Mirroring the trends seen in past years, the annual KPMG International Corporate and Indirect Tax Rate Survey shows that corporate and indirect tax rates around the world are in a constant state of change as governments look to increase indirect rates to raise revenue but to decrease corporate tax rates to attract investment.
As 2012 came to a close, KPMG International in their annual Corporate and Indirect Tax Rate Survey shows that the global indirect tax average increased by 0.17% to 15.50. Africa and Asia had the most significant increases, from 14.17 to 14.57% and 11.84 to 12.24% respectfully. A notable indirect development in 2012 saw the introduction of a VAT Pilot Program in Shanghai and its subsequent extension into other 10 other provincial-level regions.
“We expect the global indirect tax rate average to continue to rise in 2013 as more governments continue their path to economic recovery,” says Tim Gillis, KPMG’s Head of Global Indirect Tax Services. “Throughout 2013 a number of countries’ VAT systems will jump up including Finland, Dominican Republic and Cyprus.”
Meanwhile, the global corporate tax rate average remained almost the same. There was a small decline of 0.09% to 24.43% since January 2012. For 2013 many country budget proposals include corporate tax rate reductions. Countries with proposed corporate tax rate drops in 2013 include Mexico, Sweden and Ecuador.
“Corporate tax will never be abolished or abandoned,” says Wilbert Kannekens, KPMG’s Head of Global International Corporate Tax. “Profits will always be taxed. That is what governments and the general public wants. With business being global and taxes being levied on a country-by-country basis more discussions will arise on how profits will have to be ‘allocated’ to various jurisdictions.”
“Given that business is becoming increasingly global but taxes are levied at country level, there are going to be more and more discussions on how to ‘allocate’ taxable profit among different jurisdictions, and Russia is undoubtedly going to play a part in this process,” says Anna Voronkova, Head of International Taxation at KPMG in Russia and the CIS.
The average changes in rates as shown by the KPMG tax rates online tool:
| Country |
Corporate 2011 |
Corporate 2012 |
% Increase/ Decrease |
Indirect 2011 |
Indirect 2012 |
% Increase/ Decrease |
| Africa |
28.55% |
29.02% |
 0.47% |
14.17% |
14.57% |
0.4% |
| North America |
34% |
33% |
 1% |
5% |
5% |
– |
| Asia |
23.1% |
22.89% |
0.21% |
11.84% |
12.24% |
0.4% |
| Europe |
20.88% |
20.5% |
0.38% |
19.71% |
20% |
0.29% |
| Latin America |
29.02% |
28.3% |
0.72% |
12.78% |
12.79% |
0.01% |
| Oceania |
28.6% |
28.6% |
– |
12.92% |
12.92% |
– |
| EU |
22.8% |
22.6% |
0.2% |
20.76% |
21.13% |
0.37% |
| OECD |
25.50% |
25.25% |
0.25% |
18.53% |
18.85% |
0.32% |
| Global |
24.52% |
24.43% |
0.09% |
15.33% |
15.50% |
0.17% |
For 2012, the United Arab Emirates claimed the highest corporate tax rate (55%), followed by the United States (40%) and Japan (38.01%). Of those countries with a corporate income tax, Montenegro had the lowest corporate income tax rate (9%), followed by a number of countries at 10% including Serbia, Cyprus, Paraguay and Qatar. It should be noted that the “statutory tax rates” could differ from the “effective tax rate”. For example the United Arab Emirates in practice does not levy corporate income tax.
On the indirect tax side, Hungary (27%), Iceland (25.5%), Sweden, Denmark, Norway and Croatia (25%) hold the title for the highest indirect tax rates.
Aruba has the smallest VAT, or turnover tax, at 1.5%, followed by a number of countries with a 5% VAT/GST including Japan, Canada, Yemen and Nigeria.
Users can compare corporate, indirect and individual income tax rates for over 120 countries, or compare a particular tax rate across multiple countries by using KPMG’s online tax rates tool: www.kpmg.com/taxrates.
Notes to editor:
- Information is current as of time of this release.
- Corporate and indirect rate data have been provided and verified by participating KPMG member firms.
- Average rate calculations have been based on the data within each year to accurately reflect year-over-year changes.
- Countries have been assigned to their sub-region based on United Nations definitions
|
9%
Montenegro |
55%
United Arab Emirates |
1.5%
Aruba |
27%
Hungary |
|
10%
Albania, Bosnia and Herzegovina, Bulgaria, Cyprus, Gibraltar, Macedonia, Serbia, Paraguay, Qatar |
40%
United States |
5%
Canada Japan, Jersey, Nigeria, St Maarten, Taiwan, Yemen |
25.5%
Iceland |
|
12%
Macau, Oman |
38.01%
Japan |
6%
Saba, St Eustatius, Curacao |
25%
Sweden, Denmark, Norway, Croatia |
Users can compare corporate, indirect and individual income tax rates for over 120 countries, or compare a particular tax rate across multiple countries by using KPMG’s online tax rates tool: www.kpmg.com/taxrates.
Notes to editor:
- Information is current as of time of this release.
- Corporate and indirect rate data have been provided and verified by participating KPMG member firms.
- Average rate calculations have been based on the data within each year to accurately reflect year-over-year changes.
- Countries have been assigned to their sub-region based on United Nations definitions.