Corporate tax is the tax levied on the income earned by a firm.

Lower tax rates

promotes the possibility of greater economic activity. The lower rates incentivize
investment as higher profits are retained by the investor. Some countries think
otherwise. Companies are taxed at a higher rates to subsidize government
spending on nation.
Corporate tax laws and rates can impact the decision of the companies in many
ways.
1. One of the biggest ways that corporate income taxes may impact a corporation or company
is when corporate income taxes are levied at such a high rate or percentage that it may
hinder the growth of some companies.
2. Very high corporate tax results in business relocation and registration in places where tax
rates are relatively low and tax codes are relatively simply. In this era of globalization and
WTO there is always to loophole to bypass the tax when high rates are charged.

3. Corporate taxes providing incentives for research can result in R&D

activities being carried within the country.

Corporate tax is not only one of biggest contributor of the tax revenue generated
by the government, it can also help in promoting better business environment
and level playing field for companies to carry out their business.
The below table provides the details of corporate tax imposed by different
economies.
1. The region in the table is World Bank classification. There are 7 regions
which are East Asia and Pacific, Europe and Central Asia, Latin America &
the Caribbean, Middle East and North Africa, North America, South Asia
and Sub-Saharan Africa
2. Income Group: For the current 2016 fiscal year, low-income economies
are defined as those with a GNI per capita, calculated using the World
Bank Atlas method, of $1,045 or less in 2014; middle-income economies
are those with a GNI per capita of more than $1,045 but less than
$12,736; high-income economies are those with a GNI per capita of
$12,736 or more. Lower-middle-income and upper-middle-income
economies are separated at a GNI per capita of $4,125
3. Corporate Tax Rate: This column gives the standard tax rates applied in
different countries.
4. T/W: T stands for territorial and W stands for worldwide. Corporate tax
may is levied on income generated worldwide or might only be levied on
the income generated within the economy. Most countries levy the
corporate tax on the worldwide income of the resident companies. Most
notably UK is slowly moving towards territorial kind of corporate tax
regime for resident companies.
5. Remarks: This column gives more details about the tax regime. The tax
incentives provided by different economies are discussed in this column.
Sometimes a highly differentiated tax structure is followed by the
economy and is explained in this column.

SL
No.

Region

Europe &
Central
Asia

Europe &
Central
Asia

Economy

Income group

Moldova

Lower middle
income

Corporat
e Tax
Rate
12%

T/
W

Remarks

1. Territorial for non- resident countries

2. Tax exemptions for commercial banks financing capital
investments, free economic zones and increasing employee
year on year.

Monaco

High income:
nonOECD

0-33.33%

1. No tax if more than 75% of the income derived with

Monaco else 33.33%.
2. Territorial Tax applicable to both foreign and location firms
3. Tax exemption to new created enterprises for 23 months.
4. Known for banking secrecy laws.

Montenegro

Upper middle
income

0.09

1. Non-resident companies taxed on their territorial incomes

Netherlands

High income:
OECD

25%

Norway

High income:
OECD

27%

Poland

High income:
OECD

19%

Portugal

High income:
OECD

21%

Europe &
Central
Asia

Romania

Upper middle
income

16%

Europe &
Central
Asia

Russian
Federation

High income:
nonOECD

20%

10

Europe &
Central
Asia

San Marino

High income:
nonOECD

17%

3
4

6
7

Europe &
Central
Asia
Europe &
Central
Asia
Europe &
Central
Asia
Europe &
Central
Asia
Europe &
Central
Asia

Europe &
Central
Asia
Europe &
Central
Asia
Europe &
Central
Asia

Serbia

Upper middle
income

15%

Slovak
Republic

High income:
OECD

22%

Slovenia

High income:
OECD

17%

14

Europe &
Central
Asia

Spain

High income:
OECD

25%

15

Europe &
Central
Asia

Sweden

High income:
OECD

22%

16

Europe &
Central
Asia

Switzerland

High income:
OECD

32%

17

Europe &
Central
Asia

Tajikistan

Lower middle
income

25%

20%

11
12
13

18

Europe &
Central
Asia

Turkey

Upper middle
income

1. Non-resident companies taxed on their territorial incomes

2. Innovation Box is an incentive given to encourage R&D qualifying IP taxed at 5%.
1. A special 51% tax on oil & gas production and pipeline
transportation.
2. A special power production tax of 31% on top of 27% CT.
3. Shipping Tax Regime exempts tax on income for shipping
activities and are required to pay only tonnage excise tax.
Companies can opt in or opt out of the same.

1. Micro enterprises (income <EUR65000) are taxed at the

rate of 3%.
2. Exemptions are provided for reinvested profit, petroleum
companies and free trade zones.
1. 2% Payable to central government. Regional government
are paid in the range of 13.5% to 18%.
2. Russian companies in educational and medical activities
exempted.
1. 8.5% taxation of corporate profits for first 6 year of
business activity.
2. If 90% of the profit reinvested for functional investment
shall not be considered taxable income.
1. 10 year tax exemption if an investment of RSD 1 Billion on
fixed assets and employing at least 100 employees during the
same period.
1. Tax incentives include full tax relief for a period of 10 years.
2. Specific conditions are prescribed for different sectors
which needs to be met for a company to avail tax incentives.
1. Venture capital countries are subjected to 0% tax rate.
2. Investment funds over 90% of the operating profits are
exempted from paying tax.
1. Newly created companies are taxed at the rate of 15% for
the period of 2015.
2. Tax base exceeding Euro 300,000 are subjected to tax rate
of 28%.

1. Federal Tax rate is approximately is 7.8%.

2. The cantonal/ communal tax rates of vary between 12%
and 24%.
3. Tax incentives are provided both at cantonal and federal
level.
1. Simplified tax system for small business entities whose
annual income does not exceed TJS 500,000.
2. Tax rate for goods producing activity is 5% while for other
activities is 6% under simplified tax system.
1. 50% of the income generated from inventions resulting
from R&D, software development etc carried out in Turkey are
exempt from corporate tax.
2. Dividend income form Turkish participation is exempted for

foreign companies.

1. Branches of foreign legal entities are subjected to 20% tax

rate.
2. Turkmen legal entities are subjected to 8% tax rate (or 2%
in case company qualifies as a small and medium enterprise)
3. Companies in oil and gas operations are subjected 20% tax
rate

1. Tax holidays for certain industries till 2016.

19

Europe &
Central
Asia

Turkmenistan

Upper middle
income

20

Europe &
Central
Asia

Ukraine

Lower middle
income

21

Europe &
Central
Asia

United
Kingdom

High income:
OECD

20%

22

Europe &
Central
Asia

Uzbekistan

Lower middle
income

7.5%

18%

1. Several exemption result in making tax applicable for

territorial income
2. Profits from oil extraction and oil rights in the United
Kingdom and the UK continental shelf are taxed at 30%
3. Capital gain tax is not levied on non-residents, while a tax
rate of 28% is levied on residents.
1. Regular tax rate is 7.5%
2. For the commercial banks the tax rate is 15%
3. Permanent establishment are subjected to a 10% tax on
their net income after deduction of corporate tax.