporate tax rate in the world on paper, with company profits being taxed at just 8.5% at the federal level. However, the country's cantons impose further taxes, which typically leads a firm’s corporate tax to somewhere between 11.9% and 21.6%, depending on its turnover. As it's not part of the EU, and therefore the G7, it will be interesting to see what the Swiss government does now.
Jersey is an island near the coast of France. While it does levy taxes, they are much lower than the global average, and is considered a tax haven by many different organizations.
The Muslim country has more than 34.5 million people, and has an extremely low tax rate for corporations. It is one of the biggest gold mining countries in the entire world while it is also one of the biggest natural gas producers.
You will be seeing plenty of locations in our list of the countries with the lowest corporate tax rates which aren’t that popular or well-known. The country has been known for its tax haven status, with finance companies taking advantage of this for decades, since the 1970s. The country ranks 9th in our list of the countries with the lowest corporate taxes.
8.Turks and Caicos Islands-0%
The British Overseas Territory has just over 40,000 people and its economy is completed dominated by tourism and offshore financing, which is quite lucrative due to the 0% corporate tax in the country. The country ranks 8th in our list of the countries with the lowest corporate taxes.
7.Isle of Man-0%
Due to the lack of taxes in Isle of Man, it is considered by many to be a tax haven and currently has a population of less than 100,000 people. It has quite a high GDP per capita of at least $84,600. The country ranks 7th in our list of the countries with the lowest corporate taxes.
There is no corporation tax on most companies, while for the companies in the banking sector, there is a tax rate of 10%. There is also no capital gain tax, inheritance tax, capital transfer tax, value added tax or even withholding general tax. This is why the country attracts a lot of people as well as companies. The country ranks 6th in our list of the countries with the lowest corporate taxes.
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Since no direct tax is levied in the Cayman Islands, the area is extremely popular for companies looking to avoid tax, and companies such as BNP and Bank of America (NYSE:BAC) have operations there.
Bermuda is an excellent destination for tourism, but also has no corporate tax rate, which is why Google transferred $10 billion from revenues to the country, resulting in tax savings of approximately $2 billion, according to a report by Bloomberg.
The wealthy Middle Eastern company has a population of more than 1.5 million people and has developed significantly thanks to its vast oil reserves.
Bahamas is one of the most beautiful destinations in the world, but is also an extremely popular tax haven, and has close to 400,000 people residing in the country. Offshore international financial services are one of the biggest contributors to the country, contributing at least 15% of GDP. There is no income tax, wealth tax or capital gains tax in the country.
Topping the list of the companies with the biggest corporate tax rates is Anguilla, which is a Caribbean island and a British overseas territory. The island has less than 15,000 people and in addition to not having a corporate tax rate, also doesn’t have any tax on real estate, capital gains, or tax on sales.
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