Corporate Tax Rates around the World, 2021

Key Findings

• In 2021, 20 countries made changes to their statutory corporate income tax rates. Three countries—Bangladesh, Argentina, and Gibraltar—increased their top corporate tax rates, while 17 countries—including Chile, Tunisia, and France—reduced their corporate tax rates.
• Comoros (50 percent), Puerto Rico (37.5 percent), and Suriname (36 percent) are the jurisdictions with the highest corporate tax rates in the world, while Barbados (5.5 percent), Uzbekistan (7.5 percent), and Turkmenistan (8 percent) levy the lowest corporate rates. Fifteen jurisdictions do not impose corporate tax.
• The worldwide average statutory corporate income tax rate, measured across 180 jurisdictions, is 23.54 percent. When weighted by GDP, the average statutory rate is 25.44 percent.
• Asia has the lowest regional average rate, at 19.62 percent, while Africa has the highest regional average statutory rate, at 27.97 percent. However, when weighted for GDP, Europe has the lowest regional average rate at 23.97 percent and South America has the highest at 31.03 percent.
• The average top corporate rate among EU27 countries is 21.30 percent, 23.04 percent among OECD countries, and 69 percent in the G7.
• The worldwide average statutory corporate tax rate has consistently decreased since 1980, with the largest decline occurring in the early 2000s.
• The average statutory corporate tax rate has declined in every region since 1980.

Introduction

In 1980, corporate tax rates around the world averaged 40.11 percent, and 46.52 percent when weighted by GDP.[1] Since then countries have recognized the impact that high corporate tax rates have on business investment decisions so that in 2021, the average is now 23.54 percent, and 25.44 when weighted by GDP, for 180 separate tax jurisdictions.[2]

Declines have been seen in every major region of the world, including in the largest economies. The 2017 tax reform in the United States brought the statutory corporate income tax rate from among the highest in the world closer to the middle of the distribution. Whereas in 2017 the United States had the fourth highest corporate income tax rate in the world,[3] it now ranks towards the middle of the countries and tax jurisdictions surveyed.

European countries tend to have lower corporate income tax rates than countries in other regions, and many developing countries have corporate income tax rates that are above the worldwide average.

Today, most countries have corporate tax rates below 30 percent.

Notable Corporate Tax Rate Changes in 2021

Twenty countries made changes to their statutory corporate income tax rates in 2021. Bangladesh, Argentina, and Gibraltar increased their top corporate tax rates from 25 percent, 30 percent, and 10 percent to 32.5 percent, 35 percent, and 12.5 percent respectively.

Seventeen countries across five continents—Sweden, Colombia, Switzerland, Monaco, Congo, Turkey, Indonesia, France, Gambia, Lao People’s Democratic Republic, Sri Lanka, Angola, Democratic Republic of Congo, Bhutan, Kiribati, Tunisia, and Chile—reduced their corporate tax rates in 2021. The tax rate reductions ranged from just less than 1 percentage point in Sweden, to a temporary 15 percentage point reduction in Chile.

Scheduled Corporate Tax Rate Changes in the OECD

Among Organisation for Economic Co-operation and Development (OECD) countries, Austria, France, the Netherlands, and the United Kingdom, have announced they will implement changes to their statutory corporate income tax rate over the coming years.

• In Austria, the corporate income tax rate will be cut from 25 percent to 23 percent starting in 2024. The government is also considering increasing the tax exemption threshold on profits up to €30,000 from 13 percent to 15 percent.[5]
• In France, the standard statutory corporate income tax rate was lowered to 32.02 percent (including the 3.3 percent social surcharge) in 2020. An already legislated corporate rate reduction is expected to progressively bring down the corporate tax rate to 25.83 percent by 2022.[6]
• In the Netherlands, the originally planned reduction of the statutory corporate tax rate applying to income exceeding €200,000 was reversed: The corporate rate was not decreased to 22.55 percent in 2020 as originally planned. Instead, it remains at 25 percent in 2021 and will not be lowered to 21.7 percent. However, the higher tax bracket is being increased from €245,000 in 2021 to €345,000 in 2022.[7]
• In the United Kingdom, the standard statutory corporate income tax rate is due to increase from 19 percent to 25 percent on April 1, 2023.[8]

The Highest and Lowest Corporate Tax Rates in the World[9]

One hundred and forty of the 225 separate jurisdictions surveyed for the year 2021 have corporate tax rates at or below 25 percent. One hundred and fifteen have tax rates above 20 and at or below 30 percent. The average tax rate among the 225 jurisdictions is 23.54 percent.[10] The United States has the 85^th highest corporate tax rate with a combined federal and state statutory rate of 25.77 percent.[11]

The 20 countries with the highest statutory corporate income tax rates span almost every region, albeit unequally. While eight of the top 20 countries are in Africa, Europe, Oceania, and Asia appear only once. Of the remaining jurisdictions, five are in North America, and four are in South America.

On the other end of the spectrum, the 20 countries with the lowest non-zero statutory corporate tax rates all charge rates at or below 12.5 percent. Ten countries have statutory rates of 10 percent, five being small European nations (Andorra, Bosnia and Herzegovina, Bulgaria, Kosovo, and Macedonia). The only three OECD members represented among the bottom 20 countries are Chile, Hungary, and Ireland. Chile temporarily reduced its statutory corporate income tax rate for most businesses due to the pandemic. Hungary reduced its corporate income tax rate from 19 to 9 percent in 2017. Ireland is known for its low 12.5 percent rate, which has been in place since 2003.

Of the 225 jurisdictions surveyed, 15 currently do not impose a general corporate income tax. Except for the United Arab Emirates, all these jurisdictions are small, island nations. A handful, such as the Cayman Islands and Bermuda, are well-known for their lack of corporate taxes.

Regional Variation in Corporate Tax Rates

Corporate tax rates can vary significantly by region. Africa has the highest average statutory corporate tax rate among all regions, at 27.97 percent. Asia has the lowest average statutory corporate tax rate among all regions, at 19.62 percent.

When weighted by GDP, South America has the highest average statutory corporate tax rate at 31.03 percent. Europe has the lowest weighted average statutory corporate income tax, at 23.97 percent.

In general, larger and more industrialized nations tend to have higher corporate income tax rates than smaller nations. The G7, which is comprised of the seven wealthiest nations in the world, has an average statutory corporate income tax rate of 26.69 percent, and a weighted average rate of 26.41 percent. OECD member states have an average statutory corporate tax rate of 23.04 percent, and a rate of 25.81 percent when weighted by GDP. The BRICS[12] have an average statutory rate of 27.40 percent, and a weighted average statutory corporate income tax rate of 26.07 percent.

The following map illustrates the current state of corporate tax rates around the world. Countries in Africa and South America tend to have higher corporate tax rates than Asian and European jurisdictions. Oceania and North America’s corporate tax rates tend to be close to the world average.

Distribution of Corporate Tax Rates[13]

Very few tax jurisdictions impose a corporate income tax at statutory rates greater than 35 percent. The following chart shows a distribution of corporate income tax rates among 225 jurisdictions in 2021. A plurality of countries (115 total) imposes a rate at or above 20 percent and below 30 percent. Twenty-two jurisdictions have a statutory corporate tax rate at or above 30 percent and below 35 percent. Only three jurisdictions have a rate over 35 percent. Eighty-five jurisdictions have a statutory corporate tax rate below 20 percent, and 200 jurisdictions have a corporate tax rate below 30 percent.

The Decline of Corporate Tax Rates since 1980

Over the past 40 years, corporate tax rates have consistently declined on a global basis. In 1980, the unweighted average worldwide statutory tax rate was 40.11 percent. Today, the average statutory rate stands at 23.54 percent, representing a 41 percent reduction over the 41 years surveyed.[14]

The weighted average statutory rate has remained higher than the simple average over this period. Prior to U.S. tax reform in 2017, the United States was largely responsible for keeping the weighted average so high, given its relatively high tax rate, as well as its significant contribution to global GDP. Figure 3 shows the significant impact the change in the U.S. corporate rate had on the worldwide weighted average. The weighted average statutory corporate income tax rate has declined from 46.52 percent in 1980 to 25.44 percent in 2021, representing a 45 percent reduction over the 41 years surveyed.

Over time, more countries have shifted to taxing corporations at rates of or lower than 30 percent, with the United States following this trend with its tax changes at the end of 2017. The largest shift occurred between 2000 and 2010, with 78 percent of countries imposing a statutory rate below 30 percent in 2010 and only 47 percent of countries in the dataset imposing a statutory rate below 30 percent in 2000.[15]

All regions saw a net decline in average statutory rates between 1980 and 2021. The average declined the most in Europe, with the 1980 average of 44.6 percent dropping to 19.84 percent, representing a 55 percent decline. South America has seen the smallest decline, with the average only decreasing by 27 percent, from 36.66 percent in 1980 to 26.63 percent in 2021.

South America saw a period (1990-2000) where the average statutory rate increased slightly at less than 1 percentage point, although the average rate decreased over the full 40-year period.

Conclusion

Worldwide and regional average top statutory corporate tax rates have declined over recent decades, with most countries following the trend. Of 225 jurisdictions around the world, only three have increased their top corporate income tax rate in 2021, while 17 countries have decreased their corporate tax rate. The trend seems to be continuing, as several countries are planning to reduce their corporate tax rates in the coming years.

Appendix

The Dataset

Scope

The dataset compiled for this publication includes the 2021 statutory corporate income tax rates of 225 sovereign states and dependent territories around the world. Tax rates were researched only for jurisdictions that are among the roughly 250 sovereign states and dependent territories that have been assigned a country code by the International Organization for Standardization (ISO). As a result, zones or territories that are independent taxing jurisdictions but do not have their own country code are generally not included in the dataset.

In addition, the dataset includes historic statutory corporate income tax rates for the time period 1980 to 2021. However, these years cover tax rates of fewer than 225 jurisdictions due to missing data points. Please let Tax Foundation know if you are aware of any sources for historic corporate tax rates that are not mentioned in this report, as we constantly strive to improve our datasets.

To be able to calculate average statutory corporate income tax rates weighted by GDP, the dataset includes GDP data for 180 jurisdictions. When used to calculate average statutory corporate income tax rates, either weighted by GDP or unweighted, only these 180 jurisdictions are included (to ensure the comparability of the unweighted and weighted averages).

Definition of Selected Corporate Income Tax Rate

The dataset captures standard top statutory corporate income tax rates levied on domestic businesses. This means:

• The dataset does not reflect special tax regimes, including but not limited to patent boxes, offshore regimes, or special rates for specific industries.
• A number of countries levy lower rates for businesses below a certain revenue threshold. The dataset does not capture these lower rates.
• A few countries levy gross revenue taxes on businesses instead of corporate income taxes. Since the tax rates of a corporate income tax and a gross revenue tax are not comparable, these countries are excluded from the dataset.
• Some countries have a separate tax rate for nonresident companies. This dataset does not consider nonresident tax rates that differ from the general corporate rate.

Sources

Tax Rates for the Year 2021

For OECD countries, the statutory corporate income tax rates used are the combined corporate income tax rates provided by the OECD; see OECD, “Table II.1. Statutory corporate income tax rate,” updated April 2021, https://stats.oecd.org/index.aspx?DataSetCode=Table_II1. The main source for non-OECD jurisdictions are the statutory rates provided by KPMG; see KPMG, “Corporate tax rates table,” 2021, https://home.kpmg/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online/corporate-tax-rates-table.html. The study also relies on Bloomberg Tax, “Country Guides – Corporate Tax Rates,” accessed in October and November 2021, https://www.bloomberglaw.com/product/tax/toc_view_menu/3380. Jurisdictions that are not part of these sources were researched individually. The source for each of these jurisdictions is listed in a GitHub repository; see Tax Foundation, “worldwide-corporate-tax-rates,” GitHub, https://github.com/TaxFoundation/worldwide-corporate-tax-rates.

TEXT, PROPRIÉTÉ de: https://taxfoundation.org/corporate-tax-rates-by-country-2021/