Corporate tax rates are a controversial topic, especially when it comes to multinational businesses that might look to move their profits around so that they pay as little tax as possible across the world.
However, there are some countries where low rates of corporate tax can be enjoyed anyway.
In Estonia, corporate tax is only paid if company profits are distributed to shareholders, meaning it is more of a personal income tax than a corporate one. Any profits that are left in the company and not withdrawn are not subject to any tax at all, making Estonia a great place to grow a business!
With the exception of Bahrain and the United Arab Emirates, the other countries with 0% corporate tax rates are all islands.
These countries are the Cayman Islands, Bermuda, the Bahamas, the British Virgin Islands, the Marshall Islands, and the Turks and Caicos Islands. Those countries that are territories of other nations still retain their individual 0% corporate tax rate and are not subject to mainland laws.
Several countries around the world only take 10% corporation tax. These are Paraguay, Kuwait, Andorra, Bosnia, Albania, Bulgaria, Cyprus, Gibraltar, Macedonia, Mongolia, and Qatar.
In Qatar, there are varying rates for companies that operate in the oil and gas industries. Dividends in Qatar are taxed as income tax, but Qatari nationals get these tax free, meaning ex-pats often run up a larger tax bill in the country than they might like.
Canada is the biggest country and most developed economy when it comes to low corporate tax rates. This is the case as income and other personal taxes make up the majority of Canadian tax revenues.
At the federal level, businesses in Canada pay 11 – 15% corporate tax, and up to 16% at the provincial level, although there is no liability up to a certain profit limit.
Another Arabian peninsula state, Oman, charges 12%, as does Macau, one of China’s Special Administrative Regions. By comparison, corporate tax in Hong Kong, China’s other Special Administrative Region, is 16.5%, while in the rest of China it stands at 25%.
The other country with a similar level of corporate taxation is Liechtenstein, where corporate tax stands at 12.5%.