Look at the places where prices are high, low and nonexistent

As our world becomes more interconnected and doing business across borders becomes increasingly common, corporate tax rates have emerged as a hot topic – the success or failure factor when it comes to foreign investment. Some of the biggest companies on earth, including tech giants like Apple, Amazon and Google, have turned to countries with low rates to save a lot on taxes, and reward those who bring them the biggest profits.

Minimal international coordination on corporate taxation led the leaders of the world’s 20 largest economies (the Group of Twenty) to adopt a global minimum tax rate of 15% last October. “We call on the comprehensive OECD/G20 Framework on Base Erosion and Profit Shifting to rapidly develop models and multilateral tools as agreed in the Detailed Implementation Plan, with a view to ensuring that the new rules enter into force at the global level in 2023,” it said. In draft conclusions as seen by Reuters.

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The agreement was signed by 136 countries, representing 90% of the global economy, according to the World Economic Forum. The new rate applies to offshore profits of multinational companies with sales of $868 million globally and allows local governments to levy a tax rate of their choosing — although a company’s local government can raise its taxes to meet the 15% threshold and prevent the profit loophole. .

To get a sense of how corporate tax rates vary from country to country, small business lending firm OnDeck plotted it out. OnDeck pulled corporate tax rate data from KPMG, the Tax Foundation, Trading Economics, PricewaterhouseCoopers, Deloitte, and various government websites, applying each country’s tax laws to “a typical company with $1 million revenue, $100,000 profit per year, and five to Nine employees, owned by a resident of the country concerned, and who earns the majority of his revenue from business operations within the country concerned.”

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OnDeck’s study did not include companies operating in the oil, gas and mining sectors or publicly traded companies.

This is what the study found.

North American tax rates for business owners are comparable to the global average

The average corporate tax rate for North American countries is 21.5% – roughly in line with the global average. In the United States, corporations are subject to a 21% federal tax rate in addition to state corporate taxes, which range from 0% in South Dakota and Wyoming to over 9% in Alaska, Illinois, Iowa, Minnesota and Pennsylvania — and as high as 11.5% in New Jersey, according to the Tax Foundation. . Canada trails behind the United States, with a tax of $27,125 for every $100,000 in annual profit.

But tax rates in neighboring island states differ more, with a tax of $33,000 on every $100,000 in annual earnings in Saint Kitts and Nevis; 30 thousand dollars in Saint Lucia and several other countries; $15,000 in Cuba; and $0 in the Bahamas – the only remaining tax haven linked to the continent.

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South America has the second highest average tax rate, plus barriers for business owners

Small businesses in South America are subject to an average tax rate of 26.1% – the second highest among all continents. There is still a huge amount of difference, with Suriname taxing $36,000 for every $100,000 in annual profits (the highest corporate tax rate anywhere in the world); $25,000 in Ecuador, Chile and several other countries; And only $10,000 in Paraguay. Additionally, it takes an average of 42.1 days to start a business in South America – much longer than a day and a half in Canada, a Georgia day or a half day in New Zealand.

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Africa has the highest corporate tax rate, on average

Africa has the highest average tax rate of any region, at 27.5%. According to the Organization for Economic Co-operation and Development (OECD), developing countries rely more on corporate income tax; In Malaysia, for example, corporate taxes make up 66% of the country’s total tax revenue compared to just 9% in France and the UK. Chad, Comoros, Equatorial Guinea, Guinea, Sudan and Zambia have a tax rate of 35% – the second highest in the world. The process of starting a business is also an expensive and challenging process; In Equatorial Guinea, for example, it takes approximately 16 procedures to start a new business.

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Eastern Europe has some of the lowest corporate tax rates

The average corporate tax rate in European countries is 17.9%, which is significantly lower than that of Africa, South America or North America. Malta charges the highest tax at $35,000 per $100,000 in annual profits, but the range is wide across the continent, as low as just $15,000 in Georgia, $12,500 in Cyprus and even less than $0 in Monaco (depends on earning at least about 75% of revenue within the country) and Vatican City. Starting a business is relatively convenient, taking only 12.7 days on average.

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The Middle East and Central Asia have the lowest average tax rate

Small businesses in the Middle East and Central Asia are taxed at the lowest average rate, just 16.7%. Many governments in the region receive the majority of their revenue from national oil and gas companies (which are not included in this study), which lowers tax rates for small businesses outside of those sectors. Case in point: Qatar imposes a general corporate tax rate of $10,000 for every $100,000 in annual profits and more than triple that number to $35,000 (or even more) for oil companies. Similarly, Bahrain is a tax haven for most companies, charging $0, but can charge a 46% tax rate on the net profits of oil and gas companies.

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Corporate tax rates vary widely in the rest of Asia and Oceania

As we’ve already seen across several continents, tax rates can vary greatly from country to country. For example, Japan has the highest rate in the region — $33,580 per $100,000 in annual profit — while South Korea has one of the lowest rates in the region at just $11,000. Bangladesh, which has a tax rate of $32,500 per $100,000 of annual earnings, is another highly taxing feature in the region, while the island nations of Nauru and Vanuatu complete tax havens around the world.

Image Credit: Courtesy of OnDeck

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