In this article we are going to list the 15 Countries With The Lowest Corporate Tax Rates. Click to skip ahead and jump to the 5 Countries With The Lowest Corporate Tax Rates.
The G-7 nations have finally agreed to force major tech companies to pay their fair shares of taxes. The new proposed tax system, which according to the UK’s Chancellor of the Exchequer Rishi Sunak would “transform the global tax system,” would affect companies like Alphabet Inc Class A (NASDAQ: GOOGL), Facebook, Inc. Common Stock (NASDAQ: FB), Apple Inc (NASDAQ: AAPL) and Twitter Inc (NYSE: TWTR) which enjoy huge revenues but don’t have to pay taxes in certain areas where they don’t have physical headquarters.
Taxes are the backbone of an economy and there are no two ways about that. If you want to look at the difference between a developed economy and a developing economy, or a country with a high standard of living as opposed to a country with a lower standard of living, just simply look at the tax rates. In developing economies, tax rates generally tend to be quite low as opposed to say Western Europe, which has countries which boast the highest standards of living in the world, and have quite high taxes as well, which often exceed 50%. And Scandinavian countries have even higher taxes, and yet, still have the happiest populations in the world because these taxes are spent on improving infrastructure, providing universal health care and providing high quality education to everyone, rather than just a select few.
All over the world, countries have differing corporate tax rates. Some countries focus on tighter rules and regulations, and hence, have higher tax rates without giving much space to companies to maneuver. For example, for the past few years, the European Union has pledged a crackdown on corporations engaging in tax avoidance, which has caused rifts between the EU and major tech companies such as Alphabet Inc Class A (NASDAQ: GOOGL), Facebook, Inc. Common Stock (NASDAQ: FB), Apple Inc (NASDAQ: AAPL) and Twitter Inc (NYSE: TWTR). This has even led to an effect on the relations between the US and the EU. Many believe that the latest tax laws proposed by the G-7 countries are primarily aimed at US-based tech giants, but European authorities have clarified that the new tax laws would be for every company.
One of the ways that the companies avoid tax is by using tax havens. Tax havens refer to offshore countries which have really lax tax regulations and almost no corporate tax rates. These countries generally have really low or even 0% corporate tax rates. Rather, the economy of these countries is boosted by the companies registering there and engaging in economic activities. In fact, many of the entries in our list of countries with the lowest corporate tax rates actually don’t charge any tax on corporations at all. We have based our list on the average tax rate over the past decade, with the data being taken from KPMG. So without further ado, let’s take a look at the countries most friendly to corporations, starting with number 15 (the rankings may be different due to many countries having the exact same tax rates).
Countries With The Lowest Corporate Tax Rates
15. Bulgaria
Average corporate tax rate in the country over the past 10 years (2011 to 2020): 10%
We kick off our list with Bulgaria, which is one of the few countries in our list to have taxes in the double digits. The country ranks 15th in our list of the countries with the lowest corporate taxes.
14. Bosnia and Herzegovina
Average corporate tax rate in the country over the past 10 years (2011 to 2020): 10%
Bosnia and Herzegovina has a population of just 3.3 million people. The country has suffered a lot in recent history, with the Bosnian War costing the country 200 billion euros in damages and devastating the economy of the country. However, it is on the track to development and recovery, especially thanks to tourism to the picturesque country. The country ranks 14th in our list of the countries with the lowest corporate taxes.
13. Andorra
Average corporate tax rate in the country over the past 10 years (2011 to 2020): 10%
Andorra is a small European country, with just 80,000 people. In fact, it is the sixth smallest country in Europe and receives 10 million visitors annually. In fact, 80% of the GDP is dependent on tourism for the small country, with the banking sector also being a primary contributor due to the company’s tax haven status. In the past, several media reports have suggested that companies like Alphabet Inc Class A (NASDAQ: GOOGL), Facebook, Inc. Common Stock (NASDAQ: FB), Apple Inc (NASDAQ: AAPL), Twitter Inc (NYSE: TWTR) and major banks tend to avoid taxes by using tax havens such as Andorra.
Gurgen Bakhshetsyan/Shutterstock.com
12. Montenegro
Average corporate tax rate in the country over the past 10 years (2011 to 2020): 9%
Montenegro is one of the few European countries in our list, as European countries actually tend to have higher taxes. The country has only 620,000 residents, which is extremely low and its economy is mostly based on services. Montenegro is also dependent on tourism. Europe has been very strict in terms of taxes. That’s why most of the tech innovation and companies like Alphabet Inc Class A (NASDAQ: GOOGL), Facebook, Inc. Common Stock (NASDAQ: FB), Apple Inc (NASDAQ: AAPL) and Twitter Inc (NYSE: TWTR) have been basing their operations outside of the continent. The country ranks 12th in our list of the countries with the lowest corporate taxes.
Mladen Davidovic/Shutterstock.com
11. Jersey
Average corporate tax rate in the country over the past 10 years (2011 to 2020): 8%
Jersey is an island near the coast of France. While it does levy taxes, they are much lower than the global average, and is considered a tax haven by many different organizations.
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10. Uzbekistan
Average corporate tax rate in the country over the past 10 years (2011 to 2020): 7.5%
The Muslim country has more than 34.5 million people, and has an extremely low tax rate for corporations. It is one of the biggest gold mining countries in the entire world while it is also one of the biggest natural gas producers.
9. Vanuatu
Average corporate tax rate in the country over the past 10 years (2011 to 2020): 3.4%
You will be seeing plenty of locations in our list of the countries with the lowest corporate tax rates which aren’t that popular or well-known. The country has been known for its tax haven status, with finance companies taking advantage of this for decades, since the 1970s. The country ranks 9th in our list of the countries with the lowest corporate taxes.
8. Turks and Caicos Islands
Average corporate tax rate in the country over the past 10 years (2011 to 2020): 0%
The British Overseas Territory has just over 40,000 people and its economy is completed dominated by tourism and offshore financing, which is quite lucrative due to the 0% corporate tax in the country. The country ranks 8th in our list of the countries with the lowest corporate taxes.
7. Isle of Man
Average corporate tax rate in the country over the past 10 years (2011 to 2020): 0%
Due to the lack of taxes in Isle of Man, it is considered by many to be a tax haven and currently has a population of less than 100,000 people. It has quite a high GDP per capita of at least $84,600. The country ranks 7th in our list of the countries with the lowest corporate taxes.
6. Guernsey
Average corporate tax rate in the country over the past 10 years (2011 to 2020): 0%
There is no corporation tax on most companies, while for the companies in the banking sector, there is a tax rate of 10%. There is also no capital gain tax, inheritance tax, capital transfer tax, value added tax or even withholding general tax. This is why the country attracts a lot of people as well as companies. The country ranks 6th in our list of the countries with the lowest corporate taxes.
Please continue to see the 5 countries with the lowest corporate tax rates.
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Disclosure: No stakes in Alphabet Inc Class A (NASDAQ: GOOGL) Facebook, Inc. Common Stock (NASDAQ: FB) Apple Inc (NASDAQ: AAPL), Twitter Inc (NYSE: TWTR). 15 countries with the lowest corporate tax rates is originally published at Insider Monkey.
