President Joe Biden needs to either raise taxes or add to the national debt to fund his new programs. He points to global corporate tax rates as one way to raise a lot of new money. And he often claims that U.S. corporations pay one of the lowest tax rates in the country. So we did some investigation to compare the total corporate tax by country around the world.
- The median top corporate tax rate around the world is 25%, meaning half of all countries are above and half are below the 25% rate.
- The U.S. is right in the middle of the pack with a top statutory corporate tax rate of 25.77%.
- 15 countries have a 0% corporate tax rate, including a lot of “offshore” places famous for allowing shell companies, like the Bahamas, Bermuda and the Cayman Islands.
- Very few developed Western economies have a top corporate tax rate above 30%, like Portugal (31.5%) and France (32.02%).
We found the data for global corporate tax rates at the Tax Foundation for 2020. We colored each country on a sliding scale to indicate statutory top corporate tax rate. This does not mean that all companies pay exactly the specified rate. There are numerous tax deductions, rebates and credits, not to mention progressive tax rates depending both on how profitable a corporation is and in what industry it primarily operates. In a more detailed view, we broke down each region of the world so that the size of each country was scaled to its top corporate rate. Our approach to this data gives a very clear picture of which countries have the highest marginal corporate tax rates around the world.
Corporate Tax Rates in the Americas
| Top 3 Highest Tax Rates | Top 3 Lowest Tax Rates | 0% Tax Rate |
|---|---|---|
| 1. Puerto Rico: 37.5% | 1. Barbados: 5.5% | Anguilla |
| 2. Suriname: 36% | 2. Paraguay: 10% | Bahamas |
| 3. Saint Martin: 35% | 3. Curacao: 22% | Bermuda |
| British Virgin Islands | ||
| Cayman Islands | ||
| Saint Barthelemy | ||
| Turks and Caicos Islands |
Puerto Rico has the highest tax rate in the Western Hemisphere at 37.5%, and in fact the second highest in the world. Brazil is not far behind at 34%, meanwhile there are several countries in the Carribean with zero corporate tax whatsoever. The U.S. has one of the top tax rates in the region at 25.77%.
Corporate Tax Rates in the Europe
| Top 3 Highest Tax Rates | Top 3 Lowest Tax Rates | 0% Tax Rate |
|---|---|---|
| 1. Malta: 35% | 1. Hungary/Montenegro: 9% | Guernsey |
| 2. France: 32.02% | 2. Andorra/B&H/Bulgaria/Gibraltar/Kosovo/Macedonia: 10% | Isle of Man |
| 3. Portugal: 31.5% | 3. Moldova: 12% | Jersey |
A quick glance at Europe demonstrates a significant difference in how countries tax corporations. At one end of the spectrum, countries like Malta and France are charging corporate profits a top tax rate of over 30%. And at the other end, many countries are in the low double digits, including the UK (19%), Ireland (12.5%) and Cyprus (12.5%). There are also a few tax shelters charging companies 0%, like Guernsey, Isle of Man and Jersey.
Corporate Tax Rates in Africa
| Top 3 Highest Tax Rates | Top 3 Lowest Tax Rates |
|---|---|
| 1. Comoros: 50% | 1. Mauritius: 15% |
| 2. Chad: 35% | 2. Libya/Madagascar: 20% |
| 3. Democratic Republic of the Congo: 35% | 3. Botswana/Cabo Verde: 22% |
All the purple on this map indicates a lot of African countries charge a top corporate tax rate of over 20%. Comoros is the highest in the entire world at 50%, but most places fall between 20 to 40%. Mauritius is the lowest on the continent at just 15%.
Corporate Tax Rates in Asia
| Top 3 Highest Tax Rates | Top 3 Lowest Tax Rates | 0% Tax Rate |
|---|---|---|
| 1. Bhutan/India/Philippines: 30% | 1. Uzbekistan: 7.5% | Bahrain |
| 2. Japan: 29.74% | 2. Turkmenistan: 8% | UAE |
| 3. Pakistan: 29% | 3. Kyrgyzstan/Qatar: 10% |
Our map of Asia includes everywhere from Palestine in the West to Japan in the East. Across this entire continent, there are 2 countries charging 0% to corporations, like Bahrain and the UAE. Bhutan, India and the Philippines are all tied at 30%. All things considered, the mix of turquoise and purple indicates a wide variety of different corporate tax rates across Asia.
Corporate Tax Rates in the Oceania
| Top 3 Highest Tax Rates | Top 3 Lowest Tax Rates | 0% Tax Rate |
|---|---|---|
| 1. Kiribati: 35% | 1. Timor-Leste: 10% | Tokelau |
| 2. American Samoa: 34% | 2. Cook Islands/Fiji: 20% | Vanuatu |
| 3. Australia/Micronesia/New Caledonia/Niue/Papua New Guinea/Solomon Islands: 30% | 3. Guam/Northern Mariana Islands: 21% | Wallis and Futuna Islands |
Oceania presents an interesting contrast to the world’s other regions. Australia and New Zealand both charge top corporate tax rates of 30% and 28%, respectively. And yet there are several countries relatively nearby with rock bottom rates, like Vanuatu (0%).
There are a lot of variables in play when lawmakers establish top corporate tax rates. The size of the economy, the desire to attract businesses from abroad, and ease with which companies can exit a market all go into setting rates. However, there are a lot of countries offering 0%, and with global companies only interested in maximizing their bottom lines, corporate accountants will always have opportunities to lower tax liabilities.
Data: Table 1.1