The countries with the lowest corporate tax rates
Affluent nations that boast the most business-friendly tax regimes
Following the uncertainty brought on by the coronavirus pandemic and Brexit, as well as the fact many countries have now sunk into recession, business owners need to stretch their profits as far as possible. Basing your company in a country with minimal corporate tax is one sure-fire way to do that. With a number of countries having slashed their tax rates in the past couple of years, there are plenty of nations looking to lure in foreign investment with attractive perks. Click or scroll through to see the 31 OECD nations with the lowest company tax rates.
Joint 26th. Austria: 25%
Austria has one of Europe's most pro-business tax regimes. Firms that are headquartered in the country pay a unified rate of 25% and can take full advantage of other incentives, including generous research & development (R&D) tax reliefs. The current Chancellor, Sebastian Kurz, has announced plans for further reducing corporate tax in the country to 23% in 2021, and then down to 21% in 2023.
Joint 26th. Netherlands: 25%
In the Netherlands, small businesses are liable for less corporate tax. Firms in the country pay 19% if their annual profits are less than €200,000 ($237k/£183k), and the standard 25% if they generate more. Companies are also especially rewarded for innovation through additional tax benefits, innovation credits and lavish grants.
Joint 26th. Belgium: 25%
Belgium was one of Europe’s pricier locations when it came to corporate tax, with a rate of 33% before the Belgian Government reduced it down to 29% in 2018. This year has seen the country cut taxes by another 4%, and so its corporate rate currently sits at 25%. The new regulations come with counterbalance measures, such as a minimum taxation on companies making more than €1 million ($1.2m/£913k) in profit.
Joint 26th. Spain: 25%
Following the financial crash between 2008 and 2014, the Spanish economy made a slow but sure recovery, which can partly be explained by its competitive corporate tax rate of 25%. The levy, which peaked at 35% during the 2000s, was lowered in 2016 from 28%.
Joint 26th. South Korea: 25%
In 2018, a 3% corporate tax rise was brought about in South Korea, bringing the standard rate to 25%. The additional money was due to pay for social welfare programmes and new public sector jobs, but the negative impacts were quickly felt elsewhere, with the move causing for domestic investment to fall by an incredible 20 trillion won ($17.1bn/£13.1bn) that year.
Joint 26th. Chile: 25%
Bucking the global trend, Chile has actually hiked up its corporate tax rate in recent years – in 2010, the rate stood at just 19%. The extra cash is being used to fund social projects and reduce inequality in the South American country. Tax reform continues to be a hot topic in Chile, with a new, partially-integrated system levying corporate income tax at a rate of 27% for larger companies as of January this year.
Joint 24th. Italy: 24%
Businesses in Italy are obliged to pay a 24% flat rate tax, as well as a 3.9% municipal tax, but all is not what it seems. According to a Congressional Budget Office (CBO) report, many businesses are eligible for rebates and credits that can pretty much cancel out their annual bill.
Joint 24th. Greece: 24%
In 2019, Greek authorities confirmed that the corporate tax rate would be cut from 28% to its current rate of 24%, which comes in an effort to stimulate the country’s economy. As part of the same announcement, Greece’s Prime Minister Kyriakos Mitsotakis said that the country’s corporate tax rate would eventually be cut down to 20% by 2021.
23. Japan: 23.2%
Keen to stimulate the economy, which is stuck in a low-growth rut, now ex-Prime Minister Shinzō Abe's Government was committed to lowering corporate tax rates in the country. In 2017 new initiatives were put in place, including a reduced tax rate for companies that agree to increase wages by 3%, and a rate of 20% for businesses investing in new technology. The standard corporate tax rate currently sits at 23.2%.
22. Israel: 23%
Rather than impose a flat corporate tax rate that can penalise small businesses, Israel cuts tech companies some slack by taxing them at just 6% on their annual profit. Otherewise, firms in the country pay the higher rate of 23%, which was brought down from 24% in 2018.
Joint 19th. Norway: 22%
Like many countries in Europe and elsewhere, Norway has reduced its corporate tax rate to entice foreign investors – the rate remained at 28% for years until 2014, when it was lowered to 27%. The tax has been further reduced nearly every year since then, and currently sits at its 2019 rate of 22%.
Joint 19th. Denmark: 22%
Denmark offers a lot more for foreign investors besides a low corporate tax rate of 22%. Incentives stretch beyond the low corporate tax rate, and expats benefit from virtually no social security contributions and a special taxation scheme for high-salaried expats, who pay just 27% income tax for the first seven years spent working in the country (although there is an 8% labour market contribution to pay as well), which is quite the bargain compared to the standard rate of up to 56.5%.
Joint 19th. Turkey: 22%
A low corporate tax trailblazer, Turkey reduced the levy to just 20% back in 2006, before increasing it to 22% in 2018. But as of next year, corporate tax will go back to its lower rate of 20%. Despite bouts of political instability, the country is still an attractive location for multinationals, who benefit from various incentives.
18. Sweden: 21.4%
Sweden imposed one of the highest corporate tax rates in the world, peaking at a staggering 60.1% in 1989. Since then, successive governments have lowered the amount of tax companies pay. In 2019, corporate tax was reduced to its current rate of 21.4%, with plans to cut it down further to 20.6% in 2021, making the Scandinavian country more business-friendly than most.
Joint 16th. USA: 21%
The Trump administration lowered the corporate tax rate to 21% from 35% in 2017, at the time saying that the reform would allow for an annual increase of $4,000 (£3.1k) in income per household on average through stimulating wage growth, among other benefits. Following the cut business investment did increase in the States, but not on the scale originally anticipated. It remains to be seen whether the plan will work long term or only serve to benefit shareholders.
Joint 16th. Slovakia: 21%
Simplicity reigns in the straightforward Slovak tax system. Reforms carried out in the 2000s cut corporate tax, and in September 2019 the rate was reduced again by 1%, bringing it to 21%. The country also did away with a number of other taxes, including inheritance tax.
Joint 12th. Finland: 20%
Taxes in Finland tend to be steep. VAT is charged at up to 24% on many goods and services, income tax can be excessive at up to 56.95%, and taxpayers are even liable for “church tax”. Corporate tax, on the other hand, is nice and low at just 20%.
Joint 12th. Estonia: 20%
Estonia is considered one of the most attractive countries for foreign companies. Its low corporate tax rate of 20% only applies to distributed profits, and any profits generated abroad are totally exempt from taxation. Since last year, companies can also apply for a reduced tax rate of 14% if their taxable profit is equal to, or less than, that of the last three years.
Joint 12th. Iceland: 20%
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Likewise, Icelandic firms pay only 20% corporate tax. The country cut the rate from 33% to just 18% in the 2000s, before going up to its current rate in 2011. Iceland is now seen as a leader in low enterprise taxation and a thoroughly straightforward place to do business.
Joint 12th. Latvia: 20%
In Latvia, businesses big and small benefit from low corporate tax rates. A standard rate of 20% applies to larger, higher-revenue companies, while smaller, low-income microenterprises pay a reduced rate of 15%.
Joint 8th. Czech Republic: 19%
An appealing place for international investors, the Czech Republic has a low corporate tax rate of 19%. Better still, income is taxed at a flat rate of 15%, which is a major plus for high-salaried executives looking to relocate to the country.
Joint 8th. Poland: 19%
Poland may have a low corporate tax rate of 19% and a lax taxation system, but the Government is sharpening up its act and cracking down on firms that are registered in tax havens, transfer profits abroad and generally fail to pay their fair share. In 2019, the country also scrapped income tax for around 2 million young workers under the age of 26 to try and prevent the country’s best and brightest seeking better prospects abroad.
Joint 8th. United Kingdom: 19%
The UK was set to reduce its corporate tax rate by 2% to just 17% by April 2020, but Prime Minister Boris Johnson shelved this plan in November 2019, deciding to use the money made from those taxes – a whopping £6 billion ($7.7bn) – on public services instead.
Joint 8th. Slovenia: 19%
In 2017 Slovenia raised the level of corporate tax from 17% to 19%. The increase was implemented to finance a cut in income tax, which was considered excessively high in the country, with the top band reaching up to 50%.
7. Luxembourg: 18.19%
Luxembourg taxes regular SARL companies (private companies that operate in mostly French-speaking countries) at 18.19%, but offers intellectual property (IP) firms huge rebates. In fact, IP companies registered in Luxembourg are subject to corporate tax of around 5%.
6. Germany: 15.83%
Businesses in Germany pay corporate tax at a rate of 15.83% on average, but this isn't the full story. Companies are also liable for trade tax of up to 20.3% and a solidarity surcharge pushing 5.5%, which inflate their tax liabilities.
Joint 4th. Canada: 15%
Canada's low corporate tax rate of 15% had enticed countless US firms, but the country's appeal to American companies started to wane following the Trump administration's dramatic corporate tax cut. Capital started to head south and the country has struggled to hold on to companies, particularly in the oil and gas sector where new regulations have driven out more than $30 billion (£23bn) of foreign investment.
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Joint 4th. Lithuania: 15%
Corporate tax in Lithuania also sits at 15%, but a reduced rate of 5% can be offered to “micro companies”, which are defined as businesses with up to 10 employees and €300,000 ($356/£276) in income per year.
3. Ireland: 12.5%
Ireland’s low corporate tax rate of 12.5% has transformed the economy and attracted major companies from far and wide. For example, the country is currently responsible for 30% of the EU’s digital exports, with heavyweights such as Google, Facebook and Apple choosing the country as a bridge to its European branches. While the Emerald Isle’s model for attracting inward investment has been imitated by several nations worldwide, it has drawn the ire of others, including France.
2. Hungary: 9%
In 2017, Hungary reduced its corporate tax rate from 19% to 9%, and now has the lowest rate in the EU. The move comes as part of Prime Minister Viktor Orbán's mission to attract significant foreign investment.
1. Switzerland: 8.5%
Switzerland boasts the lowest corporate tax rate in the world on paper, with company profits being taxed at just 8.5% at the federal level. However, the country's cantons impose further taxes, which typically leads a firm’s corporate tax to somewhere between 11.9% and 21.6%, depending on its turnover.
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