Corporate Tax Rates By Country – OECD

The Organization for Economic Co-operation and Development (OECD) is an international organization of 30 countries that accept the principles of a free-market economy. Most OECD members are high-income economies and are regarded as developed countries. The organization publishes research and statistics on a wide variety of subjects, including analysis and forecasts on economic developments and trends, research on social changes or evolving patterns in trade, environment, agriculture, technology, taxation and other areas.

Here is a list of the corporate tax rates of each OECD country, as well as analysis from the Tax Foundation:

Amid rising concerns about the state of the U.S. economy, new data compiled by economists at the OECD shows that for the 17th consecutive year the average rate of corporate taxes in non-U.S. countries fell while the U.S. corporate tax rate stayed the same. As a result, the overall U.S. corporate tax rate is now 50 percent higher than the OECD average.

OECD Corporate Tax Rates – Federal Plus Provincial/State, 2007 and 2008


Rank
Country

Corporate
Income Tax
Rate 2008

Corporate
Income Tax
Rate 2007

Change from
2007 to 2008

1

Japan

39.54

39.54

0.0

2

United States

39.25

39.26

0.0

3

France

34.43

34.43

0.0

4

Belgium

33.99

33.99

0.0

5

Canada

33.50

36.12

-2.6

6

Luxembourg

30.38

30.38

0.0

7

Germany

30.18

38.9

-8.7

8

Australia

30.00

30.0

0.0

9

New Zealand

30.00

33.0

-3.0

10

Spain

30.00

32.5

-2.5

11

Mexico

28.00

28.0

0.0

12

Norway

28.00

28.0

0.0

13

Sweden

28.00

28.0

0.0

14

United Kingdom

28.00

30.0

-2.0

15

Italy

27.50

33.0

-5.5

16

Korea

27.50

27.5

0.0

17

Portugal

26.50

26.5

0.0

18

Finland

26.00

26.0

0.0

19

Netherlands

25.50

25.5

0.0

20

Austria

25.00

25.0

0.0

21

Denmark

25.00

25.0

0.0

22

Greece

25.00

25.0

0.0

23

Switzerland

21.17

21.32

-0.1

24

Czech Republic

21.00

24.0

-3.0

25

Hungary

20.00

20.0

0.0

26

Turkey

20.00

20.0

0.0

27

Poland

19.00

19.0

0.0

28

Slovak Republic

19.00

19.0

0.0

29

Iceland

15.00

18.0

-3.0

30

Ireland

12.50

12.5

0.0

 

OECD Average

26.6

27.6

-1.0

Why we need to cut our corporate taxes:

Combined with another new OECD study that calls the corporate income tax the most harmful type of tax for economic growth, the implications for U.S. policy are clear. The long-term prospects of the U.S. economy are at risk as long as our corporate tax rate remains out of step with the rest of the world.

The empirical evidence from the new OECD study suggests that “investment is adversely affected by corporate taxation through the user cost of capital,” meaning the after-tax return on investment. Looking at the firm level, OECD economists found that the effect of corporate taxes is strongest on industries that are older and more profitable because of their larger tax bases. Younger and smaller firms (i.e. start-ups) are less affected because they are less profitable.

The OECD study also found that statutory corporate tax rates have a negative effect on firms that are in the “process of catching up with the productivity performance of the best practice firms.” This suggests that “lowering statutory corporate tax rates can lead to particularly large productivity gains in firms that are dynamic and profitable, i.e. those that can make the largest contribution to GDP growth.”

America is being left behind. The new OECD rankings are only the latest indication of the new policy shift that has been sweeping the globe:

According to the World Bank’s Doing Business 2008, 20 non-OECD countries cut their corporate income taxes in 2007 [as well as 9 of the 30 OECD countries]. These corporate rate changes include:

  • Bulgaria, from15 percent to 10 percent
  • Turkey, from 30 percent to 20 percent
  • South Africa, from 12.5 percent to 10 percent
  • Columbia, from 35 percent to 34 percent
  • Israel, from 31 percent to 29 percent
  • Malaysia, from 28 percent to 27 percent

This year, Asian countries have been very aggressive on the tax front. China’s new 25 percent corporate tax rate, down from 33 percent, went into effect in January. Meanwhile, the Korean government has announced that it will cut its corporate rate from 25 percent to 22 percent, Taiwan is considering cutting its 25 percent corporate rate to 17.5 percent, and Hong Kong will cut its rate from 17.5 percent to 16.5 percent. In response to these developments, a Japanese advisory panel has called upon the government to cut Japan’s corporate tax rate to remain competitive and avoid discouraging foreign investment.

Since the report came out in August of 2008, the US government, as well as the rest of the world, has been on a spending spree of immense proportions [think Space Race on roids]. Politicians, whether Democratic or Republican, will be very reluctant to cut any taxes at this time, even if it would better serve the economy in the long run, as opposed to a $800 billion stimulus plan.

Best Countries For Business

9 Responses to Corporate Tax Rates By Country – OECD
  1. [...] post:  Corporate Tax Rates By Country – OECD Tags: corporate, country, environment, finance, government, investing, market-research, oecd, [...]

  2. [...] should cut income taxes across the board, cut corporate taxes so we go from the second highest in the world at 39.54% to the lowest in the industrialized world at 10%, and (for the next two years) cut capital [...]

  3. [...] should cut income taxes across the board, cut corporate taxes so we go from the second highest in the world at 39.54% to the lowest in the industrialized world at 10%, and (for the next two years) cut capital [...]

  4. [...] United States has relatively one of the highest corporate tax rates in the world, second to only Japan. That puts the United States at a competitive disadvantage, some argue. A [...]

  5. [...] than a small piece of the $13.8 trillion hole. Ditto for taxing big business more heavily. The U.S. corporate tax rate (35 percent) is already among the highest in the world. Raising that is an excellent way to reduce [...]

  6. [...] than a small piece of the $13.8 trillion hole. Ditto for taxing big business more heavily. The U.S. corporate tax rate (35 percent) is already among the highest in the world. Raising that is an excellent way to reduce [...]

  7. [...] Yet, these businesses ALREADY pay the 2nd highest corporate tax rate in the developed world (39.25%) and guess what? Our corporations will soon be paying the highest tax rates of any nation that has [...]

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