15 April 2006
MUSCAT -- Company tax rates across Europe are being driven steadily down by a combination of competition amongs European Union (EU) member states for jobs and capital, and economic liberalization, says KPMG International's global survey on statutory corporate income tax rates.
Average corporate tax rates in the EU fell by 0.28 per cent to 25.04 per cent in 2005, thanks to rate cuts in six EU member states including France, Greece and the Netherlands. The countries with the highest tax rates were Japan with 40.69 per cent and the United States with 40 per cent.
There is no corporate tax in Cayman Islands. Of the 86 countries surveyed, the majority had either kept their tax rates unchanged since 2004, or had reduced them. The largest reductions were in Barbados (minus five per cent to 25 per cent), Albania (minus three per cent to 20 per cent), Israel (minus three per cent to 31 per cent) and India (-2.9 per cent to 33.66 per cent).
Countries reporting significant increases were the Dominican Republic (plus five per cent to 30 per cent) and the Philippines (plus three per cent to 35 per cent).
Loughlin Hickey, Global head of KPMG Tax Practice said: "The accession of 10 new members to the EU in 2004, and the continuing efforts of the EU judicial system to break down barriers to free movement of capital, seem to have combined to increase tax competition among EU member states. There is a clear contrast with other parts of the world where borders are less permeable, but even so, the global trend seems to be stable or declining tax rates."
Hickey stressed that headline tax rates are not the only factor affecting the corporate tax bill.
"A low tax rate does not necessarily mean a low tax burden. Effective tax burdens can vary significantly depending on the attitude of governments and their tax authorities to corporate taxpayers, ranging from aggressive policing to actively promoting business collaboration. Clarity and certainty in the application of tax laws is a rare, but much prized commodity.
"As tax competition progressively erodes differences in rates, these factors are likely to grow in importance. One of the keys to tax competitiveness could become the relative business friendliness of a nation's tax environment."
Ashok Hariharan, KPMG tax partner for Oman and UAE (International Tax Practice) said: "This survey which includes Oman and UAE confirms that both Oman and UAE compare favourably with the rest of the world in respect of the tax rates. In Oman, companies pay a corporate tax rate of 12 per cent (increases to 30 per cent for branches of foreign companies).
In the UAE, currently there is no corporate income tax enforced except on foreign banks and foreign oil companies. In the case of foreign banks, the tax rate is 20 per cent whilst in the case of the foreign oil companies, the tax rate is generally 55 per cent.
In the case of the foreign oil companies, the amount of tax actually paid is based on the rate agreed in individual concession by the oil company and the respective emirate and could vary from 55 per cent to 85 per cent".
Ashok said: "In the Gulf, Bahrain imposes no tax except on foreign oil companies and in Qatar and Kuwait taxes are imposed only on foreign companies which would include their share of profits from local companies.
The tax rate in Kuwait is highest amongst the AGCC states (55 per cent) whilst in Qatar it is 35 per cent. In the case of Saudi Arabia, local Saudi as well as AGCC-owned companies pay Zakat of two per cent on their wealth whilst foreign companies pay corporate income tax of 20 per cent on profits. There is also a special national gas investment tax in Saudi Arabia, which ranges from 30 per cent to 85 per cent.
KPMG's corporate tax rates survey has been run every year since 1993. It now covers 86 countries, including the 30 member countries of the OECD, the 25 EU countries, 19 countries in the Asia Pacific Region and 19 countries in the Latin America Region. Tax professionals from across KPMG's global network of member firms have contributed to the survey. This year's survey compares corporate income tax rates as at January 1, 2006 with their equivalent as at January 1, 2005.
MUSCAT -- Company tax rates across Europe are being driven steadily down by a combination of competition amongs European Union (EU) member states for jobs and capital, and economic liberalization, says KPMG International's global survey on statutory corporate income tax rates.
Average corporate tax rates in the EU fell by 0.28 per cent to 25.04 per cent in 2005, thanks to rate cuts in six EU member states including France, Greece and the Netherlands. The countries with the highest tax rates were Japan with 40.69 per cent and the United States with 40 per cent.
There is no corporate tax in Cayman Islands. Of the 86 countries surveyed, the majority had either kept their tax rates unchanged since 2004, or had reduced them. The largest reductions were in Barbados (minus five per cent to 25 per cent), Albania (minus three per cent to 20 per cent), Israel (minus three per cent to 31 per cent) and India (-2.9 per cent to 33.66 per cent).
Countries reporting significant increases were the Dominican Republic (plus five per cent to 30 per cent) and the Philippines (plus three per cent to 35 per cent).
Loughlin Hickey, Global head of KPMG Tax Practice said: "The accession of 10 new members to the EU in 2004, and the continuing efforts of the EU judicial system to break down barriers to free movement of capital, seem to have combined to increase tax competition among EU member states. There is a clear contrast with other parts of the world where borders are less permeable, but even so, the global trend seems to be stable or declining tax rates."
Hickey stressed that headline tax rates are not the only factor affecting the corporate tax bill.
"A low tax rate does not necessarily mean a low tax burden. Effective tax burdens can vary significantly depending on the attitude of governments and their tax authorities to corporate taxpayers, ranging from aggressive policing to actively promoting business collaboration. Clarity and certainty in the application of tax laws is a rare, but much prized commodity.
"As tax competition progressively erodes differences in rates, these factors are likely to grow in importance. One of the keys to tax competitiveness could become the relative business friendliness of a nation's tax environment."
Ashok Hariharan, KPMG tax partner for Oman and UAE (International Tax Practice) said: "This survey which includes Oman and UAE confirms that both Oman and UAE compare favourably with the rest of the world in respect of the tax rates. In Oman, companies pay a corporate tax rate of 12 per cent (increases to 30 per cent for branches of foreign companies).
In the UAE, currently there is no corporate income tax enforced except on foreign banks and foreign oil companies. In the case of foreign banks, the tax rate is 20 per cent whilst in the case of the foreign oil companies, the tax rate is generally 55 per cent.
In the case of the foreign oil companies, the amount of tax actually paid is based on the rate agreed in individual concession by the oil company and the respective emirate and could vary from 55 per cent to 85 per cent".
Ashok said: "In the Gulf, Bahrain imposes no tax except on foreign oil companies and in Qatar and Kuwait taxes are imposed only on foreign companies which would include their share of profits from local companies.
The tax rate in Kuwait is highest amongst the AGCC states (55 per cent) whilst in Qatar it is 35 per cent. In the case of Saudi Arabia, local Saudi as well as AGCC-owned companies pay Zakat of two per cent on their wealth whilst foreign companies pay corporate income tax of 20 per cent on profits. There is also a special national gas investment tax in Saudi Arabia, which ranges from 30 per cent to 85 per cent.
KPMG's corporate tax rates survey has been run every year since 1993. It now covers 86 countries, including the 30 member countries of the OECD, the 25 EU countries, 19 countries in the Asia Pacific Region and 19 countries in the Latin America Region. Tax professionals from across KPMG's global network of member firms have contributed to the survey. This year's survey compares corporate income tax rates as at January 1, 2006 with their equivalent as at January 1, 2005.
© Times of Oman 2006
