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Corporate Tax Rates by Country

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Corporate Tax Rates by Country

The corporation is a common and established type of business entity that is available in many countries around the world. Most governments treat corporate entities as a distinct, separate identity from its owners. Other common business entities, like limited liability companies and partnerships, are usually associated directly with their owners for taxation purposes. Corporations are held to a higher degree of public accountability and they must meet various structural and management requirements.

Taxation on corporate profits is a primary source of federal income for many developed and developing countries, although there is significant variation in the type and amount of corporate taxation. “Industrial countries raise about four times as much from personal income tax than from corporate income tax,” according to an International Monetary Fund publication.

OECD Member Corporate Tax Rates

The Organization for Economic Cooperation and Development (OECD) is an international organization made up of over 30 developed countries. The OECD evaluates and compares economic data from national economies to develop global economic solutions and improve tax policies. The following table compares the corporate tax rates of OECD member countries to their United Nations Human Development Index (HDI) rating.

The HDI is a composite evaluation of a population’s well-being and development. This index is calculated based on three primary categories: health, education and standard of living. Health score is measured by calculating the average life expectancy of a country’s citizens when they are born. Education score is based on two statistics: the average amount of schooling the public receives and the amount they are expected to receive. Living standard score is measured by comparing national income to total population. HDI rating is a comparative tool that provides a simple way to compare the quality of life of different countries and economies.

OECD Comparison of Corporate Tax Rates Worldwide by Country and Human Development Index Rating

CountryCorporate TaxHDI Rating
Australia300.929
Austria250.885
Belgium340.886
Canada16.50.908
Chile200.805
Czech Republic190.865
Denmark250.895
Estonia210.835
Finland260.882
France34.40.884
Germany15.80.905
Greece200.861
Hungary190.816
Iceland200.898
Ireland12.50.908
Israel240.888
Italy27.50.874
Japan300.901
Korea220.897
Luxembourg22.10.867
Mexico300.77
Netherlands250.91
New Zealand280.908
Norway280.943
Poland190.813
Portugal250.809
Slovak Rep.190.834
Slovenia200.884
Spain300.878
Sweden26.30.904
Switzerland8.50.903
Turkey200.699
U.K.260.863
United States350.91



Table Information

The above table only shows the national government’s income tax rate on incorporated entities. It does not represent additional local taxes that may apply in some countries. In the United States, many state governments also levy income tax on businesses that are incorporated with the state. Several other nations, including Korea, Germany and Japan, also have significant local taxes on corporations.

The tax data in the table is from an OECD publication found on the Tax Database section of the official OECD website. Human Development Index ratings for non-OECD countries and comprehensive description of index rating procedures are found in the Human Development Report 2011, which is published through the United Nations Development Program.

Comparison: Lowest and Highest Corporate Taxes

The United States levies the highest federal tax on corporate income of all the OECD members, but this does not necessarily make it a hostile environment for business formation. “Although the U.S. statutory tax is higher, the average effective rate is about the same, and the marginal rate on new investment is only slightly higher,” according to Congressional Research Service publication.

In contrast, the small European country of Switzerland sports one of the lowest corporate tax rates in the world. Switzerland’s tax on corporate income is less than one quarter of the U.S. tax. It is interesting to note that both countries have high Human Development Index ratings. The United States was ranked 4th worldwide in 2011, while Switzerland ranked 11th.

 

 Corporate Tax Rates by Country

About Quentin


Quentin is a freelance journalist, researcher and copy writer. His published compositions include feature journalism, for print and online outlets, as well as research-driven articles and e-books.

pixel Corporate Tax Rates by Country
 Corporate Tax Rates by Country

Quentin

Quentin is a freelance journalist, researcher and copy writer. His published compositions include feature journalism, for print and online outlets, as well as research-driven articles and e-books.

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Corporate Tax Rates by Country