Corporate vs. indirect tax: how will governments, companies and individuals react to changes occurring world wide

Corporate vs. indirect tax: how will governments,...

Mirroring the trends seen in past years, the annual KPMG International Corporate and Indirect Tax Rate Survey shows that corporate and indirect tax rates around the world are in a constant state of change as governments look to increase indirect rates to raise revenue but to decrease corporate tax rates to attract investment.


As 2012 came to a close, KPMG International in their annual Corporate and Indirect Tax Rate Survey shows that the global indirect tax average increased by 0.17 percent to 15.50. Africa and Asia had the most significant increases, from 14.17 to 14.57 percent and 11.84 to 12.24 percent respectfully. A notable indirect development in 2012 saw the introduction of a VAT Pilot Program in Shanghai and its subsequent extension into other 10 other provincial-level regions.


“We expect the global indirect tax rate average to continue to rise in 2013 as more governments continue their path to economic recovery,” says Tim Gillis, KPMG’s Head of Global Indirect Tax Services. “Throughout 2013 a number of countries’ VAT systems will jump up including Finland, Dominican Republic and Cyprus”.


Meanwhile, the global corporate tax rate average remained almost the same. There was a small decline of 0.09 percent to 24.43 percent since January 2012. For 2013 many country budget proposals include corporate tax rate reductions. Countries with proposed corporate tax rate drops in 2013 include Mexico, Sweden and Ecuador.


“Corporate tax will never be abolished or abandoned,” says Wilbert Kannekens, KPMG’s Head of Global International Corporate Tax. “Profits will always be taxed. That is what governments and the general public wants. With business being global and taxes being levied on a country-by-country basis more discussions will arise on how profits will have to be “allocated” to various jurisdictions”.


"Lower tax rates and, in particular, Income tax and VAT, is certainly important. But for Ukraine reasonable and economically feasible definition of taxable basis is of the first importance, as well as other key aspects of tax (including the frequency of payment, advance payments and many others.) Only the complex solution of all these issues will facilitate business development, and will be beneficial for the state”, sais Sergey Popov, Partner, Tax and Legal, KPMG in Ukraine. 


The average changes in rates as shown by the KPMG tax rates online tool:


Country Corporate
% increase
% increase
Africa 28.55% 29.02% 0.47% 14.17% 14.57% 0.4%
North America 34% 33% 1% 5% 5% -
Asia 23.1% 22.89% 0.21% 11.84% 12.24% 0.4%
Europe 20.88% 20.5% 0.38% 19.71% 20% 0.29%
Latin America 29.02% 28.3% 0.72% 12.78% 12.79% 0.01%
Oceania 28.6% 28.6% - 12.92% 12.92% -
EU 22.8% 22.6% 0.2% 20.76% 21.13% 0.37%
OECD 25.50% 25.25% 0.25% 18.53% 18.85% 0.32%
Global 24.52% 24.43% 0.09% 15.33% 15.50% 0.17%

The highest and lowest tax rates

For 2012, the United Arab Emirates claimed the highest corporate tax rate (55 percent), followed by the United States (40 percent) and Japan (38.01 percent). Of those countries with a corporate income tax, Montenegro had the lowest corporate income tax rate (9 percent), followed by a number of countries at 10 percent including Serbia, Cyprus, Paraguay and Qatar. It should be noted that the “statutory tax rates” could differ from the “effective tax rate”. For example the United Arab Emirates in practice does not levy corporate income tax.

On the indirect tax side, Hungary (27 percent), Iceland (25.5 percent), Sweden, Denmark, Norway and Croatia (25 percent) hold the title for the highest indirect tax rates.

Aruba has the smallest VAT, or turnover tax, at 1.5 percent, followed by a number of countries with a 5 percent VAT/GST including Japan, Canada, Yemen and Nigeria.

Corporate lowest rates 2012 Corporate highest rates 2012 Indirect lowest rates 2012 Indirect highest rates 2012
United Arab Emirates
Albania, Bosnia and Herzegovina, Bulgaria, Cyprus, Gibraltar, Macedonia, Serbia, Paraguay, Qatar,
United States
Canada Japan, Jersey, Nigeria, St Maarten, Taiwan and Yemen
Macau and Oman
Saba, St Eustatius and Curacao
Sweden, Denmark, Norway, Croatia,

Users can compare corporate, indirect and individual income tax rates for over 120 countries, or compare a particular tax rate across multiple countries by using KPMG’s online tax rates tool:

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