With a population of just over 348,000 and covering an area of 40,000 square miles, the Nordic island of Iceland is the most sparsely populated country in Europe. It brings in $7.3 billion (£5.3 bn) of tax revenue annually. Income tax is a flat rate of 22.75%, but there is a tax-free amount before this is payable. In addition there’s a municipal tax and a government surtax for those on higher incomes, which brings the total tax payable to around 37% of income.
The Baltic country of Estonia brought in $8 billion (£5.7bn) in tax from a population of 1.3 million and the coffers will be further boosted by dramatic increases in the taxation on alcohol, which is set to rise by 50% by 2020, putting up the cost of a $12 (£9) crate of beer to $18 (£13).
It may have a population of nearly 2 million, around 700,000 more people than its neighbour Estonia, but Latvia only brings in slightly more tax each year, according to the OECD’s figures, at $8.4 billion (£6.2bn). However, recent changes in January 2018 may boost revenues, including raising the corporate income tax rate from 15% to 20%.
This central European country, known for its lakes and mountains, brought in tax receipts of $16.3 billion (£11.94bn) from its population of just over two million. Individuals pay a progressive rate of tax from 16% to 50%, while last year corporation tax was increased from 17% to 19%.
Luxembourg generated $22.2 billion (£16.27bn) from its population of just 582,000. Its success lies in part due to it attracting many international businesses thanks to its favourable tax rules; for example it offers intellectual property (IP) firms enormous rebates and IP companies registered in Luxembourg have to pay corporate tax of less than 6%. However, Luxembourg’s fortunes may change; last year Amazon was ordered to repay €250m ($293m/£221m) in back taxes after the European Commission said it had been given an unfair tax deal in Luxembourg.
The Slovak Republic had tax revenues of $29.3 billion (£21.47bn) in 2016, according to the report. The country, which has a population of 5.4 million, has seen foreign direct investment increase dramatically in recent years, thanks in part to a flat corporate tax rate of 22%, low labour costs and a favourable geographic location.
The land-locked country of Hungary underwent enormous changes to its taxation system in 2017 after its parliament approved the reduction of statutory corporate income tax to a flat rate of just 9%, the lowest of all the European Union’s member states. Under the previous system, the first $1.8 million (£1.3m) of taxable income was taxed at 10%, and the rest at 19%. The country brought in $49 billion (£35.9bn) in tax revenues from its population of 9.8 million.
Personal income tax in Chile, which stands at 35%, helped bring in $50.4 billion (£36.9bn) in tax revenue from the South American country’s population of 17.9 million people. The income tax rate is the lowest the country has seen in recent years; its all-time high was in 2004 when it stood at 40%.
The New Zealand tax system is simple: while individuals and companies pay tax, residents don’t need to pay other levies including inheritance tax, payroll tax or social security tax. The top rate of personal tax is 33%, and in 2016 the US-based Tax Foundation ranked New Zealand’s overall tax system as second in the developed world for its competitiveness and top for its individual taxes. The country had total tax receipts of $60.1 billion (£44bn) from its 4.7 million people in 2016.
The Czech Republic netted $66.5 billion (£48.7bn) in tax revenue from its 10.6 million population, according to the OECD’s report. Income tax is a flat rate of 15%, although for those earning 48 times the average salary it's payable at a rate of 22%. Meanwhile, the standard corporate tax rate is 19%, while investment funds have a special tax rate of 5%.
The Emerald Isle is appealing to many international companies thanks to its favourable tax deals and the country, which has a population of just 4.7 million, collected $70.2 billion (£51.44bn) in taxation in 2016. However the future is less certain. Last year, Ireland was ordered to collect a disputed €13 billion ($15.5bn/£11.4bn) tax bill from Apple. The European Commission had ruled that Ireland had given the firm illegal state aid by allowing it to pay an effective corporation tax rate of 1%. Ireland is challenging the decision.
While Portugal may have generated a similar amount of tax revenue as Ireland at $70.3 billion (£51.5bn), its population is more than double at 10.3 million. Individuals pay a progressive rate of income tax from 14.5% up to 45%, while corporation tax is a flat rate of 21%.
Greece has suffered well-documented financial troubles in recent years and in 2016 it generated $75 billion (£54.9bn) from its 10.7 million poeple, slightly more than Portugal. Critics argue its tax system is overly complex: for example there are six different rates of VAT while others fear the new tax applied on holidaymakers staying in the country will harm tourism.
Israel, which as a population of 8.5 million, generated $99.6 billion (£72.9bn) in tax, according to the report. And the country is hoping that recent changes in corporation tax, which saw the rate fall from 25% to 24% in January this year and will drop again to 23% next January, will boost business.
Finland’s high income tax rates helped the country achieve $105.2 billion (£77bn) from its 5.5 million population. Residents pay a progressive state tax (6.5% to 31.75%), and an average of 19.17% to municipalities, plus a further 1-2% to parishes.
Finland’s Scandinavian neighbour Norway amassed $140.7 billion (£103bn) in tax from just 5.2 million people, again partly due to its high taxes. There is a flat rate of 24%, plus an additional top tax rate of up to 15.4%, and a social security contribution of 8.2%. One interesting quirk of Norway’s system is that all tax returns are public and available to view online.
Denmark has some of the highest tax rates in the world, helping boost its tax coffers to $140.9 billion (£103bn) from its population of 5.7 million. Most personal income is subject to an AM, or labour market, tax of 8%, which covers unemployment payments, sickness and other benefits. Once income tax is added on – which include state, municipality and church taxes – the full amount paid varies between 41% and 56%. Denmark’s corporate income tax rate is 24.5%.
In sharp contrast, Poland received $157.5 billion (£115.4bn) in tax revenues in 2016, $17 billion more than Denmark but from a population of nearly 38 million – more than six times the amount of the Scandinavian country. Income tax stands at 18%, while higher earners pay 32% and corporate income tax is 19%.
Austria underwent significant tax reform in 2016. The changes saw the lowest income tax rate applicable for taxable income of $13,100 (£9,600) and above reduced from 36.5% to 25%, it saw the threshold the higher tax rate of 50% was payable on increase from $71,300 (£52,700) to $107,000 (£79,000), and saw a new rate of 55% for those earning more than €1 million. The OECD report shows Austria, which has a population of 8.7 million, generated a total of $164.9 billion (£120.8bn) in tax revenues.
Switzerland is known as a haven for wealthy foreigners who want to deposit their cash in its banks. The rich state generated $183.7 billion (£134.5bn) from its population of 8.7 million, however navigating its taxation system can be tricky due to the country’s federalist structure. There are 26 cantons and around 2,250 municipalities that each levy their own income taxes, wealth taxes, inheritances taxes, property gains taxes and other taxes.
The latest OECD data shows Mexico, which has a population of 127.5 million people, brought in $186 billion (£137bn) in tax revenue. Income tax is progressive; in fact there are 11 different tax brackets from 1.92% to 35% and the corporate tax rate stands at 30%. The US's tax reforms are expected to have an economic impact on Mexico, with some commentators speculating that some multinational companies may move north of the border for lower taxes.
Belgians pay high rates of income tax on a sliding scale from 25% to 50%. However, there were some changes this year that reduce what individuals pay; the rate at which 40% tax is payable was increased from €12,720 ($14,580/£11,183) to €22,290 ($26,500/£19,580), while the 45% bracket has been removed completely. The top rate remains 50%. The report showed the country, which has a population of 11.35 million, collected $206 billion (£150bn) in tax.
Turkey operates a progressive income tax system and rates vary from 15% to 35%, while the standard corporate rate is 20%. It raised $218.3 billion (£159bn) from its 79.5 million people in 2016.
The Scandinavian country of Sweden raised an eye-watering $225.6 billion (£165bn) from its 9.9 million-strong population. Residents pay local taxes of between 29%-35%, and national income tax of up to 25%; however inheritance tax was abolished in 2005. Corporate income tax sits at 22%, although wide-reaching changes to this are being proposed, including reducing this rate in two phases to 20.6%.
The Netherlands also has a progressive income tax system and those earning a salary of more than €68,508 ($81,400/£60,200) are hit by an income tax rate of 51.95%, which has helped boost tax receipts from its 17 million people to $301.9 billion (£221.3bn). However, changes to the tax system due to be implemented next year will see a reduction in tax paid by higher earners.
The latest figures available show Australia raised $348 billion (£256.6bn) from its 24.13 million-strong population. Individuals pay income tax on a progressive basis from 19% to 45%. A Medicare Levy is payable on top to pay for public healthcare; this was increased from 1.5% to 2% in 2014, while since 2015 higher earners who don’t have private hospital cover must also pay the Medicare Levy Surcharge of between 1% and 1.5% on top. Corporate taxes stand at 30%, however the government is pushing for this to be cut to 25% by 2025.
Japan received $351.6 billion (£259bn) from its population of 127 million, according to the most recent figures. In 2017 the country’s ruling bloc approved a plan to cut the corporate tax rate from 30% to 20%, although only for companies that raise wages and increase capital spending. Japan has a progressive income tax system, with rates from 20% to 40%.
South Korea, which received $371.1 billion (£272 bn) from its 51 million population, is undergoing huge changes this year as the country enacts the 2018 Tax reform Bill. Some of the changes include adding a new 25% corporate income tax bracket for taxable income in excess of KRW300 billion ($270m/£198m), instead of the previous flat rate of 22%. Meanwhile the top income tax bracket has been increased from 40% to 42% for higher earners.
With a population of 46.6 million, Spain generated tax receipts of $412.4 billion (£303bn) in 2016 according to the report. The country operates a sliding scale of income tax from 19% to 45%, while the general corporation tax rate is 25%. Meanwhile, residents of the Andalucia region had some good news this year, as it was announced changes to inheritance tax rules mean that the vast majority of children or spouses will not have to pay it anymore.
The system of paying federal tax is simple in Canada: there is a sliding scale of 15% to 33% depending on how much you earn, however it gets a bit trickier when you need to add on provincial and territorial tax as the rate you pay depends on your income – and where you live. The rates vary dramatically, from 4%, the lowest bracket in Nunavut, up to the highest bracket in Nova Scotia of 21%. The country’s population of 36.3 million brought in a total of $491.1 billion (£360bn) in 2016.
Italy’s 60.6 million-strong population helped contribute to vast tax revenues of $792.8 billion (£582bn). Italians pay personal income tax of between 23% to 43%, plus regional tax which is typically between 1.23% and 3.33%
The UK generated $869.4 (£640bn) billion in tax from its population of 65.6 million people, according to the OECD report. The UK uses a progressive income tax system, where those living in England, Wales and Northern Ireland pay between 20% and 45% tax, while those in Scotland pay 19% to 46% tax depending in their earnings. Residents must also pay National Insurance contributions too, which are 12%, although workers who earn more than £46,350 pay only 2% on earnings over that threshold. The Corporation Tax main rate is currently 19% but is set to be reduced to 17% in 2020.
With a population of 66.9 million, France generated $1,115.9 billion (£820bn) in tax. However it will be interesting to see the results of dramatic tax cuts President Emmanuel Macron made in 2017, including slashing the contentious wealth tax effectively by 70% and introducing a 30% flat rate on capital gains.
A combination of being the biggest economy in Europe, a population of 82 million and a relatively high taxation system meansGermany has the second largest tax revenue in the report at $1,305.7 billion (£958bn). In addition to income tax, which varies from 14% to 45% for very high incomes, everyone has to pay solidarity tax, which is capped at 5.5% of an individual’s income tax. Also, if you’re a member of a church registered in Germany, you will also be required to pay a church tax of 8 or 9% of your income, depending on which federal state you live in.
The USA tops the list in the report for having the highest level of tax revenues, with $4,846.3 billion (£3,571bn) tax generated from its population of 325.7 million. However with the USA going through huge tax reforms this year under President Trump, it will be interesting to see the impact that has on those figures in future. Most analyses suggests that while the changes aren’t the biggest tax cuts the country has ever seen, the reduction of the US corporate tax rate from 35% to 21% is the biggest corporate tax cut in US history.