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TA XContents 1 Introduction
2 Commentary
Corporate Tax Rates 9 Corporate Tax Rates 1999 - 2008
10 Corporate Tax Rates – Comparison Charts
16 Corporate Tax Rates Footnotes
Indirect Tax Rates 29 Indirect Tax Rates 2004 - 2008
32 Indirect Tax Rates – Comparison Charts
34 Indirect Tax Rates Footnotes KPMG's Corporate and Indirect Tax Rate Survey 2008 1
IntroductionWelcome to the 2008 edition of KPMG's Corporateand Indirect Tax Rate Survey. This is the 16th year that wehave asked our member firms for details of thecorporate tax rates charged in their countries, and inmany ways, the changing results over the years reflectan increasingly global mindset among tax policy makersas well as corporates.
To help our member firm clients and other organizations consider developmentsacross borders, we have included both corporate and indirect tax rates from 106and 90 countries, respectively. We started reporting on indirect tax rates in our2007 survey and everything we have seen since appears to confirm that indirecttaxes are either at the same level as, or surpassing, corporate taxes as a concernfor international business. So, for the first time, we have looked back five years toshow trends in indirect tax rates.
Loughlin HickeyGlobal Head of TaxKPMG in the United Kingdom2 KPMG's Corporate and Indirect Tax Rate Survey 2008
Commentary The global trends in taxation identified in our 2007 Corporate and Indirect Tax Rate Survey have continued and intensified during the course of the past year. Average corporate tax rates among the 106 countries surveyed this year have fallen again, from 26.8 percent in 2007 to 25.9 percent in 2008, while average indirect tax rates have remained steady at 15.7 percent. This in itself shows that revenues from indirect taxes are becoming more and more important to governments around the world, as direct corporate taxes fall while indirect taxes stay broadly the same. But maintaining the level of indirect tax rates is only the first of three key trends which point to a global shift towards indirect taxes.
The second trend is the steady expansion in the number of governments which have adopted or are planning to adopt a Value-Added Tax (VAT) or Goods and Services Tax (GST). Today, there are 135 jurisdictions in the world with taxes of this kind, and the countries either considering them, or with firm plans to introduce them include India (see below), and the UAE. Most interestingly, the debate on whether to introduce a federal VAT system has also begun in the U.S., the only OECD economy not to have one.
The third trend is the steady expansion of the indirect tax base, a process already familiar to businesses operating in the European Union and now, more than ever before, a significant part of the tax challenge facing businesses in other parts of the world. This is partly because governments may want to make use of the flexibility and stability that indirect taxation offers in order to protect their revenues. It is also necessary to keep the tax system up to date as new products, services, and methods of doing business are constantly being developed, often aided by new technology. An effective indirect tax system needs to evolve constantly if it is to keep up with the pace of commercial and technological change. KPMG's Corporate and Indirect Tax Rate Survey 2008 3
To try to put these trends into an historic context, for this year's survey we havecollected indirect tax rate information going back five years, to see how theserates have moved over time.
At first glance, it appears that there has been very little movement. The 87countries reporting indirect rates for 2004 had an average rate of 15.6 percent,the 88 countries reporting for 2005 also averaged 15.6 percent, whilst the 89countries reporting for 2006 saw a small drop in their average to 15.4 percentand the 90 countries reporting for 2007 and 2008 averaged 15.7 percent forboth years.
But looking more closely, at the country level there are movements both upand down. Some of these reflect the global trends identified above whilstothers have been driven by local social, political and economic factors.
Canada, for example, has seen a two point cut in its Goods and Services Tax(GST) from seven percent in 2004-2006 to six percent in 2007 and five percentin 2008. The reasons for this are largely down to Canadian politics; the GST iswidely disliked in Canada and having enjoyed a budget surplus for some yearsthe government has reduced this tax along with others. Its direct corporate taxrate has come down from 36.1 percent in 2007 to 33.5 percent in 2008.
There have also been reductions in India, which took the opportunity in 2005,with the introduction of a state-level VAT system, to cut its main indirect tax ratefrom 16 percent to 12.5 percent. (The figure of 16 percent is an average of thesales taxes imposed by Indian states at the time).
This is essentially a local realignment of existing indirect tax systems with twoaims. The first is to improve international trade and encourage the import oftechnology into India, by bringing Indian taxation into line with the generallylower taxes found in the Association of Southeast Asian Nations (ASEAN).The second is to prepare the ground for a move to a national GST by 2010.
If Canada and India are being driven by local considerations, Germany andSingapore show global trends in action. We previewed Singapore's increasefrom five percent to seven percent in our 2007 report, and that budget measure,plus the reduction in corporate tax rate from 20 percent to 18 percent, has nowcome into force.
Germany raised its VAT rate from 16 percent to 19 percent in 2007, in a responseto long-standing budget deficits on one hand and the need to reduce itscorporate tax rate to remain internationally competitive on the other. Germany'scorporate tax rate fell from 38.4 percent in 2007 to 29.5 percent in 2008.4 KPMG's Corporate and Indirect Tax Rate Survey 2007
But it is not just in rate changes that government tax policies are revealed. In a move that is being replicated elsewhere in the world, both Singapore and Germany have introduced specialized groups within their tax authorities, focused on helping businesses to improve their handling of VAT/GST. This may reflect another growing trend, seen in Europe in particular, towards greater co-operation and transparency between tax authorities, businesses and their advisors. While this process may result in improvements and simplifications, the ultimate objective is clearly to ensure protection of the indirect tax base.
The German equivalent is a pilot scheme, currently running in one federal state, where a specialist tax office has been created dealing solely with VAT issues. All other tax offices in the state are obliged to report significant VAT cases to this central group, to help develop a highly experienced, centralized VAT regulatory system. Again, this is very likely to be rolled out to other states.
Among respondents in the Asia Pacific countries this rose to 88 percent, andlooking at the average indirect tax rates in countries in this part of the worldwe can see why.
Average Asia Pacific indirect rates have risen by half a percentage point since2006, the largest regional rate of increase we have recorded. But even so, at anaverage of 11.1 percent, indirect taxes in the Asia Pacific region are the lowest inthe world. They are nearly five points below the global average of 15.7 percent,and 8.4 points below the EU average of 19.5 percent. Meanwhile, Asia Pacificaverage corporate tax rates, at 28.4 percent, are the highest in the world eventhough they have been falling steadily, year on year.
In a world where companies and their profits are increasingly mobile, taxes onconsumption present a source of revenue that few can avoid. They draw on thewhole economy, rather than on corporate profits, offer a steady stream of incomerather than large sums at widely spaced intervals, and are collected much morerapidly after the event than corporate taxes. Despite the political problems whichintroducing these taxes inevitably present, this is a combination that fewgovernments will be able to resist.6 KPMG's Corporate and Indirect Tax Rate Survey 2008
Turning to corporate tax rates, the most remarkable result of our 2008 survey is that we have found no country anywhere that has raised its rate since last year. The global average is, once again, down nearly a full point to 25.9 percent with the EU average down to 23.2 percent, the Latin American rate down half a point to 26.6 percent, and the Asia Pacific rate down 0.8 percent to 28.4 percent.
Here, again, we are seeing a steady strengthening of efforts to widen the tax base and improve enforcement. This is especially so in the area of transfer pricing, where a rapidly increasing number of countries is introducing rules to regulate the prices at which companies in the same group buy and sell from each other across borders.
Indeed, with the implementation of legislation like the U.S.'s FIN 48, tax directorsmay have to predict for official purposes the real time tax obligations of theircompanies for some time into the future. The penalties for getting this wrongare no less severe than for errors in retrospective tax calculations. No wonderthat this presents quite a challenge for even the best run tax department.
Niall CampbellGlobal Head of Indirect Tax Services
Wilbert KannekensGlobal Head of International Corporate Tax8 KPMG's Corporate and Indirect Tax Rate Survey 2008Corporate Tax Rates1999 - 200810 KPMG's Corporate and Indirect Tax Rate Survey 2008
European Asia - Latin 1 Jan 1999 1 Jan 2000 1 Jan 2001 1 Jan 2002 OECD Country (%) (%) (%) (%) Union Pacific America
Afghanistan Albania Angola I Argentina 35 35 35 35 I Aruba I I Australia 36 36 34 30 I I Austria 34 34 34 34 Bahrain I Bangladesh 35 35 35 35 I Barbados 40 40 40 37.5 Belarus I I Belgium 40.17 40.17 40.17 40.17 I Bolivia 25 25 25 25 Bosnia and Herzegovina Botswana 25 25 25 25 I Brazil 33 37 34 34 I Bulgaria I Canada 44.6 44.6 42.1 38.6 I Cayman Islands 0 0 0 0 I Chile 15 15 15 16 I China 33 33 33 33 I Colombia 35 35 35 35 I Costa Rica 30 30 30 30 Croatia 25 25 20 20 I Cyprus 28 28 I I Czech Republic 35 31 31 31 I I Denmark 32 32 30 30 I Dominican Republic 25 25 25 25 I Ecuador 15 25 25 25 Egypt I Estonia I Fiji 35 35 34 32 I I Finland 28 29 29 29 I I France 40 36.66 35.33 34.33 I I Germany 52.3 51.6 38.36 38.36 I I Greece 40 40 37.5 35 Guatemala 27.5 25 31 31 I Honduras 25 25 25 25 I Hong Kong 16 16 16 16 I I Hungary 18 18 18 18 I Iceland 30 30 30 18 I India 35 38.5 39.55 35.7 I Indonesia 30 30 30 39 Iran I I Ireland 28 24 20 16 Israel 36 36 36 36 I I Italy 41.25 41.25 40.25 40.25 I Jamaica I I Japan 48 42 42 42 Jordan Kazakhstan I I Korea, Republic of 30.8 30.8 30.8 29.7 Kuwait KPMG's Corporate and Indirect Tax Rate Survey 2008 11
1 Jan 2003 1 Jan 2004 1 Jan 2005 1 Jan 2006 1 Jan 2007 1 Jan 2008 Footnote Country (%) (%) (%) (%) (%) (%)
Afghanistan 20 20 1Albania 23 20 20 10 2Angola 35 35 3Argentina 35 35 35 35 35 35 4Aruba 35 35 28 28 5Australia 30 30 30 30 30 30 6Austria 34 34 25 25 25 25 7Bahrain 0 0 0 8Bangladesh 30 30* 30 30 30 30 9Barbados 36 33 30 25 25 25 10Belarus 24 24 11Belgium 33.99 33.99 33.99 33.99 33.99 33.99 12Bolivia 25 25 25 25 25 25 13Bosnia and Herzegovina 30 10 14Botswana 25 25 25 25 25 25 15Brazil 34 34 34 34 34 34 16Bulgaria 15 15 10 10 17Canada 36.6 36.1 36.1 36.1 36.1 33.5 18Cayman Islands 0 0 0 0 0 0 19Chile 16.5 17 17 17 17 17 20China 33 33 33 33 33 25 21Colombia 35 35 35 35 34 33 22Costa Rica 36 30 30 30 30 30 23Croatia 20 20 20 20 20 20 24Cyprus 15.00 15.00 10 10 10 10 25Czech Republic 31 28 26 24 24 21 26Denmark 30 30 28 28 28 25 27Dominican Republic 25 25 25 30 29 25 28Ecuador 25 25 25 25 25 25 29Egypt 20 20 20 30Estonia 24 23 22 21 31Fiji 32 31 31 31 31 31 32Finland 29 29 26 26 26 26 33France 34.33 34.33 33.83 33.33 33.33 33.33 34Germany 39.58 38.29 38.31 38.34 38.36 29.51 35Greece 35 35 32 29 25 25 36Guatemala 31 31 31 31 37Honduras 25 25 30 30 30 30 38Hong Kong 16 17.5 17.5 17.5 17.5 16.5 39Hungary 18 16 16 16 16 16 40Iceland 18 18 18 18 18 15 41India 36.75 35.875 36.5925 33.66 33.99 33.99 42Indonesia 30 30 30 30 30 30 43Iran 25 25 44Ireland 12.5 12.5 12.5 12.5 12.5 12.5 45Israel 36 36 34 31 29 27 46Italy 38.25 37.25 37.25 37.25 37.25 31.4 47Jamaica 33.33 33.33 33.33 33.33 48Japan 42 42 40.69 40.69 40.69 40.69 49Jordan 35 35 50Kazakhstan 30 30 30 30 51Korea, Republic of 29.7 29.7 27.5 27.5 27.5 27.5 52Kuwait 55 55 5312 KPMG's Corporate and Indirect Tax Rate Survey 2008
European Asia - Latin 1 Jan 1999 1 Jan 2000 1 Jan 2001 1 Jan 2002 OECD Country (%) (%) (%) (%) Union Pacific America
I Latvia Libya I Lithuania I I Luxembourg 37.45 37.45 37.45 30.38 I Macau I Malaysia 28 28 28 28 I Malta Mauritius 35 35 35 25 I I Mexico 35 35 35 35 Montenegro Mozambique I I Netherlands 35 35 35 34.5 I Netherlands Antilles I I New Zealand 33 33 33 33 I Norway 28 28 28 28 Oman 12 12 12 12 I Pakistan 35 43 34.65 35 Palestine I Panama 37 37 37 37 I Papua New Guinea 25 25 25 25 I Paraguay 30 30 30 30 I Peru 30 30 30 30 I Philippines 33 32 32 32 I I Poland 34 30 28 28 I I Portugal 37.4 37.4 35.2 33 Qatar I Romania 25 25 Russia 43 24 Saudi Arabia 45 30 30 30 Serbia I Singapore 26 26 25.5 24.5 I I Slovak Republic 29 25 I Slovenia 25 25 25 25 South Africa 37.8 37.8 I I Spain 35 35 35 35 I Sri Lanka 35 35 35 42 Sudan I I Sweden 28 28 28 28 I Switzerland 25.1 25.1 24.7 24.5 Syria I Taiwan 25 25 25 25 I Thailand 30 30 30 30 Tunisia I Turkey 33 33 33 33 Ukraine 30 30 United Arab Emirates I I United Kingdom 31 30 30 30 I United States 40 40 40 40 I Uruguay 30 30 30 30 I Venezuela 34 34 34 34 I Vietnam 35 32.5 32 32 Yemen Zambia
1 Jan 2003 1 Jan 2004 1 Jan 2005 1 Jan 2006 1 Jan 2007 1 April 2008 Footnote Country (%) (%) (%) (%) (%) (%)
Latvia 15 15 15 15 54Libya 40 40 55Lithuania 15 15 15 15 56Luxembourg 30.38 30.38 30.38 29.63 29.63 29.63 57Macau 12 12 12 12 58Malaysia 28 28 28 28 27 26 59Malta 35 35 35 35 60Mauritius 25 25 25 25 22.5 15 61Mexico 34 33 30 29 28 28 62Montenegro 20 20 9 9 9 9 63Mozambique 32 32 32 32 64Netherlands 34.5 34.5 31.5 29.6 25.5 25.5 65Netherlands Antilles 34.5 34.5 34.5 34.5 66New Zealand 33 33 33 33 33 30 67Norway 28 28 28 28 28 28 68Oman* 12 12 12 12 12 12 69Pakistan 35 35 35 35 35 35 70Palestine 16 16 71Panama 30 30 30 30 30 30 72Papua New Guinea 30 30 30 30 30 30 73Paraguay 30 30 20 10 10 10 74Peru 27 30 30 30 30 30 75Philippines 32 32 32 35 35 35 76Poland 27 19 19 19 19 19 77Portugal 33 27.5 27.5 27.5 25 25 78Qatar 35 35 79Romania 25 25 16 16 16 16 80Russia 24 24 24 24 24 24 81
Source for all rates, KPMG member firms. Rates as at 1 January each year except 2008, where rates are as at 1 April.Saudi Arabia 30 30 30 20 20 20 82Serbia 14 12.33 10 10 10 10 83Singapore 22 22 20 20 20 18 84Slovak Republic 25 19 19 19 19 19 85Slovenia 25 25 25 25 23 22 86South Africa 37.8 37.8 37.8 36.9 36.9 34.55 87Spain 35 35 35 35 32.5 30 88Sri Lanka 35 35 32.5 32.5 35 35 89Sudan 35 35 90Sweden 28 28 28 28 28 28 91Switzerland 24.1 24.1 21.3 21.3 21.32 21.17 92Syria 28 28 93Taiwan 25 25 25 25 25 25 94Thailand 30 30 30 30 30 30 95Tunisia 33 33 35 35 30 30 96Turkey 30 33 30 20 20 20 97Ukraine 30 30 25 25 25 25 98United Arab Emirates 40 40 55 55 55 55 99United Kingdom 30 30 30 30 30 28 100United States 34 34 40 40 40 40 101Uruguay 35 30 30 30 30 25 102Venezuela 34 34 34 34 34 34 103Vietnam 32 28 28 28 28 28 104Yemen 35 35 105Zambia 35 35 35 35 106
Average corporate tax rate 28.9 28.0 27.4 26.5 26.8 25.914 KPMG's Corporate and Indirect Tax Rate Survey 2008
31.4 31.1
Percentage 30.6 29.8 30 28.9 28.0 27.4 26.8 26.5 25.9
25 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
29.2 29 28.4 28
34.8 35 34.1
33 32.8 Percentage
31.4 31 30.6 29.8 29 28.8 28.2 27.7 27 26.7
25 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 KPMG's Corporate and Indirect Tax Rate Survey 2008 15
Percentage 28.3 28 26.1 25.8 26 24.2 24 23.2
20 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
29 28.7 28.5 28.4 28.2 28.1 28.1Percentage
27.9 28.0 28 27.1 27 26.1 25.8 26.6
26 24.2 23.2 25
24 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
28.4 27.9 28 26.6 26.7 26 25.9
24 23.2 22
20 All ASPAC EU LAT OECD
1 Afghanistan (2008 rate = 20%) contributions. Setting up of reserves minimum income tax. Minimum incomeGenerally, two types of taxes are payable do not lead to tax deductible expenses, tax only applies to the extent it exceedsby the corporations. The corporate except for banks and insurance the (regular) income tax calculated as aincome tax rate is 20 percent. It is companies. Dividends by an Albanian percentage of the taxable income.applied to the taxable income. Whereas resident entity which is subject to Minimum income tax paid in any giventhe business receipt tax (ranging from corporate income tax to Albanian year reduces the (regular) income tax2 percent to 10 percent) is applied to the resident taxpayers who own more of subsequent years (maximumgross revenue. Qualifying extractive than 25 percent of the capital of such carryforward of 10 years).industries (mines and hydrocarbons) entity are tax exempt.are exempt from the business receipt 5 Aruba (2008 rate = 28%)tax. Taxable income is determined by 3 Angola (2008 rate = 35%) The corporate income tax rate isdeducting all business-related tax Corporate taxpayers may fall under 28 percent. Companies operating in thedeductible expenses from gross Group A, Group B, or Group C. so-called Free Zone are taxed at arevenue. The tax deductible expenses Group A generally includes state rate of 2 percent. A so-calledalso include dividends paid by the companies, financial and credit imputation payment company (IPC) iscorporation and business receipt institutions, insurance companies, subject to an effective corporate taxtax. Expenses which are subject to foreign exchange houses, and all the rate of 2 percent; an IPC pays 28withholding tax are not tax deductible properly registered companies and percent corporate income tax while theif the taxpayer fails to withhold permanent establishments. Group B shareholder is entitled to an imputationwithholding tax and to pay it to the comprises of taxpayers that do not fall payment of 26 percent from the Arubantax authorities. Under a tax incentive under Groups A or C, as well as those government upon distribution of ascheme, so-called approved enterprises who carry out a one-off activity of a dividend by the IPC.(that is, enterprises registered with the commercial or industrial nature.Afghanistan Investment Support Agency Group C comprises any individual 6 Australia (2008 rate = 30%)according to the Investment Law) are that cumulatively fulfils the following The corporate income tax rate is 30eligible for accelerated depreciation conditions: works for himself/herself percent, and applies to both resident(four years for buildings and two years and does not have more than three and non-resident companies. A residentfor other assets). employees; does not keep a set of company is liable to corporate income accounts; does not make use of more tax on its worldwide income and capital2 Albania (2008 rate = 10%) than two vehicles; and whose annual gains. A non-resident company is liableThe corporate income tax rate is applied gross turnover is below 13 UCFs. to corporate income tax on itsto the taxable profit of the fiscal year Australian-source income only, and on(1 January to 31 December). Taxable 4 Argentina (2008 rate = 35%) capital gains from the disposal of anprofit is defined as gross income A minimum income tax at a rate of asset that is taxable Australian realgenerated minus related tax deductible 1 percent applied to the tax value of property (TARP). Broadly, TARP willexpenses. There are certain non-tax the company's assets (liabilities cannot include Australian real property and andeductible expenses, for instance, be deducted). Some assets, such as indirect interest in Australian realbusiness expenses unsupported by a stocks, shares in other entities subject property. The Australian tax systemregular invoice, interest accrued up to to taxation, and assets of mining provides taxation relief againsta certain limit, interest paid on loans companies, are exempt from minimum international double taxation byand pre-payments which exceed four income tax. The acquisition of new granting foreign tax credits in sometimes the amount of owned equity goods, except for automobiles, as well circumstances and in others, byduring the period, representation as the investment in newly constructed exempting the foreign income fromexpenses over a certain limit, cost of or refurbished buildings (for the first Australian tax.The corporate income taxfringe benefits, voluntary pension two years) are also excluded from rate applies to income earned during KPMG's Corporate and Indirect Tax Rate Survey 2008 17
the period from 1 July to 30 June of rebate on the tax payable. In case the for exemption for certain insurancethe following year. If a company has dividend is lower than 10 percent of the companies, a 1.75 percent rate forapproval to use a different year-end paid-up capital, the corporate income qualifying insurance companies and afor tax purposes, the approved period tax rate is increased to 40 percent. variable rate of 1 percent to 2.5 percentmust still relate to a 30 June year-end Should the dividend amount be less than for other qualifying international(that is, year ended 31 December 2006 15 percent in spite of having sufficient business activities. Recent changesin lieu of 30 June 2007). For the year distributable profits, the company is to note in domestic legislation include1 July 2001 to 30 June 2002 and later subject to an additional 5 percent tax an exemption from tax in Barbadostaxable years, the corporate income on the undistributed profits. Banks, for certain dividends received bytax rate has been 30 percent. insurance companies, leasing companies, companies resident in Barbados from and other financial institutions, and non-resident companies, as well as an7 Austria (2008 rate = 25%) mobile phone operators are taxed at exemption from withholding tax inThe corporate income tax rate is 25 45 percent. All other companies including Barbados on certain dividends paidpercent. There are no trade income or branches of foreign companies are taxed by companies resident in Barbadosnet worth taxes. Austrian corporations at 40 percent. A rebate in the amount of out of foreign-source income to non-may benefit from the liberal 50 percent of the income derived from resident shareholders. These changesinternational participation exemption export business will be granted to are applicable from the taxable yearand the group taxation (including companies registered in Bangladesh. 2007 onwards.cross-border loss utilization and good- Textile/jute industries are subject towill depreciation for the acquisition of 15 percent but these industries will not 11 Belarus (2008 rate = 24%)qualifying Austrian subsidiaries). qualify for an export rebate. Tax at The corporate income tax rate is 0.25 percent deducted by the bank 24 percent. For special zones the8 Bahrain (2008 rate = 0%) from export proceeds received by corporate income tax rate may beBahrain is an income tax-free country. export-oriented knitwear and woven reduced to approximately 10 percent.There is no corporate or personal garment industries is treated as final There are various requirements andincome tax in Bahrain. Accordingly, tax. If the profit earned by a bank every case should be analyzed closely.all profits, dividends, or any other exceeds 50 percent of its capital andincome is tax-free. Bahrain only taxes reserves, the bank is subject to a 12 Belgium (2008 rate = 33.99%)oil and gas companies in the drilling 15 percent excess profits tax on the A lower tax rate applies to companiesand exploration sector at a rate of additional profit. The aforesaid rates will that are more than 50 percent owned46 percent. There are no exchange remain valid for companies whose by individuals. All companies subject tocontrol regulations and accordingly accounting year ends on any dates resident or non-resident corporate taxthere is no restriction on repatriation within 30 June 2007. benefit from the risk capital or notionalof capital, profits, royalties, or wages, interest deduction that is computedand free movement if foreign 10 Barbados (2008 rate = 25%) on the companies' adjusted equityexchange is permitted. The corporate income tax rate is 25 capital (including retained earnings). percent. The corporate income tax The deduction equals 4.307 percent9 Bangladesh (2008 rate = 30%) rate may be reduced, on a sliding scale, (4.807 percent for small companies)The corporate income tax rate is to 1.75 percent, by a foreign currency for fiscal year 2009 (taxable years30 percent for corporations (except tax credit granted for qualifying foreign starting 1 January 2008 or later). Thebanks and other financial institutions) currency generating activities. For notional interest deduction reduces thelisted at a stock exchange. If such listed small business, manufacturing, or effective tax rate to an average rangecorporation pays a dividend that exceeds certain insurance concessions special from 25 percent to 27 percent (or20 percent of the paid-up capital for a rates apply. An international financial lower depending on the equity capital).taxable year, it receives a 10 percent service center tax regime provides18 KPMG's Corporate and Indirect Tax Rate Survey 2008
13 Bolivia (2008 rate = 25%) period of five years will be lost. 17 Bulgaria (2008 rate = 10%)The corporate income tax rate is This arrangement can limit the overall The corporate income tax rate is 1025 percent (annual profit tax IUE). corporate income tax levied on both percent of the taxable profit. ThePayments of this tax are considered the company and the shareholder to taxable profit is determined byan on-account payment for any 25 percent. Lower company tax rates adjusting the financial result (undersubsequent year's 3 percent are available for manufacturing entities IFRS or Bulgarian National Accountingtransactions tax. Certain foreign (5 percent). An approved International Standards) due to certain tax non-companies` activities performed in Financial Service Center entity is only deductible and/or non-taxable items.Bolivia through branches or agencies liable for company tax and not for Corporate income tax returns shouldare subject to different tax rules. ACT. Mining entities (with the exception be filed and the reported in it liabilitiesSuch activities include transportation, of diamond mining) are settled by 31 March of the followinginternational news agencies, foreign taxed at a rate between 15 percent year. Tax of 10 percent is levied oninsurance companies, and distribution and 45 percent (excluding ACT). certain types of expenses.of movies and videotapes. An effective Diamond mining taxation is negotiatedrate of 5.5 percent is applied to gross with the government. 18 Canada (2008 rate = 33.5%)income arising from these activities. Up Includes federal tax of 19.5 percent forto 4 percent of this tax is considered an 16 Brazil (2008 rate = 34%) 2008 plus provincial tax. Depending onon-account payment for any The corporate income tax rate is 25 the province, the total effective generalsubsequent year's 3 percent percent. In addition social contribution corporate income tax rate for 2008transactions tax. on net profits at a rate of 9 percent are ranges from 29.5 percent to 35.5 levied, leading to a overall rate of 34 percent (24.5 percent to 35.5 percent14 Bosnia and Herzegovina percent. Please note that the social for manufacturers). Lower rates are(2008 rate = FBiH and RS: 10%) contribution on net profits tax rate has available to Canadian-controlled privatePlease note that Bosnia and Herzegovina been increased from the current 9 corporations (CCPC) on their first CADconsists of two separately administered percent to 15 percent to financial 400,000 to CAD 500,000 of taxableterritorial entities: Federation of Bosnia institutions, private insurance, and active business income. Aand Herzegovina (FBiH) and Republic capitalization companies starting 1 May representative tax rate for 2008 for aof Srpska (RS). The Corporate Profit 2008.The 25 percent corporate income CCPC on its first CAD 400,000 ofTax Law (CPT Law) is subject to the tax rate comprises of a 15 percent eligible taxable income is approximatelyrespective entity's legislation. In FBiH, basic rate and 10 percent surtax on 16.5 percent (11 percent federal taxthe new CPT Law has been recently income over BRL 240,000 per year. plus 5.5 percent provincial tax).adopted and it became applicable as The tax base for the corporate income Depending on the province, the totalof 1 January 2008. The corporate tax are the adjusted net profits. effective tax rate for a CCPC on itsincome tax rate (CPT) is 10 percent ´ Depending on the type of income and eligible income ranges from 13 percentin both entities. Tax incentives are further conditions a social contribution to 19 percent.envisaged in both entities; in FBiH a on net profits tax credit (bônus detax holiday is allowed for the year in adimplência fiscal) may be granted to 19 Cayman Islands (2008 rate = 0%)which over 30 percent of total certain corporate income tax payers. There are no notes for 2008.taxpayer's incomes is realized through A tax deferral of four years of socialexport as well as tax incentives in both contribution on net profits tax may be 20 Chile (2008 rate = 17%)entities related to investment as per available for companies that purchase Chilean corporate tax (named firstthe FBiH CPT Law and the RS CPT certain industrial assets between 1 category tax) applies to all types ofLaw. Further in FBiH, tax losses can October 2004 and 31 December 2010 taxable income realized by a taxpayer,be carried forward for five years, the (MP 428/08). Deferral is equivalent to individual or legal entity, regardless ofsame rule applies in RS. 25 percent of the depreciation of its nationality, residence or domicile, these assets. Reduced effective with the exception of income from15 Botswana (2008 rate = 25%) corporate tax rates may be applicable dependent employee's and independentThe corporate income tax rate is for companies qualifying for the personal services. Tax base is the25 percent. It is split into a 15 percent election of the presumed profit system accrued net taxable income aftercompany tax and a 10 percent (such as those with gross revenues allowable deductions and expenses.additional company tax (ACT). The lower than BRL 48 million on the year First category tax paid can be creditedACT can be used to offset any preceding the election). against final taxes, which are globalwithholding tax payable on dividend complementary tax in case of Chileandistributions. ACT unused after a resident individuals and withholding tax in case of non-residents. KPMG's Corporate and Indirect Tax Rate Survey 2008 19
21 China (2008 rate = 25%/20%/15%) exceeding CRC 67.791 million are for up to five years is available underAs of 1 January 2008, a new corporate subject to the ordinary 30 percent rate. special investment incentive schemes.income tax applies to residententerprises and non-resident enterprises 24 Croatia (2008 rate = 20%) 27 Denmark (2008 rate = 25%)with establishments in China or without The corporate income tax rate is 20 Two prepayments of corporate incomeestablishments in China but having percent. The taxable income is tax during the taxable year are mandatory.China-sourced income. The corporate determined by adjusting the accounting If the final tax liability exceeds theincome tax rate is 25 percent. The profit in accordance with the provisions prepayments a surcharge of 6.3reduced rate applicable to small-scale of the Corporate Profit Tax Law. percent (2008) of the outstanding taxenterprises with low profitability is 20 Dividends received are not subject to liability is payable. There are no localpercent and to hi-tech enterprises corporate income tax. A company can taxes on corporate income.eligible for key support from the state is reduce its tax base if it qualifies under15 percent. the Investment Promotion Law, 28 Dominican Republic Special State Care Areas Law, Hill (2008 rate = 25%)22 Colombia (2008 rate = 33%) and Mountain Areas Law, Free Trade In July 2007, the tax rate reductionThe corporate income tax rate is 33 Zones Law, and Law on Renewal and (Law 172-07) entered into force whichpercent from 2008 onwards (it was Development of the City of Vukovar. reduces the corporate tax rate toalready reduced for 2007 from 35 Tourist tax, forestry tax, and 25 percent from 2007 onwards.percent to 34 percent). The surcharge of monumental protection fee are taxesthe 10 percent which previously applied based on turnover. 29 Ecuador (2008 rate = 25%)was abolished. Colombian companies A corporate income tax rate ofand foreign branches qualifying as 25 Cyprus (2008 rate = 10%/25%) 15 percent applies when the taxpayerindustrial users established in Colombian The corporate income tax is 10 percent decides to reinvest its profits. ThisDuty Free Zones are subject to a applicable on active income whereas reinvestment shall be intended toreduced corporate income tax rate of 15 dividend received are tax exempt. the acquisition of new machinerypercent from 2007 onwards. The 7 Income deriving from the sale of or equipment and the company'spercent income tax rate that applied to securities is also tax exempt. capital must be increased by thedividends and participations transferred In ascertaining a company's taxable reinvested amount.abroad was reduced to 0 percent. In income all outgoings and expensesaddition, there is a regional tax called the wholly and exclusively incurred by such 30 Egypt (2008 rate = 20%)industry and commerce tax levied on person in the production of the income The corporate income tax rate isindustrial, commercial, and service are deducted. The corporate income tax 20 percent applicable for activeactivities carried out within a for public corporate bodies (meaning income whereas dividend received aremunicipality. The rate depends on the legal persons of public law tax exempt. Income deriving from themunicipality and ranges between 4.14 or any other public corporate body sale of securities registered in theand 13.8 per thousand. For corporate established by law for the public Egyptian stock market is also taxincome tax purposes, 100 percent of the interest) is at 25 percent plus 3 exempt. In ascertaining a company'sindustry and commerce tax and of the percent special contribution for the taxable income all outgoings andproperty tax is deductible. Also, 25 defense of the republic. expenses wholly and exclusivelypercent of the financial transactions tax incurred by such person in theeffectively paid is deductible for 26 Czech Republic (2008 rate = 21%) production of the income arecorporate income tax purposes. A special rate of 5 percent applies to deducted so long as they are profits of investment, mutual, and supported by external documents23 Costa Rica (2008 rate = 30%) pension funds. Dividend income is and related to business.The corporate income tax rate is 30 taxed at 15 percent or, if received by apercent. Reduced rates are available parent company from a subsidiary 31 Estonia (2008 rate = 21%)for smaller companies. Corporate (currently defined as a company in Only profit distributions are subject toentities with a gross income under CRC which the parent has held at least 10 taxation. Profits that are not distributed33.701 million are subject to a 10 percent for at least 12 months and but retained in the company and/orpercent corporate income tax rate; which is resident in the Czech Republic, reinvested are not subject to taxation;corporate entities with gross income of EU, Switzerland, or a country with a 21 percent tax applies to profitmore than CRC 33.701 million but less which the Czech Republic has signed a distributions including dividend paymentsthan CRC 67.791 million are subject to a double-tax treaty, as long as the and other forms of profit transfers20 percent corporate income tax rate. corporate tax rate is at least 12 (transfer pricing items, non-businessCorporate entities with gross income percent), 0 percent. Income tax relief costs, payments to low-tax territories).20 KPMG's Corporate and Indirect Tax Rate Survey 2008
32 Fiji (2008 rate = 31%) The minimum trade tax multiplier is administrative region of the People'sThe corporate income tax rate is 31 200 percent). The local trade tax is not Republic of China. The 16.5 percentpercent (reduced in 2004 from 32 deductible as a business expense from rate (with effect from the yearpercent to 31 percent). It applies to 2008 onwards. assessment) applies to Hong Kongcompanies incorporated in Fiji and sourced profits that are derived frombranches of non-resident companies. 36 Greece (2008 rate = 20%/25%) a business carried on in Hong Kong.Dividend distribution out of full The 25 percent rate applies to listed Offshore profits, capital gains,corporate tax paid retained earnings AE companies (corporations) and to dividends, and most bank depositare not subject to any further income EPE entities (limited liability interest income are exempt fromtax. With effect from 1 January 2008, companies).The same rate applies to tax. Profits derived from certainan additional 15 percent normal tax will domestic unlisted AE companies, securities or types of businessbe charged on remittance of branch banks, and credit institutions operating (such as qualifying debt instrumentsprofits on which full corporate income as co-operatives and branches of or profits derived from the businesstax has not been paid. foreign entities. General partnerships of reinsurance of offshore risks by a (OE) and limited partnerships (EE) are professional re-insurer) are either33 Finland (2008 rate = 26%) considered legal entities in Greece and exempt from tax or subject to aThe corporate income tax rate is are subject to the corporate tax rate of concessional rate of 8.25 percent (half26 percent (effective as of 1 20 percent for fiscal year 2007. A 3 of the 16.5 percent standard rate).January 2005). percent surcharge applies to gross rental income, but the surcharge may 40 Hungary (2008 rate = 16% plus 4%)34 France (2008 rate = 33 1/3%) not exceed the primary corporate tax. The corporate income tax rate isplus additional contribution if applicable) 16 percent, which can be reduced to 10For fiscal years ending after 1 January 37 Guatemala (2008 rate = 31% or 5%) percent on the first HUF 50 million2007, the corporate tax rate is The system operates based on the (approximately, HUF 200,000) positive33.33 percent. A 3.3 percent social territoriality principle; that is, all tax base if the company meets certaincontribution of the corporate income Guatemalan-source income is taxed. requirements, (the excess is subject totax is applicable to the portion of Beginning 1 July 2004 two systems 16 percent). Effective from Septembercorporate income tax exceeding for payment of ISR exist; one calls 1, 2006, a so-called solidarity tax ofEUR 763,000 resulting in an overall for payment of 5 percent on gross 4 percent was introduced for alltax rate of 34.43 percent (for this income and the other for payment companies which is based on pretaxportion). Companies which have a of 31 percent on taxable income; profit modified by certain items. Anturnover of up to EUR 7.63 million and taxpayer's choice. Under the 31 percent additional local business tax of up toof which individuals hold at least 75 on taxable income system, 2 percent is applicable based on thepercent of the share capital (or which tax is paid annually but advanced total trading turnover (two times theare owned by companies meeting the quarterly. Under the 5 percent local business tax is deductible forsame conditions) are subject to a on gross income system, tax is CIT purposes). In addition, effective fromcorporate income tax rate of 15 paid monthly. 1 July 2007, a minimum tax was alsopercent. This applies to the part of introduced. The AMT base is calculatedthe taxable profit up to EUR 38,120. 38 Honduras (2008 rate = 30%) by 2 percent of total incomes lessThese companies are exempted The overall income tax rate for COGS and value of mediated services;from the 3.3 percent contribution. corporations comprises of a there are some other adjustments as 25 percent corporate income tax rate well. If it exceeds the greater of profit35 Germany (2008 rate = 29.51%) and a temporary 5 percent solidarity before tax or the normal corporateThe overall income tax rate for surcharge that applies if the taxable income tax base then either acorporations includes corporate income exceeds HNL 1 million. In declaration needs to be attached to theincome tax at a rate of 15 percent, addition, there is a net assets tax of tax return or tax needs to be paid onsolidarity surcharge at a rate of 0.825 1 percent of the value of the assets of the minimum tax base.percent (5.5 percent of the corporate the company less allowances forincome tax) and local trade tax. The certain accounts and accumulated tax 41 Iceland (2008 rate = 15%)local trade tax generally is in a range depreciation. Net assets tax is payable The corporate income tax rate forbetween 7 percent and 17.15 percent, only to the extent it exceeds the resident limited liability companies isassuming a municipality multiplier corporate income tax. 15 percent. The income tax rate for(Hebesatz) ranging normally from 200 other resident legal entities, such aspercent to 490 percent. (The average 39 Hong Kong (2008 rate = 16.5%) limited partnerships, associations,multiplier for 2006 was 391 percent. Hong Kong SAR is a special private nonprofit institutions, trusts KPMG's Corporate and Indirect Tax Rate Survey 2008 21
funds, estates of deceased persons, Dividend distribution tax (DDT) is levied stocks/shares in corporate entitiesand bankrupt estates is 23.5 percent. at 16.995 percent (15 percent, plus which are subject to tax at fixed ratesTax is imposed on their net income, surcharge of 10 percent of the tax, plus on transfer, gains/losses are aggregatedafter allowable deductions. Non- education tax of 3 percent of tax and with other corporate results. Transfer ofresident entity's tax rate and surcharge) on dividends distributed by a freehold property is subject to tax atdeduction depends on the type of domestic company. In case of money a rate of 5 percent of the taxable value.income and the entity's residence. market mutual fund or liquid fund to Transfer of shares and their right in theInterest derived by non-residents from unit holders it is increased to 28.33 listed companies on the Tehran StockIcelandic sources is not subject to percent (25 percent, plus surcharge of Exchange is subject to tax at 0.5corporate income tax in Iceland. 10 percent of the tax, plus education percent of the sales price. Transfer of tax of 3 percent on tax and surcharge). shares in other corporate entities is42 India (2008 rate = 33.99%/30.90%) For non-equity oriented mutual fund taxed at the rate of 4 percent of theFor the fiscal year ending 31 March other than money market mutual fund par value.2008 the basic corporate income tax or liquid fund to individuals or HUF unitrate for domestic companies is 30 holders, the rate is 14.163 percent (12.5 45 Ireland (2008 rate = 12.5%)percent, and the surcharge is 10 percent, plus surcharge of 10 percent The corporate income tax rate ispercent of the corporate income tax if of the tax, plus education tax of 3 12.5 percent for active income ofthe income is in excess of INR 10 percent on tax and surcharge). For non- new operations. A corporate incomemillion. The effective tax rate for equity oriented mutual fund, other than tax rate of 25 percent applies todomestic companies having income money market mutual fund or liquid passive income and income fromless than INR 10 million of income is fund to unit holders other than certain land dealing activities, mining,30.90 percent (30 percent plus individual and HUF, the rate is 22.66 and petroleum activities. A corporateeducation tax of 3 percent on tax); percent (20 percent, plus surcharge of income tax rate of 20 percent appliesotherwise, 33.99 percent (30 percent, 10 percent of the tax, plus education to dealing in undeveloped residentialplus surcharge of 10 percent of the tax, tax of 3 percent on tax and surcharge). land in Ireland. A special corporateplus education tax of 3 percent income tax rate of 10 percent applies toon tax and surcharge). A minimum 43 Indonesia (2008 rate = 30%) active trading income earned by certainalternate tax (MAT) is levied at 10 The corporate income tax rate is 30 existing manufacturing companies. Thispercent of the adjusted profits of percent for resident corporations with special corporate income tax rate willcompanies where the tax payable is income over IDR 100 million. Taxable expire in 2010 and will be replaced byless than 10 percent of their book income between IDR 0 to IDR 50 the standard corporate income tax rateprofits. In the case of companies million is taxed at a rate of 10 percent of 12.5 percent. Capital gains are taxedhaving income of more than INR 10 and income between IDR 50 to IDR at 20 percent with a participationmillion, the effective rate would be 100 million is taxed at a rate of 15 exemption for gains on disposals of11.33 percent/10.558 percent (10 percent. Certain income received by shareholdings of 5 percent or more ofpercent plus a surcharge of 10 percent/ non-residents is taxed at 20 percent. companies resident in EU or income2.5 percent of the tax, plus an An additional 20 percent branch profit tax treaty states.education tax of 3 percent on the tax tax is imposed on the after-tax profitsplus surcharge). The effective tax rate of a permanent establishment (subject 46 Israel (2008 rate = 27%)for foreign companies having income to income tax treaty relief). The corporate income tax rate will beless than INR 10 million is 41.2 percent gradually reduced: 27 percent in 2008,(40 percent plus education tax of 3 44 Iran (2008 rate = 25%) 26 percent in 2009, and 25 percent inpercent on tax); otherwise, 42.23 The corporate income tax is 25 2010. Financial institutions are subjectpercent (40 percent, plus surcharge percent. There are no other direct to a profit tax and a payroll tax at aof 2.5 percent of the tax, plus taxes imposed on the profit or the 15.5 percent rate; both of which areeducation tax of 3 percent on tax and dividend distributions or reserves. All deductible for corporate income taxsurcharge). Income of domestic corporate entities engaged in any kind purposes. The effective tax rate ofshipping companies can be computed of commercial activity in the Free Trade financial institutions is 36.8 percent (forunder the tonnage tax scheme. Non- and Industrial Zones are exempt from the year 2008). Companies withresidents and foreign companies payment of corporate income corporate an approved enterprise are taxed at aengaged in shipping, aviation, oil/gas, tax for 15 years from the date of reduced tax rate that varies dependingand turnkey power projects are taxed commencement of operations in the on the national priority zone in whichon a deemed profit basis of 7.5 percent, zones. There is no legislation regarding the company is located, the type of5 percent, and 10 percent respectively, capital gains or losses. Except for the incentive scheme applied for, and theplus surcharge and education tax. transfer of freehold property and level of foreign ownership in the22 KPMG's Corporate and Indirect Tax Rate Survey 2008
company. Capital gains are subject to companies with paid-in capital of JPY 52 Korea, Repuplic of25 percent tax. Special terms apply to 100 million or less). Local tax rates vary (2008 rate = 27.5%)assets purchased prior to 31 December depending, for instance, on local The corporate income tax rate is 27.52002. Dividends from foreign sources government and the amount of paid-in percent (including resident surtax) ifare subject to a 25 percent tax, with a capital of the company. The tax rate the taxable income exceeds KRW 100.credit for foreign withholding tax, or, shown is the illustrative effective tax For lower taxable income a corporatein certain circumstances, the corporate rate for a company in Tokyo with paid-in income tax rate of 14.3 percentincome tax rate with an underlying capital of more than JPY 100 million (including resident surtax) applies.tax credit for tax paid by the after taking into account a deduction fordistributing company. business tax (business tax itself being 53 Kuwait (2008 rate = 0%/55%) tax deductible). Size-based business tax The corporate income tax rates range47 Italy (2008 rate = 31.4%) is also levied on a company with paid-in from 0 percent to 55 percent. On 26This overall income tax rate for capital of more than JPY 100 million, in December 2007, the Kuwait Nationalcorporations consists of a 27.5 percent addition to the income-based business Assembly approved the passing of acorporate income tax (the so-called tax. So the overall tax rate for such bill which would result in a corporateIRES) and a basic 3.9 percent regional companies can be higher than 40.69 income tax rate of 15 percent for non-tax (the so-called IRAP). The taxable percent. The size-based business tax resident corporations. The bill has yet tobasis differs as certain expenses are rates in Tokyo are 0.504 percent on the become law. This will occur on the billallowed for IRES purposes but not for added-value component tax base (total being signed by the Amir of Kuwait andIRAP, for instance, interest and almost of labor costs, net interest payments, the notification of this being publishedall labor costs. Italian regions have the net rent payments, and income/loss of in the Official Gazette of Kuwait. Theright to vary the basic IRAP rate up to 1 the current year) and 0.21 percent on proposed change in tax rate ispercent. The 2008 Italian Budget Law the capital component tax base (total expected to become effectivereduced the IRES rate from 33 percent paid-in capital and capital surplus). For in the first half of 2008.The existingto 27.5 percent and the IRAP rate small and medium-sized companies Kuwait Income Tax Decree No.3 offrom 4.25 percent to 3.9 percent with paid-in capital of JPY 100 million or 1955 will remain in force until such(with an overall reduction of nominal less, the effective tax rate in Tokyo is time as the new law takes effect.5.85 percent). IRAP rates varied by 42.05 percent with no size-basedregions (in force on 1 January 2008) business tax imposed. 54 Latvia (2008 rate = 15%)must be multiplied by the coefficient The corporate income tax rate is0.9176; such coefficient (equal to the 50 Jordon 15 percent. There are four regions inratio 3.9:4.25) is coherent with the (2008 rate = 15%/25%/35%) Latvia called Special Economic ZonesIRAP rate reduction. The corporate income tax rate of 15 (SEZ). Companies operating in these percent applies in case of mining, zones are subject to a corporate48 Jamaica (2008 rate = 33 1/3%) industry, hotels, hospitals, income tax rate of 25 percent, butCompanies must declare their income transportation, contracting, and other are granted a 80 percent corporateand make prepayments of the corporate sectors approved by the Council of income tax relief.tax in four installments (15 March, Ministers. The corporate income tax15 June, 15 September, and 15 rate of 35 percent applies in case of 55 Libya (2008 rate =December) during the taxable year. If banks, financial and finance companies, 15%/20%/25%/30%/35%/40%)the final tax exceeds the prepayments, exchange companies, and brokerage The annual corporate income taxthe balance is payable by the due date companies. The corporate income tax rates are on slices basis as follows:of filing the income tax return (15 rate of 25 percent applies to all other the first LYD 200,000 at 15 percent;March of the year following the year companies. the following LYD 300,000 at 20of assessment). percent; the following LYD 500,000 at 51 Kazakhstan (2008 rate = 30%) 25 percent; the following LYD 500,00049 Japan (2008 rate = 40.69%) The corporate income tax rate is 30 at 30 percent; the following LYDJapanese corporate income taxes percent. Branches of foreign 500,000 at 35 percent; and over LYDconsist of corporation tax (national tax), companies operating in Kazakhstan are 2 million at 40 percent.business tax (local tax), and prefectural subject to an additional branch profitsand municipal inhabitant taxes (local tax of 15 percent of their after-taxtax). The corporation tax rate is 30 income resulting in an overall tax ratepercent (22 percent on the first JPY 8 of 40.5 percent for branch offices.million for small and medium-sized Income tax treaties may reduce the branch profits tax. KPMG's Corporate and Indirect Tax Rate Survey 2008 23
56 Lithuania (2008 rate = 15%/13%) permanent establishment in Malaysia 61 Mauritius (2008 rate = 15%)The corporate income tax rate is 15 is taxed at 26 percent whereas The corporate income tax rate ispercent. A rate of 13 percent applies a non-resident corporation with no 15 percent.if the average number of employees Malaysian permanent establishmentof an entity does not exceed 10 and the is taxed at 10 percent. A special 5 62 Mexico (2008 rate = 28%)income does not exceed LTL 500,000 percent tax rate applies to corporations The corporate income tax rate is 28(EUR 144,810) (additional conditions which conduct an inward reinsurance percent. In addition, effective 1 Januaryhave to be satisfied). Currently, business or an offshore insurance 2008, a new business flat tax (IETU)corporate income tax relieves are business. Income generated by a life is in force. Such flat tax is paid at theavailable for agricultural companies, fund of an insurance company is taxed rate of 16.5 percent (17 percent in 2009free economic zone companies, at 8 percent. A non-resident corporation and 17.5 percent in 2010) on a cashmanufacturing companies employing with shipping or air transport income is flow basis. It is provided that incomepeople with disabilities, credit unions, taxed at 26 percent either on 5 percent on sale of goods, rendering ofand cooperatives. All relieves are of its gross shipping or air transport independent services and temporaryapplied only if certain conditions are income derived in Malaysia or on that use or enjoyment of goods will besatisfied and their impact on corporate part of the Malaysian gross income considered to determine suchincome tax varies with regard to the computed as a proportion of worldwide retribution, with certain expensesparticular situation. Additionally, the profits to worldwide gross income. being tax deductible. The IETU isincome of investment companies with Income of resident corporations derived defined as a minimum tax in respect tovariable capital and insurance from the transportation of passengers income tax (IT), but with a widercompanies' income from investments or cargo on Malaysian ships is exempt. taxable base as many of the tax(except for dividends) are exempt from Finally, companies engaged in deductions authorized for IT purposescorporate income tax. petroleum operations are subject to tax are not permissible for the IETU. at 38 percent.57 Luxembourg (2008 rate = 29.63%) 63 Montenegro (2008 rate = 9%)A corporate income tax rate of 60 Malta (2008 rate = 35%) The corporate income tax rate is 922.88 percent includes a 4 percent The corporate income tax at a rate percent. Taxable profit is calculated byemployment fund contribution. The is 35 percent. Malta operates a full adjusting the company's profit or lossmunicipal business tax rate varies; imputation system of taxation for both declared in the P&L account accordingfor example, the rate for the City of residents and non-residents, which to the provisions of the CIT Law.Luxembourg is 6.75 percent. ensures the full relief of economic Adjustments include certain disallowed double taxation upon the distribution costs, as well as depreciation. Operating58 Macau (2008 rate = 12%) of taxed profits by companies resident losses stated in the tax balance may beAn exemption on the taxable in Malta. On the distribution of taxed carried forward for five years and offsetincome up to MOP 200,000 has been profits the shareholders may opt to against operating profit declared in theannounced by the government in 2008 claim a partial/full refund of the tax paid tax balance. Capital losses could beand was introduced retrospectively in by the distributing company. As a carried forward and offset against capital2007. Income between MOP 200,000 general rule the tax refund amounts to gains up to five years.and MOP 300,000 is taxable at 9 six-sevenths of the tax paid. The refundpercent; 12 percent is applicable to the will be reduced to two-thirds if the 64 Mozambique (2008 rate = 32%)portion of income over MOP 300,000. shareholder claims double-taxation The corporate income tax rate is 32 relief and five-sevenths in those cases percent. In addition, income of59 Malaysia (2008 rate = 26%) where the distributed profits are agricultural companies or organizations isResident companies with paid up derived from passive interest or royalty taxed at 10 percent until 31 Decembercapital of MYR 2.5 million and below at income being subject to foreign tax at 2010. Furthermore, agricultural, cultural,the beginning of the basis period for a less than 5 percent. Dividends and and artisan cooperatives benefit from aYear of Assessment (YA) are subject to capital gains derived from participation 50 percent reduction in the tax rate,corporate tax at a rate of 20 percent on holdings will qualify for a full refund. resulting in an effective tax rate ofthe first MYR 500,000 of chargeable The Malta tax suffered on distributed broadly 16 percent. Generally, certainincome. For chargeable income in profits hence ranges between 0 investment projects approved by theexcess of MYR 500,00, corporate tax is percent to 10 percent. The tax paid government of Mozambique prior to 1at the rate of 26 percent (reduced to 25 on profits derived, directly or indirectly, January 2003 are subject to variouspercent from YA 2009). Leasing income from immovable property situated in lower tax rates, applicable until the end(from moveable property) derived by a Malta is not available for refund. of the project. Those investment projects approved as of 1 January 2003 are, in24 KPMG's Corporate and Indirect Tax Rate Survey 2008
general, subject to the standard tax rate 69 Oman (2008 rate = 12%) is issued. Non-resident miningof 32 percent but receive a tax credit of The corporate income tax rate is 12 companies pay tax at 40 percent. In5 percent of the investment made in the percent on taxable profits exceeding case of other businesses, a branch of afirst five years of a project. OMR 30,000 and applies to all foreign company is taxed at 48 percent. companies incorporated in Oman Non-residents are taxed on a deemed65 Netherlands and branches and permanent profit basis (shipping: 5 percent, that(2008 rate = 20%/23%/25.5%) establishments in Oman of companies is, an effective tax rate of 2.4 percentIn 2008 taxable profits of up to EUR incorporated in the other Gulf Co- of gross income; insurance: 10 percent,40,000 are taxed at 20 percent, profits operation Council (GCC) countries that is, an effective tax rate of 4.8between EUR 40,000 and EUR (Bahrain, Kuwait, Qatar, Saudi Arabia, percent of gross income). Foreign200,000 are taxed at 23 percent, and and United Arab Emirates). In the contractors can elect to be taxed on aprofits over EUR 200,000 are taxed at case of branches and permanent deemed profit basis of 25 percent25.5 percent. In 2007, taxable profits of establishments in Oman of non-GCC (that is, an effective tax rate of 12up to EUR 25,000 were taxed at 20 companies the tax rates range from percent of gross income).percent, profits between EUR 25,000 0 percent to 30 percent dependingand EUR 60,000 were taxed at 23.5 upon amount of taxable profits. 74 Paraguay (2008 rate = 10%)percent, and profits over EUR 60,000 The corporate income tax rate iswere taxed at 25.5 percent. 70 Pakistan (2008 rate = 35%) 10 percent. If the company distributes The corporate income tax rate is 35 utilities to shareholders domiciled in66 Netherlands Antilles percent and applies to all banking, Paraguay, a 5 percent rate will be(2008 rate = 34.5%) public, and private limited companies. applied to distributed utilities,The corporate income tax rate is However, subject to certain conditions resulting an effective rate of 14.534.5 percent and includes a 15 percent being met, small companies are taxed percent. To utilities distributed tosurcharge although, for certain at 20 percent. shareholders not domiciled inactivities, tax holidays are available Paraguay a 15 percent rate will bewhich generally lower the tax rate to 2 71 Palestine (2008 rate = 15% and 16%) applied, resulting an effective rate ofpercent. Companies operating in The 15 percent corporate income tax 27.33 percent. There are differentialeconomic zones are also taxed at a rate rate is applied in the case of local effective rates for the followingof 2 percent. The income of qualified companies and the 16 percent taxed acts carried out by non-domiciledlimited liability companies engaged in corporate income tax rate is applied in entities: insurance premium thatcertain financial activities is exempt. the case of foreign companies. covers risks of people/goods in the country: 3 percent; people67 New Zealand (2008 rate = 30%) 72 Panama (2008 rate = 30%) transportation fares/freight of goods:The corporate income tax rate is 30 Tax due is the higher of 30 percent of 3 percent; communications (phone,percent. A flat tax of 3 percent applies net taxable income and 1.4 percent of internet, and similar): 3 percent; newsto general insurance premiums and Panamanian-source gross income agencies: 4.5 percent; distributors offilm hire taxes paid to non-residents. (alternative minimum tax). Corporations movies, cinema/television, and similar:The New Zealand government has with losses may request a three-year 12 percent; and transfer of the use ofintroduced the large budget screen holiday from the application of alternative containers: 4.5 percent. For financingsproduction grant scheme which, minimum tax. If there is no distribution, received from external banks, currentprovided certain requirements are met, or if the distributed amount is less than effective rate is 6 percent. Corporateallows for a rebate of 12.5 percent of 40 percent of net earnings, a income earned by individuals/foreignthe qualifying New Zealand production complementary tax of 4 percent is due entities for their activities carriedexpenditure on film and television as an advanced dividend tax. out in Paraguay (independently ofproduction companies. A film or their branches, agencies ortelevision company is eligible for the 73 Papua New Guinea permanent establishment) is currentlygrant if it is a resident company or (2008 rate = 30%) at an effective rate of 15 percent.a foreign corporation operating with For mining and gas companies,a permanent establishment in the corporate income tax rate is 30 75 Peru (2008 rate = 30%)New Zealand. percent. Existing petroleum projects The corporate income tax rate is are subject to a 50 percent tax rate 30 percent. Additionally, dividends68 Norway (2008 rate = 28%) while new petroleum projects are taxed are subject to the rate of 4.1 percentThe corporate income tax rate is at either 45 percent or 30 percent when paid by a domiciled corporation28 percent. depending on when the license to individuals (domiciled or not) or to KPMG's Corporate and Indirect Tax Rate Survey 2008 25
foreign entities. Branches of foreign 77 Poland (2008 rate = 19%) 81 Russia (2008 rate = 24%)entities are also subject to the 4.1 The corporate income tax rate is 19 The corporate income tax rate ispercent tax rate. A tax on net assets percent, with no other taxes on 24 percent. Federal tax authoritieshas been introduced with effect from corporate income. However, a 50 determine the applicable tax rates,2005. A marginal rate system is percent penalty rate applies for transfer however, tax payments are split intoapplied to determine this tax (the rate pricing adjustments if a taxpayer is federal taxes (6.5 percent) and regionalvaries from 0 percent to 0.5 percent unable to provide, within seven days of taxes (17.5 percent with the right todepending on the amount of taxable a request by the tax authorities, reduce to 13.5 percent). Local taxesnet assets). The tax is based on the net transfer pricing documentation (as are no longer payable. Interest incomeassets of domiciled corporate taxpayers required under statute) in respect of on state securities is taxed at 15after deducting certain balance sheet transactions with related parties. percent or 0 percent.items specified in the legislation. This Companies located in the specialtax can be applied as a tax credit economic zones may benefit from tax 82 Saudi Arabia (2008 rate = 20%)against corporate income tax. exemptions. Dividend income is taxed The corporate income tax rate is 20 at 19 percent; under certain conditions percent. Corporate tax is payable by76 Philippines (2008 rate = 35%) exemptions are available for dividends non-Saudi shareholders only. Zakat (aThe corporate tax rate increased to 35 received from subsidiaries resident in religious tax) at 2.5 percent is levied onpercent effective 1 July 2005 and will be Poland, Switzerland, Member States of Saudi and GCC shareholders. Inreduced to 30 percent effective 1 January the European Union, and the European addition, withholding tax of 5 percent is2009. On the fourth taxable year Economic Area. payable on dividends distributed to non-following the start-up year, domestic resident shareholders.corporations and resident foreign 78 Portugal (2008 rate = 25%)corporations are subject to a 2 percent The corporate income tax rate is 25 83 Serbia (2008 rate = 10%)minimum corporate income tax (MCIT). percent. This rate is to be increased by The corporate income tax rate is 10This tax is calculated based on gross a municipal surcharge of up to 1.5 percent. Taxable profit is calculated byincome and is due if the MCIT is greater percent, which is to be levied over the adjusting the company's profit or lossthan the corporation's corporate income company's taxable profit. declared in the P&L account accordingtax liability, determined by applying the 35 to the provisions of the CIT Law.percent tax rate to net income. A 10 79 Qatar (2008 rate = 35%) Adjustments include certain disallowedpercent improperly accumulated earnings The corporate income tax rate is 35 costs, as well as depreciation.tax (IAET), subject to certain exceptions, percent. It is the maximum rate in ais also imposed on undistributed earnings progressive rate structure and is 84 Singapore (2008 rate = 18%)of closely-held corporations. These are applicable to income in excess of QAR The corporate income tax rate is 18corporations in which at least 50 percent 5 million. However, tax is only imposed percent. A partial tax exemption isof the value of outstanding capital stock on foreign companies operating in granted on 75 percent of the first SGDor at least 50 percent of the total Qatar or Qatari companies with foreign 10,000 of regular income (excludingcombined voting power of all classes of shareholders. Companies which are Singapore franked dividends) and 50stock entitled to vote is owned directly or wholly owned by Qatari shareholders percent on the next SGD 290,000. Forindirectly by 20 individuals or less. or GCC nationals are exempt. Certain the first three assessment years forPhilippine branches of foreign companies established pursuant to an new companies, full tax exemption ofcorporations are exempt from the 10 emiree decree may be subject to a regular income (excluding Singaporepercent IAET. Foreign corporations with specific flat tax rate rather than the franked dividends) up to SGD 100,000Philippine branches pay 15 percent standard progressive rates. can be claimed provided certainbranch profits remittance tax. Philippine conditions are met and a partial taxbranches of foreign corporations not 80 Romania (2008 rate = 16%) exemption of 50 percent on the nextsubject to the 10 percent IAET. Philippine The corporate income tax rate is 16 SGD 200,000 of regular incomeEconomic Zone Authority (PEZA) percent. Profits earned from nightclubs, (excluding Singapore frankedregistered corporations which enjoy casinos, discotheques, and sport dividends). A concessionary tax ratepayment of special tax rate on their betting organizers are subject to tax at of 10 percent or lower applies toregistered operations or activities in lieu 16 percent as well, although the tax entities engaged in certain prescribedof other taxes, national and local are payable cannot be lower than 5 percent activities or granted tax incentives.exempt from the 10 percent IAET. There of the taxpayer's qualifying grossare also several other special tax regimes revenue earnings. A special relief is 85 Slovak Republic (2008 rate = 19%)for certain types of activity. available for small companies. The corporate income tax rate is 19 percent.26 KPMG's Corporate and Indirect Tax Rate Survey 2008
86 Slovenia (2008 rate = 22%) taxed at 20 percent, except in respect 1 January 2005, a taxable interestThe corporate income tax rate is 22 of results not related to their corporate charge is levied on such provisions.percent. However, the corporate purpose, which will be taxed at theincome tax rate will be 21 percent in general rate. 92 Switzerland2009 and 20 percent in 2010. Taxable (2008 rate = 12.66% to 25.45%)persons performing non-profit activities 89 Sri Lanka (2008 rate = 35%) The corporate tax rate in the city ofare exempt. There is also a special rate For the assessment year 2008/09 Zurich is 21.17 percent. All 26 cantonsof 0 percent which under certain (1 April 2008 to 31 March 2009), apply different tax rates and in most ofconditions applies to investment funds, the corporate income tax rate is 35 them the statutory tax rate needs to bepension funds, insurance undertakings percent. However, small companies multiplied with the communal and/orfor pension plans, and venture capital (with taxable income not exceeding cantonal coefficients that may varycompanies (only for activities based on LKR 5 million and not being a holding, from tax period to tax period. The rateventure capital). subsidiary, or any associate company shown above comprises federal, of a group of companies) are taxed at cantonal, and communal taxes. As87 South Africa (2008 rate = 34.55%) 15 percent and companies in the first corporate income taxes are deductibleThe corporate income tax rate is 28 five years of listing are taxed at 33.33 when computing the tax basis, thepercent. However, South Africa percent. Certain identified sectors also effective corporate income tax rates areimposes an additional secondary tax on enjoy concessionary rates, such as lower than the statutory rates publishedcompanies (STC) at 10% on any net exports (other than traditional in the tax codes. In 2008, the cantonsdividends declared by them. Therefore, products), tourism, agriculture, and of Obwalden and Appenzellif a company distributes 100 percent of construction at 15 percent and venture Ausserrhoden have the lowestits after-tax earnings as a dividend, an capital companies/ specialized housing corporate income tax rate (12.66effective tax rate of 34.55 percent will banks at 20 percent. Dividends or the percent ) while the canton of Berne andapply. This does not apply to gold repatriation of profits by a non-resident the community of Malleray have themining companies (which are taxed on company are taxed at 10 percent. An highest (25.45 percent). However, if aa formula basis) or to South African economic service charge (ESC) is 1 company qualifies for a holding,branches of foreign entities which are percent of turnover (although lower principal, or mixed company ruling,taxed at a rate of 33 percent. Further, it rates are applicable where companies effective tax rate can be reduced to 5is proposed that STC will be replaced benefit from tax holidays or percent/12 percent. Additionally, full taxby a withholding tax from next year. concessionary rates) but can be set-off holiday up to 10 years might be against corporate tax liability. The social available in some regions.88 Spain (2008 rate = 30%) responsibility levy is 1.5 percent onCompanies with tax years starting from income tax for year 2008/2009. A 93 Syria (2008 rate = 28%)1 January 2008 are subject to tax at 30 deemed dividend tax at 15 percent is The corporate income tax rate ispercent. Where a company's turnover applicable for non-declaration of 28 percent. Lower progressive rates(alone or combined with other group dividends. apply to the first SYP 3 million of netcompanies) in the immediately profit. Investment law entities are taxedpreceding tax period is less than 90 Sudan at a flat rate of 22 percent, industrialEUR 8 million, it is taxed on the first (2008 rate = 10%/15%/30%/35%) entities at a flat rate of 25 percent, andEUR 120,202 of taxable income at 25 Industrial companies are subject to public majority joint stock companiespercent with the balance of its taxable corporate income tax at 10 percent; at a flat rate of 14 percent. Localincome being subject to tax at 30 trading, real estate, and banks service administration surcharges vary frompercent. The following entities will be companies are subject to corporate 4 percent to 10 percent of the taxtaxed at 25 percent: general mutual income tax at 15 percent; tobacco amount, depending upon location.insurance companies, social welfare companies are subject to corporate Foreign-controlled service sectorinstitutions and qualified social security income tax of 30 percent; and oil entities are subject to withholding taxesmutual entities for accidents at work companies are subject to 35 percent. on gross turnover in lieu of corporateand occupational diseases, mutual income tax on their net profits, at ratesguarantee entities and guarantee 91 Sweden (2008 rate = 28%) that vary from 3 percent to 10 percentunderwriting companies regulated by The corporate income tax rate is 28 according to industry type. TourismLaw 1/1994 of 11 March on the Legal percent. An optional provision for entities (domestic or foreign) are subjectRegime for Mutual Guarantee Societies untaxed income is available. The to withholding tax at 2.5 percent ofRegistered with the Bank of Spain; and provision must not exceed 25 percent gross turnover.credit and rural credit co-operatives. of the tax base and must be dissolvedTax protected co-operatives will be within the following six years. Starting KPMG's Corporate and Indirect Tax Rate Survey 2008 27
94 Taiwan (2008 rate = 25%) loans or amounts in Thailand (which corporate taxpayer is a UkrainianThe corporate income tax rate is 25 were undertaken before 18 April 2006) company with annual revenues ofpercent. It is the maximum rate in a and to gross income (reduced to 2 less than UAH 1 million (approximatelyprogressive rate structure. The rate percent for certain types of income) of USD 200,000) and the annual averageis applicable to income in excess of foundations and associations engaged number of employees of less than 50,TWD 100,000. in business activities. A petroleum (oil, and that which is predominantly (that gas, and derivatives) tax rate of 50 is, in excess of 75 percent) owned by95 Thailand (2008 rate = 30%) percent applies to the net taxable individuals and/or small-size UkrainianThe corporate income tax rate is 30 profits of companies with concessions companies. No election is available forpercent but it may be reduced to 20 to explore for and produce petroleum. small-size Ukrainian companies that arepercent or 25 percent for certain Thai engaged in manufacturing and tradingcompanies which are listed on the 96 Tunisa (2008 rate = 10%/30%/35%) of excise goods, gabling, and certainStock Exchange of Thailand prior to Companies are taxed at 10 percent, 30 other businesses.31 December 2009. A tax rate of 10 percent, or 35 percent depending onpercent applies to the remittance of industry. The corporate income tax rate 99 United Arab Emiratesdividends or branch profits abroad. For applies to resident companies and to (2008 rate = 0%/20%/55%)companies small and medium sized permanent establishments of non- The UAE consists of seven emirates:enterprises (SME) with less than THB resident companies with a minimum Abu Dhabi, Dubai, Sharjah, Ajman,5 million paid up capital, the corporate tax payable of 0.1 percent under certain Umm Al Quwain, Fujairah, and Ras Alincome tax rate is reduced to 0 percent conditions. Fully export companies Khaimah. While there are no corporatefor the initial taxable profits of THB are taxable at the rate of 10 percent income taxes at a federal level, some150,000, 15 percent on THB 150,001 to effective 1 January 2011. The fully emirates have issued their own incomethe first THB 1,000,000 of net taxable export companies established before tax decrees. Although in theory theseprofits, and 25 percent on the THB 1 January 2011 continue to benefit emirate level decrees impose tax on1,000,001 to 3,000,000 of net taxable from the exoneration for the period of the income of all corporate entities, inprofits next THB 2,000,000 but not 10 years. Financial institutions working practice tax is currently only enforcedexceeding THB 3,000,000. Corporate with residents as well as banks for their on foreign oil companies and branchesincome tax exemptions (tax holidays transactions of the same nature with of foreign banks. Although the tax rateand corporate tax rate reductions) are residents are taxable at the rate of 35 applicable to oil companies is generallygranted to companies promoted by the percent. For regional development 55 percent of operating profits, theboard of investment (BOI), asset projects, there is exoneration for 10 amount of tax actually paid by suchmanagement companies (AMCs) and years and 50 percent tax base companies is based on a rate agreed inventure capital companies investing in reduction for additional 10 years. individual concessions between theSMEs subject to certain conditions. company and the respective emirate.Corporate income tax incentives were 97 Turkey (2008 rate = 20%) This rate can range between 55introduced in 2002 for Thai regional The corporate income tax rate is percent and 85 percent. Branches ofoperating headquarters (ROH). The 20 percent. foreign banks are taxed at 20 percentcorporate income tax rate for a ROH is of their taxable income in the emiratesreduced to 10 percent on qualifying 98 Ukraine (2008 rate = 25%) of Abu Dhabi, Dubai, Sharjah, andROH service income, royalties, and The corporate income tax rate is 25 Fujairah. Municipal taxes are also leviedinterest and 0 percent on dividends percent. Special tax rates may apply in some of the emirates. In Dubai, a 10received from associated enterprises. depending on the business activities percent municipal tax is charged onA rate of 3 percent applies to gross (for instance a nil or 3 percent rate is hotel revenues (usually passed onincome of companies engaged in applied to insurance income earned by to the consumer as a service charge),international transportation. A rate of 10 Ukrainian insurance companies). Also, a 10 percent municipality fee is leviedpercent applies to the net taxable small-size Ukrainian companies can on the rent from commercial property,profits of commercial banks which are elect to be taxed under a simplified and a 5 percent fee is levied on theengaged in obtaining deposits or loans taxation regime that exempts the rent of residential property. Abu Dhabifrom foreign countries and re-lending eligible corporate taxpayer from the does not levy a municipality tax onsuch loans or amounts to other, or the payment of virtually all other Ukrainian rented premises, but landlords aresame, foreign countries. A rate of 10 taxes. An eligible taxpayer can elect to required to pay certain annual licensepercent also applies to the net taxable be taxed at 6 percent or at 10 percent fees (which they may pass on toprofits of commercial banks derived of all revenues from the sale of goods tenants).from obtaining deposits or loans from and services depending on the VATforeign countries and re-lending such status of such taxpayer. An eligible28 KPMG's Corporate and Indirect Tax Rate Survey 2008
100 United Kingdom generally subject to corporate income basis of the price obtaining on the(2008 rate = 28%) tax at 50 percent (also applicable to London metal exchange. Where there isA 21 percent rate applies to companies income from any other sources). no windfall tax, there will be variablewith taxable profits of up to GBP This rate does not include municipal tax. The variable tax rates will vary300,000 with marginal relief up to GBP business taxes which range from between 1% and 15%. The windfall tax1.5 million. Companies with taxable 0.3 percent to 9.4 percent of gross rates will be 25%, 50%, and 75%.profits of GBP 1.5 million or more pay income, depending on the district andtax at the full rate of 28 percent. All the business activity.these thresholds are reduced foraccounting periods of less than 12 104 Vietnam (2008 rate = 28%)months and if there are associated The corporate income tax rate is 28%companies. Bermuda, Gibraltar, and applies to resident companiesGuernsey, Isle of Man, and Jersey: with foreign investors (including, jointthese countries are dependent ventures, 100% foreign-ownedterritories or crown dependencies of companies, and business co-operationthe United Kingdom, which has formally contracts) licensed from 1 Januaryconfirmed that the OECD Convention 2004 (25% if licensed before 1 Januaryapplies to these countries. These 2004) and Vietnamese enterprises.countries are not included when However, incentive corporate incomecalculating the averages and ranges tax rates (10%, 15%, and 20%) willindicated above. apply for certain projects. Corporate income tax rates from 28% to 50%101 United States (2008 rate = 40%) apply to businesses conductingThe marginal federal corporate income prospecting, exploration, andtax rate on the highest income bracket of exploitation of petroleum and gascorporations (for 2007, USD 18,333,333 and other rare and precious naturaland above) is 35 percent. State and local resources.governments may also impose incometaxes ranging from less than 1 percent 105 Yemen (2008 rate = 35%)to 12 percent, and the top marginal The corporate income tax rate isrates of which average approximately 35% and applies to all categories of7.5 percent. A corporation may deduct commercial activity. Tax holidays ofits state and local income tax expense seven years or more are available towhen computing its federal taxable projects licensed under the investmentincome, generally resulting in a net law. Oil and mineral activities areeffective rate of approximately 40 subject to special regimes of taxation,percent. The effective rate may vary and education and agriculture aresignificantly depending on the locality in tax exempt.which a corporation conducts business.The United States also has a parallel 106 Zambia (2008 rate = 35%)alternative minimum tax (AMT) system, The corporate income tax rate is 35%.which is generally characterized by a However, income earned by bankinglower tax rate (20 percent) but a broader institutions is subject to 40% tax ontax base. profits in excess of ZMK 250 million. Profits from farming, chemical fertilizer102 Uruguay (2008 rate = 25%) production, and export of non-traditionalThe corporate income tax rate is items are taxed at a rate of 15%.25 percent. Companies with a turnover of ZMK 200 million or less pay a turnover tax of 3%.103 Venezuela (2008 rate = 34%) Tax on foreign exchange earned by sunThe corporate income tax rate is 34 hotel is subject to tax at 15%. Windfallpercent. However, corporations tax has been introduced on companiesengaged in the exploitation of producing base metals of copper andhydrocarbons and related activities are cobalt which will be calculated on theIndirect Tax Rates2004 - 200830 KPMG's Corporate and Indirect Tax Rate Survey 2008
European Asia - Latin 1 Jan 2004 1 Jan 2005 1 Jan 2006 1 Jan 2007 1 Jan 2008 Footnote OECD Country % % % % % Union Pacific America
Afghanistan 15 15 15 15 15 1 Albania 20 20 20 20 20 2 Angola N/A N/A N/A N/A N/A 3 I Argentina 21 21 21 21 21 4 I Aruba N/A N/A N/A 3 3 5 I I Australia 10 10 10 10 10 6 I I Austria 20 20 20 20 20 7 Bahrain N/A N/A N/A N/A N/A 8 I Bangladesh 15 15 15 15 15 9 I Barbados 15 15 15 15 15 10 Belarus 18 18 18 18 18 11 I I Belgium 21 21 21 21 21 12 I Bolivia 13 13 13 13 13 13 Bosnia and Herzegovina N/A N/A 17 17 17 14 Botswana 10 10 10 10 10 15 I Brazil 19 19 19 19 19 16 I Bulgaria 20 20 20 20 20 17 I Canada 7 7 7 6 5 18 I Cayman Islands N/A N/A N/A N/A N/A 19 I Chile 19 19 19 19 19 20 I China 17 17 17 17 17 21 I Colombia 16 16 16 16 16 22 I Costa Rica 13 13 13 13 13 23 Croatia 22 22 22 22 22 24 I Cyprus 15 15 15 15 15 25 I I Czech Republic 22 19 19 19 19 26 I I Denmark 25 25 25 25 25 27 I Dominican Republic 12 16 16 16 16 28 I Ecuador 12 12 12 12 12 29 Egypt 10 10 10 10 10 30 I Estonia 18 18 18 18 18 31 I Fiji 12.5 12.5 12.5 12.5 12.5 32 I I Finland 22 22 22 22 22 33 I I France 19.6 19.6 19.6 19.6 19.6 34 I I Germany 16 16 16 19 19 35 I I Greece 18 18 19 19 19 36 Guatemala 12 12 12 12 12 37 I Honduras 12 12 12 12 12 38 I Hong Kong N/A N/A N/A N/A N/A 39 I I Hungary 25 25 20 20 20 40 I Iceland 24.5 24.5 24.5 24.5 24.5 41 I India 16 16 12.5 12.5 12.5 42 I Indonesia 10 10 10 10 10 43 Iran N/A N/A N/A N/A N/A 44 I I Ireland 21 21 21 21 21 45 Israel 17 18 16.5 15.5 15.5 46 I I Italy 20 20 20 20 20 47 I Jamaica 15 15 16.5 16.5 16.5 48 I I Japan 5 5 5 5 5 49 Jordan 16 16 16 16 16 50 Kazakhstan 15 15 15 14 13 51 I I Korea, Republic of 10 10 10 10 10 52 Kuwait N/A N/A N/A N/A N/A 53 I Latvia 18 18 18 18 18 54 Libya N/A N/A N/A N/A N/A 55 I Lithuania 18 18 18 18 18 56 I I Luxembourg 15 15 15 15 15 57 I Macau N/A N/A N/A N/A N/A 58 I Malaysia 10 10 10 10 10 59 KPMG's Corporate and Indirect Tax Rate Survey 2008 31
European Asia - Latin 1 Jan 2004 1 Jan 2005 1 Jan 2006 1 Jan 2007 1 Jan 2008 Footnote OECD Country % % % % % Union Pacific America
I Malta 18 18 18 18 18 60 Mauritius 15 15 15 15 15 61 I I Mexico 15 15 15 15 15 62 Montenegro 17 17 17 17 17 63 Mozambique 17 17 17 17 17 64 I I Netherlands 19 19 19 19 19 65 I Netherlands Antilles * * * * * 66 I I New Zealand 12.5 12.5 12.5 12.5 12.5 67 I Norway 24 25 25 25 25 68 Oman N/A N/A N/A N/A N/A 69 I Pakistan 15 15 15 15 20 70 Palestine 14.5 14.5 14.5 14.5 14.5 71 I Panama 5 5 5 5 5 72 I Papua New Guinea 10 10 10 10 10 73 I Paraguay 10 10 10 10 10 74 I Peru 17 17 17 17 17 75 I Philippines 10 10 10 12 12 76 I I Poland 22 22 22 22 22 77 I I Portugal 19 19 21 21 21 78 Qatar * * * * * 79 I Romania 19 19 19 19 19 80 Russia 18 18 18 18 18 81 Saudi Arabia N/A N/A N/A N/A N/A 82 Serbia N/A 18 18 18 18 83 I Singapore 5 5 5 5 7 84 I I Slovak Republic 19 19 19 19 19 85 I Slovenia 20 20 20 20 20 86 South Africa 14 14 14 14 14 87 I I Spain 16 16 16 16 16 88 I Sri Lanka 15 15 15 15 15 89 Sudan 10 10 10 12 15 90 I I Sweden 25 25 25 25 25 91 I Switzerland 7.6 7.6 7.6 7.6 7.6 92 I Taiwan 5 5 5 5 5 93 I Thailand 7 7 7 7 7 94 Tunisia 18 18 18 18 18 95 I Turkey 18 18 18 18 18 96 Ukraine 20 20 20 20 20 97 United Arab Emirates ** ** N/A N/A N/A 98 I I United Kingdom 17.5 17.5 17.5 17.5 17.5 99 I United States * * * * * 100 I Uruguay 23 23 23 23 22 101 I Venezuela 16 15 14 14 9 102 I Vietnam 10 10 10 10 10 103 Zambia 17.5 17.5 17.5 17.5 17.5 104
*See footnote Source for all rates: KPMG member firms. Rates as at 1 January each year.** No IBFD info32 KPMG's Corporate and Indirect Tax Rate Survey 2008
15.50 15.45 15.38 15.40 15.35 15.30 15.25 15.20 1-Jan-04 1-Jan-05 1-Jan-06 1-Jan-07 1-Apr-08
10.90 10.83 10.83 Percentage
10.80 10.75
10.70 10.64
10.30 2004 2005 2006 2007 2008
16.75 16.72 16.70
16.55 2004 2005 2006 2007 2008 KPMG's Corporate and Indirect Tax Rate Survey 2008 33
EU 2004 – 2008 19.80 19.56 19.49 19.49 19.60 19.45 19.40Percentage 19.20
18.80 18.65 18.60
18.00 2004 2005 2006 2007 2008
15.60 15.41 15.40
14.80 14.7*
14.20 14.3*
14.20 14.00 2004 2005 2006 2007 2008
*The average rates for 2007 and 2008 reflect the introduction of the BBO in Aruba in January 2007, at a rate of 3 percent.
television. Most food and drinks, books, are exempt from VAT, for example, the electronic data processing industrypharmaceuticals, hotel and camping prescription drugs, residential (7 percent). Certain supplies areaccommodations, passenger accommodation, education at approved exempt from ICMS, for exampletransportation, agricultural services are institutions, public medical facilities supplies of books, newspapers,charged at a 6 percent rate, and services, non-fee based financial periodicals, and the paper consumednewspapers and periodicals published services, and passenger transportation in the printing of such products,(in certain conditions), supplies related (excluding the transportation of tourists). sale of fixed assets, fruits, vegetables,to aircrafts and sea-going vessels and and farm and garden produce andexports of goods are charged with 0 16 Brazil preservatives.percent. Supplies of certain goods and There are two types of value-addedservices are exempt from VAT, for tax in Brazil: a state sales tax (imposto The reduced IPI rate of 0 percentexample financial services, letting of sobre circulação de mercadorias e applies to, for example, live animalsimmovable property, hospital services, serviços; ICMS) and a federal excise and animal products, plant products,medical care, and cultural activities. tax (imposto sobre produtos chemical products, textile products, industrializados; IPI). There are other and shoes. Certain supplies are exempt13 Bolivia taxes on supplies of goods or services: from IPI, for example supplies ofThe standard rate of value-added tax a services tax (imposto sobre serviços; vessels (except sporting or pleasure(impuesto al valor agredado; IVA) is 13 ISS), a social contribution for social boats), exports, books, newspapers,percent of the total price of the service security financing (contribuição para o periodicals, and paper consumed inrendered for an effective rate of 14.943 financiamento da seguridade social; the printing of such products, electricpercent. Exports of goods and services COFINS) and an employees' profit energy, petroleum products, fuel, andare zero-rated. Exempt services participation program (programa de minerals belonging to the country.include: financial transactions such as integração social; PIS).insurance and reinsurance, interest, There are reduced rates of ISS whichcommissions on financial services and The standard rate of ICMS is 17 vary from one municipality to another.sales, and purchases of shares. percent (in São Paulo, Minas Gerais, Certain supplies are exempt from ISS, and Paraná the standard rate is 18 for example exports of services,14 Bosnia and Herzegovina percent and in Rio de Janeiro it is 19 amounts intermediated in the bondsThe standard rate of value-added tax percent). IPI is normally charged at an and securities market, the amount of(porez na dodanu vrijednost; PDV) is ad valorem (value) rate according to bank deposits, the capital, interests,17 percent. There is a reduced rate of 0 the classification of the product based and default interests regarding creditpercent which applies to, for example, upon the international Harmonized operations performed by financialexports of goods and certain related Commodity Description and Coding institutions.services. Supplies of certain goods and System, administered by the Worldservices are exempt from VAT, for Customs Organization in Brussels. Reduced rates of 0.65 percent PISexample financial services, insurance Rates range from 0 percent to a and 3 percent COFINS apply underand reinsurance services, education, maximum of 330 percent and average a so-called cumulative regime. Unlikehealthcare, rent of residential property about 10 percent. The standard rate the non-cumulative regime there is nofor a period longer than 60 days, certain of ISS is ranges from 2 percent to recognition of any tax credits under thesupplies of immovable property, dealing 5 percent. The standard rates of PIS cumulative regime. Certain suppliesin shares, management of investment and COFINS under the so-called are exempt from PIS and COFINS, forfunds, and stamps. non-cumulative regime are 1.65 percent example the exportation of goods, the and 7.6 percent, respectively. exportation of services with payment in15 Botswana convertible currency, sales of productsThe standard rate of value-added tax There are reduced rates of 7 percent to a commercial export company foris 10 percent. There is a reduced rate and 12 percent ICMS which apply export purpose specifically and salesof 0 percent which applies to, for to inter-state supplies within Brazil of fixed assets.example, exports of goods and depending on the region into whichservices, international transport goods are sold and to certain intra-stateservices, disposal of businesses as supplies, for example, to diesel oil andgoing concerns, certain food products hydrated ethyl alcohol fuel, motornot mixed with other products, some vehicles and transport services (12pesticides, fertilizers, farming tractors percent), products that are part of theand supplies to the Head of State. basic food basket and products fromCertain supplies of goods and services KPMG's Corporate and Indirect Tax Rate Survey 2008 37
leasing of ships and aircrafts until 2010. 30 Egypt goods placed in free zone, freeSupplies of certain goods and services The standard rate of general sales tax warehouse, or VAT warehouse, (0are exempt from VAT, for example (GST) is 10 percent. There are other percent). Supplies of certain goodshealth and welfare services, education, rates that vary from 0 percent to 45 and services are exempt from VAT, forcertain sport and cultural activities, percent. The reduced rates apply to, example immovable property, financialland, financial and insurance services, for example, coffee, all products made and insurance services, postal services,postal services by Post Denmark, of flour, soap, fertilizers, gypsum, and education, and health and welfare.passenger transport services (excluding iron bars (5 percent), and exports oftransport of tourists by bus), and travel goods (0 percent). The increased rates 32 Fijiagency services. apply to, for example, national and The standard rate of value-added tax international telecommunication is 12.5 percent. There is a reduced28 Dominican Republic services using mobile phones, motor rate of 0 percent which applies to, forThe standard rate of value-added tax vehicles of a cylinder capacity less example, exports of goods and certain(impuesto sobre transferencia de than 1600 cc (15 percent), some services, prescribed medication, somebienes industrializados y servicios; colored televisions, refrigerators or basic food items (such as rice, flour,ITBIS) is 16 percent. Exports of deep freezes, sound recorders, air- locally produced eggs, tea, edible oil,goods and services are zero-rated. conditioning units, cameras, perfumery, tinned fish, and powdered milk) andExempt supplies include: basic cosmetics or toilet preparations and kerosene. Supplies of certain goodsconsumption items, educational products prepared for the care of hair and services are exempt from VAT, formaterials, medicines, services of and skin (25 percent), motor vehicles example financial and insurancehealth, financial, utilities, and inland of a cylinder capacity of 1600 cc up services, residential accommodation,transport of persons and cargo. to 2000 cc, motor vehicles for the and education. transport of goods and persons, jeep29 Ecuador motor vehicles, camping trailers (30 33 FinlandThe standard rate of value-added tax percent), motor vehicles of a capacity The standard rate of value-added tax(impuesto al valor agregado; IVA) is 12 of more than 2000 cc, and vehicles for (arvonlisävero; ALV) is 22 percent.percent. Exports are zero-rated, with trips and camping (45 percent). GST is There are reduced rates of 17 percent,certain exceptions. Exempt supplies imposed on some commodities 8 percent, and 0 percent which applyinclude: natural food products, milk, according to their collection unit (ton, to, for example, food and animal feedand certain industrialized food products liter, or value) for example, tea, beet, (17 percent), accommodation, books,for human consumption, medicines and cane sugar, soda water, petroleum pharmaceuticals, passenger transport,and drugs of human use, seeds, bulbs, products, medicaments, and water and cultural and sporting servicesplants, live roots, fish flour, animal feed, cement. Certain supplies of commodities (8 percent), newspaper subscriptions,fertilizers, insecticides, pesticides, are exempt from GST, for example, and the sale and hire of certainherbicides, and veterinarian products, dairy products, vegetable oils transport vessels and exports of goodstractors with tires up to 200 HP and (subsidized), conserves, processed or (0 percent). Supplies of certain goodsother agricultural implements, paper, prepared meat and fish items (with and services are exempt from VAT,newspaper, magazines, and books, some exceptions), natural and butane for example immovable propertyfluvial, maritime, and terrestrial gas, newsprint, paper, and macaroni (with some major exceptions), financialtransportation of passengers and made of ordinary flour. and insurance services, education,cargo as well as, international air and health and welfare.transportation of cargo and air cargo 31 Estoniatransportation from and to the province The standard rate of value-added tax 34 Franceof Galapagos, financial and investment (käibemaks) is 18 percent. There are The standard rate of value-added taxservices for entities legally authorized reduced rates of 5 percent and 0 (taxe sur la valeur ajoutée; TVA) is 19.6to provide them, the transfer of percent which apply to, for example percent. There are reduced rates of 5.5securities, health and education books, certain periodicals, medicines, percent, 2.1 percent, and 0 percentservices, public services of electricity, cultural performances, accommodation which apply to, for example, food,water, sewer and trash collection, (5 percent), international and passenger water, passenger transportation, someleasing of residential property, book transport, exports of goods, supply pharmaceutical products, books, hotelprinting and aerial fumigation services, of aircraft operating on international accommodation (5.5 percent),services provided by artisans, and routes, supply of sea-going vessels for newspapers and medicines for humanservices of health and life insurance navigation on high seas, services on health when reimbursed by socialand reinsurance. board of such vessels or aircrafts, security (2.1 percent), and exports of40 KPMG's Corporate and Indirect Tax Rate Survey 2008
goods and intra-Community supplies which apply to, for example, fresh food 39 Hong Kong(0 percent). Certain supplies of products, pharmaceuticals, passenger There is no value-added tax or goodsgoods and services are exempt transport services, electricity, natural and services tax in Hong Kong.from VAT, for example certain medical gas, and certain professional servicessupplies, postal services, education, such as those which are provided by 40 Hungarycertain financial transactions, and hotels, restaurants, and coffee shops The standard rate of value-added taxinsurance services. (9 percent), newspapers, periodicals, (általános forgalmi adó; ÁFA) is 20 books, and theatre tickets (4.5 percent), percent. There are reduced rates of 535 Germany export transactions, international transit percent and 0 percent, which apply to,The standard rate of value-added tax of goods and transactions in relation to for example, books, newspapers,(Umsatzsteuer; USt) is 19 percent shipping (0 percent). VAT rates are medicines, some medical instruments(increased from 16 percent as from 1 further reduced by 30 percent if goods (5 percent), and exports of goods (0January 2007). There are reduced rates or services are supplied to or by percent). There are two special ratesof 7 percent and 0 percent which apply taxpayers established in the under the farmer's flat rate scheme;to, for example, foods, plants and Dodecanese Islands and other Aegean a rate of 12 percent applicable toanimals, books and newspapers, Islands (that is 13 percent, 6 percent, supplies of agricultural products and aentrance fees to cultural sites and and 3 percent, respectively). Certain rate of 7 percent applicable to suppliespassenger transport (journeys of not supplies of goods and services are of live animals and animal products.more than 50 km) (7 percent), the exempt from VAT, for example used Supplies of certain goods and servicessupply, import, repair, and maintenance immovable property, medical, are exempt from VAT, for example sale,of certain ships and aircraft, cross- educational and cultural services and rental and leasing of land parcels otherboarder passenger transport by air, insurance, financing, and most banking than building land, rental and sale offinancial transactions rendered to a activities provided to EU residents. real property, postal services, financialrecipient resident outside the European services, certain education activities,Union (EU), and exports of goods 37 Guatemala human health care services, social(0 percent). There are two special rates The standard rate of value-added tax services, and recreational and amateurunder the farmer's flat rate scheme; (impuesto al valor agregado; IVA) is sports services.a rate of 5.5 percent (increased from 12 percent. Exports are zero-rated.5 percent as from 1 January 2007) Exempt supplies include: certain 41 Icelandapplicable to supplies of forestry imports, certain medicines, specified The standard rate of value-added taxproducts which are not the products financial services, and specified (virdisaukaskattur; VSK) is 24.5 percent.of saw mills and a rate of 10.7 percent supplies of real property. There are reduced rates of 7 percent(increased from 9 percent as from 1 (reduced from 14 percent as from 1January 2007) applicable to supplies of 38 Honduras March 2007) and 0 percent. The 7typical agricultural goods and services The standard rate of sales tax percent rates apply to, for example,as well as to specific supplies of (impuesto sobre ventas; ISV) is 12 accommodation, books and periodicals,sawmill products. Certain supplies of percent. An increased rate of 15 licenses to use radio and televisiongoods and services are exempt from percent applies to imports and national broadcasting services, and certainVAT, for example, the services of supplies of alcoholic beverages and food intended for human consumption.transport agencies rendered as a result tobacco products. The goods and The 0 percent rate apply to, forof statutory command to the German services exported abroad are subject example, exports of goods andFederal Mail, financial transactions to 0 percent. Exempt supplies include: services, international transportation,rendered to recipient resident within basic food items for human consumption, fuel and equipment delivered for usethe EU, insurance services, supplies livestock and certain agricultural in ships and aircraft engaged infalling under the Real Estate Acquisition goods, and machinery, pharmaceutical international traffic, sales and rentalsLaw, land (limited), health and welfare, products for humans and animals, of ships and aircraft, and repairs andand education. books, magazines, newspapers, maintenance services rendered to and school supplies, most financial ships and aircraft. Certain supplies of36 Greece services, educational services, the goods and services are exempt fromThe standard rate of value-added tax supply of water and electricity, VAT, for example, real estate and(foros prostithemenis axias; FPA) is 19 professional and sports services, and parking space leases, health services,percent. There are reduced rates of 9 terrestrial transportation of passengers. social services, educational and sportpercent, 4.5 percent, and 0 percent activities, passenger transport, postal services, financial services, and services of travel agencies. KPMG's Corporate and Indirect Tax Rate Survey 2008 41
46 Israel telephone services. Zero-rated supplies are exempt from VAT, including leasesThe standard rate of value-added tax include: exports, agricultural equipment or sales of residential buildings, leases(mas erech musaph; Ma'am) is 15.5 and material, health supplies, and or sales of land plots, financial andpercent. There is a reduced rate of 0 medication, and goods purchased by insurance services by companiespercent which apply to, for example, or services rendered to government licensed in Kazakhstan, geologicalexports of goods, supply of intangible entities. Exempt supplies include: exploration work, contributions toproperty to non-residents (with medical supplies and equipment, books the charter capital of legal entities,exceptions), supply of services to and educational supplies, energy-saving assignments of rights under subsoilnon-residents in limited circumstances, devices and miscellaneous services use contracts, sales of ownershipinternational cargo transport services, including construction, health, public stakes in legal entities, medicalsale of assets in limited conditions, and utilities, and financial services. and veterinary services, and financialsupply of certain services in connection leases.with the entry or departure of aircrafts 49 Japanor vessels into or from Israel. Supplies The standard rate of consumption tax 52 Korea, Republic ofof certain goods and services are is 5 percent. There is a reduced rate The standard rate of value-added tax isexempt from VAT, for example of 0 percent, which applies to, for 10 percent. There is a reduced rate of 0residential (excluding hotels) leases example, export transactions, including percent which applies to, for example,for a period not exceeding 25 years, the transfer or lease of goods, other the exports of goods, services renderedand sale of an approved rental building export related activities such as outside the Republic of Korea,under the Encouragement of Capital international transportation, services international transportation by shipsInvestments Law (subject to certain provided to a non-resident (except and aircraft, other goods or servicesconditions), deposit of funds by a transport or storage of assets in Japan, supplied to earn foreign exchange.dealer with a financial institution or provision of accommodation and food Supplies of certain goods and servicesthe grant of a loan by a dealer to a in Japan, provision of services of a are exempt from VAT, for examplefinancial institution. similar nature in Japan). Supplies of unprocessed foodstuffs, medical and certain goods and services are exempt health services, certain educational47 Italy from consumption tax, for example services and passenger transportThe standard rate of value-added tax sale and lease of land, rental of services, books, newspapers and(imposta sul valore aggiunto; IVA) is housing, sale of securities, and similar magazines, postage stamps, and public20 percent. There are reduced rates of instruments, monetary transactions, telecommunication services.10 percent, 4 percent, and 0 percent medical treatment under publicwhich apply to, for example, certain medical insurance law, social welfare 53 Kuwaitfoods, hotel accommodation, public activities, school tuition, and There is no indirect tax in Kuwait attransport, pharmaceuticals, water (10 examination services. this time.percent), basic foodstuffs, books andnewspapers, main residence, medical 50 Jordan 54 Latviaequipment, and aids for handicapped The sales tax rate is ranging 4 percent The standard rate of value-added tax(4 percent), exports of goods and to 16 percent of the value of the goods. (pievienotās vērtības nodoklis; PVN)intra-Community supplies, international The rate is fixed at 16 percent in case is 18 percent. There are reduced ratestransport services, and services directly of services. Sales tax is payable when of 5 percent and 0 percent whichconnected with exports or imports. the sale is accomplished or the service apply to, for example, pharmaceuticals,Supplies of certain goods and services is rendered. In the case of imported accommodation in hotels, books andare exempt from VAT, for example goods, the sales tax is payable at the newspapers, water and heating,financial and insurance services, customs clearance stage, before the passenger transport and entrance feeslotteries, betting, and other games of release of such goods. to sport events (5 percent), supply,chance, postal services, education import, repair and maintenance ofservices, and welfare. 51 Kazakhstan certain ships and aircraft, passenger The standard value-added tax rate is transport by air or sea, financial48 Jamaica 13 percent (down from 14 percent in transactions outside the EU and The standard rate of value-added tax 2007). A 0 percent VAT rate applies to exports (0 percent). Supplies of certain(general consumption tax) is 16.5 exports of goods and international goods and services are exempt frompercent. The rate of 8.25 percent transportation of passengers, baggage, VAT, for example, land and usedapplies to certain tourism services. and goods into or out of Kazakhstan. immovable property, financial andThe rate of 20 percent applies to Certain supplies of goods and services insurance services, education, and health and welfare services. KPMG's Corporate and Indirect Tax Rate Survey 2008 43
55 Libya passenger transport services (0 percent). services, credit, banking, and otherThere is no value-added tax applicable Supplies of certain goods and services related services, cultural, sporting andin Libya. are exempt from VAT, for example religious services, postal services, banking and financial services, education, and health and welfare.56 Lithuania management of investments funds,The standard rate of value-added tax SICAR, some pension funds and 61 Mauritius(pridetines vertes mokestis; PVM) is 18 securitization vehicles, insurance and The standard rate of value-added tax ispercent. There are reduced rates of 9 reinsurance operations, supply and 15 percent. There is a reduced rate of 0percent, 5 percent, and 0 percent letting of immovable property, postal percent which applies to, for example,which apply to, for example, supplies of services, education, and certain exports of goods other than exemptservices relating to construction and medical supplies. goods, sugar, wheat flour, books,reconstruction of residential houses booklets, brochures of specific customsfinanced by state or municipality (9 58 Macau headings, the supply of electricity,percent), passenger transport services, There is no value-added tax or good water, international transport ofbooks, newspapers and periodicals, and services tax in Macau. passengers and goods, supplies ofpharmaceuticals and certain medical services to non-residents. Supplies ofproducts, accommodation at hotels, 59 Malaysia certain goods and services are exemptorganic food products, chilled meat, There is no VAT or GST in Malaysia from VAT, for example rice, wheat,live, fresh, and frozen fish (5 percent), at present. In its place, Malaysia has bread, butter, milk and cream, medical,exports of goods, intra-Community sales tax and services tax. Sales hospital and dental services, certainsupplies and supply, modification, tax is imposed on taxable goods pharmaceutical products, educationalmodernization, hiring of sea-going manufactured locally/imported, unless and training services, postal services,ships and aircraft (0 percent). There is exempted. Service tax is charged on cargo handling, and certain residentiala special rate of 6 percent under the specific type of services (taxable buildings.farmer's flat rate scheme. Supplies of service) provided by taxable persons.certain goods and services are exempt The standard rate of sales tax and 62 Mexicofrom VAT, for example health and service tax is 10 percent and 5 percent, The standard rate of value-added taxwelfare, social, educational (including respectively. A reduced sales tax rate (impuesto al valor agregado; IVA) is 15professional education), culture, sports, of 5 percent is applicable to certain percent. The reduced rate of 10 percentpostal, financial, insurance services, items such as foodstuffs, alcoholic applies to the frontier region (definedsale of real estate (older than 24 beverages, and tobacco products. as 20 kilometers parallel to themonths), and leasing of real estate. In addition certain services provided northern and southern international within a group and services provided divisions of Mexico). Zero-rated57 Luxembourg offshore are exempted subject supplies include: exports, non-The standard rate of value-added tax to conditions. industrialized animals and vegetables(taxe sur la valeur ajoutée; TVA) is 15 (except rubber), patent medicines andpercent. There are reduced rates of 60 Malta products intended for food, except12 percent, 6 percent, 3 percent, and 0 The standard rate of value-added tax beverages other than milk, syrups orpercent which apply to, for example, (taxxa fuq il-valur miżjud) is 18 percent. concentrates for preparation ofcertain wines, fuel (other than gas There are reduced rates of 5 percent beverages, ixtle, palm leaves and typeand electricity), safekeeping and and 0 percent which apply to, for of agave, tractors and agriculturalmanagement of securities, management example, letting of or provision of implements, reinsurance, and suppliesof credit by persons not granting it accommodation in premises (in certain of water for domestic use. Exempt(12 percent), electricity, gas (6 percent), conditions), the supply of electricity, supplies include: sales of land, books,food (except drinks containing alcohol), medical accessories, printed matter, newspapers and magazines underand animal feed, books, newspapers items for the exclusive use of the certain conditions, commissions onand periodicals, passenger transport, disabled (5 percent), exports of goods, mortgages and retirement funds, publichotel accommodation, certain sporting international transport and ancillary transport of persons by land (except byand cultural services, and certain services, supplies of certain qualifying railway), international maritimepharmaceutical products (3 percent), vessels and aircraft, the chartering transport, insurance and reinsurance,exports and intra-Community supplies thereof and certain services provided certain interests, derived financialof goods, supplies of goods and thereto, food, and pharmaceutical operations, professional medicalservices used by airlines operating for goods (0 percent). Supplies of certain services, authors royalties, leasing ofreward chiefly on international routes, goods and services are exempt from residential property, books,and services supplied for the needs of VAT, for example immovable property newspapers, and magazines.seagoing vessels and international (with some exceptions), insurance44 KPMG's Corporate and Indirect Tax Rate Survey 2008
63 Montenegro and 0 percent which apply to, for of such services, the right to attendThe standard rate of value-added tax example, food, drink (excluding cinemas (8 percent), exports of goods,(porez na dodatu vrijednost; PDV) is alcoholic beverages), medicines, books, supplies relating to ships and aircrafts,17 percent. There are reduced rates daily newspapers and magazines, books, magazines, newspapers, andof 7 percent and 0 percent which passenger transport, some labor construction services relating to publicapply to, for example, basic foodstuffs, intensive services, admission to roads (0 percent). Supplies of certainmedicines not listed on the Health Fund cultural, entertainment and sports goods and services are exempt fromlist, textbooks and teaching aids, books events (6 percent), exports of goods, VAT, for example financial services,and serial publications, daily and intra-Community supplies, and services real estate (with some major exceptions),periodic press (with some exceptions), regarding goods not yet imported and education, health services, andhotel and other accommodation, public supplies of sea-going vessels or social services.transportation of passengers and their aircrafts (0 percent). Supplies of certainpersonal baggage (7 percent), exports goods and services are exempt from 69 Omanof goods, transport and other services VAT, for example immovable property There is no value-added tax or goodsin relation to export, goods and services (with some major exceptions), financial and services tax in Oman.used in international air and maritime and insurance services, education, andtraffic, and medicines and medical health and welfare. 70 Pakistandevices listed on Health Insurance Fund Indirect taxes in Pakistan includelist (0 percent). Supplies of certain 66 Netherlands Antillies a sales tax and a federal excisegoods and services are exempt from The standard rate of turnover tax is duty (FED).VAT, for example financial and banking 5 percent in Curaçao and Bonaireservices, insurance and reinsurance (Omzetbelasting; OB) and 3 percent in The standard rate of sales tax is 15services, the supply of immovable St. Maarten, St. Eustatius, and Saba percent; however certain goods areproperty (except the first transfer), (Belasting op Bedrijfsomzetten; BBO). subject to sales tax at higher rates ofhealth and social security services, Exempt supplies include medical 17.5 percent and 20 percent. There iscultural, sport, and religious services. services and certain fuels used for a reduced rate of 0 percent, which business purposes. applies to, for example, all exports of64 Mozambique goods, local supplies of raw materials,The standard rate of value-added tax 67 New Zealand and supplies of specified export(imposto sobre o valor acrescentado; The standard rate of goods and sectors, import, and local supplies ofIVA) is 17 percent. There is a reduced services tax (GST) is 12.5 percent. capital goods. Certain supplies ofrate of 0 percent which applies to, for The rate is reduced to 0 percent in goods and services are exempt fromexample, exports of goods, services certain situations such as the export sales tax, for example agriculturallinked to exports of goods, international of goods and services, the supply products, unprocessed food items,passenger transportation, and some of a business as a going concern, animals and their meat, fisheries,basic foodstuffs. Supplies of certain and the supply of financial services diary products, construction materials,goods and services are exempt from under the business-to-business regime. computer software, ships, navigationVAT, for example medical and health Supplies of certain goods and services equipments, and the sale to hospitalsservices, goods and services linked to are exempt from GST unless the supplies and educational non-profit organizations.welfare and social security, education can be zero-rated. Exempt supplies FED applies to the import and(with some exceptions), banking and include the supply of financial services, manufacturing of specified goods andfinancial transactions, insurance and the supply by non-profit bodies of provision of specified services atreinsurance transactions, leasing of donated goods and services, the different rates. The rate of FED onimmovable property for residence supply of residential accommodation, specified services ranges from 5 percentor commercial and industry in rural and the supply of fine metals. to 15 percent. Special excise duty (SED)zones, goods and services related to at uniform rate of 1 percent is applicableagricultural, forestry, livestock and 68 Norway on import of goods and locallyfishing activities, and importation of The standard rate of value-added tax manufactured goods, except thecertain goods approved for mining (merverdiavgift; MVA) is 25 percent. goods specifically exempt from SED.and industrial free-zone operations. There are reduced rates of 14 percent (increased from 13 percent as from 71 Palestine65 Netherlands 1 January 2007), 8 percent, and 0 The value-added tax rate is fixed atThe standard rate of value-added tax percent which apply to, for example, 14.5 percent.(omzetbelasting; BTW) is 19 percent. food (14 percent), hotel accommodation,There are reduced rates of 6 percent passenger transportation, communication KPMG's Corporate and Indirect Tax Rate Survey 2008 45
72 Panama items (cesta básica), loans and financial such as, educational services, servicesThe standard rate of value-added tax interests, commissions and surcharges, rendered pursuant to an employer-(impuesto sobre la transferencia and supplies of pharmaceutical employee relationship, servicesde bienes corporales muebles y la products. Exports are zero-rated. rendered by regional or areaprestación de servicios; ITBMS) is Exempt supplies include: certain headquarters established in the5 percent. The increased rate of 10 diplomatic and investment imports, Philippines. There is a withholdingpercent applies to the import, wholesale, farm products in their natural state, VAT at a rate of 5 percent applicableand retail sale of alcoholic beverages foreign currencies, governmental or to payments made to contractors byand the 15 percent increased rate private securities including shares the government or any of its politicalapplies to the import, wholesale, and of stock, goods received through subdivisions or instrumentalities.retail of all kinds of cigarettes and inheritance, transfer of credits, books,cigars. Zero-rate supplies include: magazines, and others of scientific, 77 Polandexports and re-exports of goods and educational, and general interest, The standard rate of value-added taxthe sales of pharmaceutical and food interest on public or private shares (podatek od towarow i uslug; PTU) isproducts when certain conditions are and securities, deposits in financial 22 percent. There are also reducedmet (that is, the taxable person is entities authorized by the Central Bank rates of 7 percent, 3 percent, and 0engaged exclusively in such activities of Paraguay, services of cooperatives, percent which apply to, for example,and its total output is sold within the home savings, and loans under the foods, medicines, books, andPanamanian territory). Exempt supplies Sistema de Ahorro y Préstamo para newspapers (7 percent), agriculturalinclude (among others): the sales of la Vivienda. products, products of fishery, andfood and pharmaceutical products, animal feed (3 percent), supply, import,sales of oil, lubricants, fuel, and similar 75 Peru repair, and maintenance of certain shipsproducts, newspapers, magazines, The standard rate of value-added tax and aircraft, international transport, andeducative magnetic media, notebooks, (impuesto general a las ventas; IGV) is intra-Community supplies of goods andpencils, and other items for school 17 percent. The municipal promotion exports (0 percent). Certain supplies ofpurposes, medicines and pharmaceutical tax (impuesto de promoción municipal; goods and services are exempt fromproducts, and payments (including IPM) of 2 percent is also added to the VAT, for example, supply of second-interest paid and received) arising value of goods or services used to hand goods, land other than buildingfrom financial services and financial determine the IGV, which results in a 19 land, supply of housing structures, andleasing contracts. percent sales tax overall. Zero-rated services of management of investment supplies include: the export of goods, funds.73 Papua New Guinea the export of services detailed in theThe standard rate of goods and services sole arranged text of sales tax and the 78 Portugaltax (GST) is 10 percent. There is a supplies in the Amazon region perform The standard rate of value-added taxreduced rate of 0 percent which applies by companies located in the Amazon (imposto sobre o valor acrescentado;to, for example, exports of goods and region. Exempt supplies include: fresh IVA.) is 21 percent for Portugueseservices, medical supplies, supplies of fish, vegetables, seeds, fruit, mainland and 15 percent for Madeiragoods and services to prescribed educational and cultural books, credit and Azores islands. There are reducedforeign aid provider, supplies of goods services granted by banks, financial and rates of 12 percent (8 percent forand services to a non-profit body. credit institutions, public transportation islands), 5 percent (4 percent islands),Supplies of certain goods and services services within the country, cargo and 0 percent which apply to, forare exempt from GST, for example transportation, cultural performances, example, restaurant services, fruit andfinancial, medical, and educational and life insurance. vegetables (12 percent (8 percentservices, public road transport, postage for islands)), water supply, booksstamps and the retail supply of 76 Philippines and newspapers (5 percent (4 percentnewspapers. The standard rate of value-added tax is for islands)), exports, transport of 12 percent (increased from 10 percent goods and people between the74 Paraguay as of 1 February 2006). A reduced rate mainland and the islands (0 percent).The standard rate of value-added tax of 0 percent is imposed on specified Supplies of certain goods and services(impuesto al valor agregado; IVA) is 10 transactions: such as, export sales or are exempt from VAT, for examplepercent. The 5 percent rate applies to services rendered to persons/entities immovable property, financial, andtransfers of real state, transfers of the exempt from VAT. Certain specified insurance services.right to use goods, certain basic food transactions are exempt from VAT46 KPMG's Corporate and Indirect Tax Rate Survey 2008
95 Tunisia cultural, educational, and health most states, and some localThe standard rate of value-added tax is services rendered by the government governments impose transactional18 percent. There are reduced rates of and other related organizations. based taxes commonly referred to12 percent and 6 percent which apply as sales and use taxes. Forty-fiveto, for example, the transport of goods 97 Ukraine states and the District of Columbiaexcluding agricultural and fish products The standard rate of value-added tax impose a state level tax on the saleand goods used for their production, (podatok na dodanu vartist; PDV) is 20 or use of goods and some services.services rendered to hotels, services percent. There is a reduced rate of 0 Local governments in thirty-four statesrendered by lawyers, notaries, legal percent which applies to, for example, are authorized to impose local salesand tax counsels and other experts, exports of goods and related services, taxes. There are about 7,600catering and IT services (12 percent), supplies for airplanes and ships used in jurisdictions across the country thatactivities carried out by doctors, nurses, international traffic. Supplies of certain has chosen to impose a local sales tax.masseurs, veterinarians and analytical goods and services are exempt from Which goods and services are subjectlaboratories, the transport of persons VAT, for example certain financial to tax, along with the applicable taxand agricultural products, the import, services, insurance services, sale of rates, vary according to the jurisdiction.production, and sale of fertilizers, business as a going concern, royalties, All states and some localitiessupplies of livestock concentrate food, subscriptions for and delivery of local with sales and use tax regimesSoya beans, fish meal, products and newspapers, magazines and books, possess broad powers to determinearticles for the pharmaceutical industry prescribed pharmaceuticals, certain whether goods and services are fully(6 percent). Supplies of certain goods transfers of immovable residential taxable, taxable at a special rate,and services are exempt from VAT, for property and land, local passenger or are fully exempt.example school education, imports, transportation (except for taxis),the production and sale of aircrafts for education, and prescribed health 101 Uruguaypublic transport, services rendered by and welfare. The standard rate of value-added taxmaritime transport and ship agencies, (impuesto al valor agregado; IVA) isaircraft transport services, leasing of 98 United Arab Emirates 22 percent as from 1 July 2007. Thevessels and aircrafts for international There is no value-added tax or reduced rate of 10 percent (reducedmaritime and air transport, the goods and services tax in the from 14 as from 1 July 2007) appliesproduction and sale of flower, bread, United Arab Emirates. to specific consumer goods, lodgingpasta (normal quality), olive oil, Soya, services, and medicines. Exports areSoya oil, and the production, refining, 99 United Kingdom zero-rated. Exempt supplies includeand conditioning of vegetable oil. The standard rate of value-added tax certain agricultural goods and is 17.5 percent. There are reduced rates machinery, specified fuels, commissions,96 Turkey of 5 percent and 0 percent which apply and interests on specific financialThe standard rate of value-added tax to, for example, children's car seats, transactions and transport services.(katma değer verisi; KDV) is 18 percent. certain contraceptive products, domesticThere are reduced rates of fuel and power, and renovations/ 102 Venezuela8 percent, 1 percent, and 0 percent conversions of residential properties The standard rate of value-added taxwhich apply to, for example, basic food (5 percent), food and animal feed, (impuesto al valor agregado; IVA) is 9products, textile products (8 percent), books and newspapers, prescription percent (the rate was reduced from 14overnight services/accommodation drugs and medicines, children's clothes, percent to 11 percent as from 1 Marchperformed in the hotels, motels, passenger transport, and exports of 2007 and then further to 9 percent asholiday villages, and similar goods (0 percent). Supplies of certain from 1 July 2007). The increased rateaccommodation facilities (8 percent), goods and services are exempt of 19 percent (which results fromagricultural products, and exports of from VAT, for example financial and adding 10 percent to the standard rate)goods and services and international insurance services, education services applies to luxury goods. Certain goodstransportation (0 percent). Note that supplied by eligible bodies, certain and services (such as red meat, animalTurkish VAT Law does not include cultural services, betting, gaming oil, or local plain tickets) havedirectly a rate of 0 percent, but only and lotteries, subscriptions, and health temporary rate of 8 percent. Exportsan exemption with credit. Supplies of and welfare. are zero-rated. Exempt supplies includecertain goods and services are exempt basic food items, medicine, fertilizer,from VAT, for example banking and 100 United States fuel, newspapers, books andinsurance transactions, services While the United States does not magazines, education, intangiblerendered in Free Trade Zones, social, impose a national value-added tax, assets, loans, banks, and financial KPMG's Corporate and Indirect Tax Rate Survey 2008 49
103 VietnamThe standard rate of value-added tax(gia tri gia tang; GTGT) is 10 percent.There are reduced rates of 5 percentand 0 percent which apply to, forexample, medical equipment andinstruments, printing of certain books,fresh foodstuffs, scientific andtechnical services, base chemicals,manufacturing equipment andmachinery, processed metals,and most transportation services(5 percent), the exports of goodsand services (0 percent) – please notethat export services are subject toa consumption in Vietnam test andstrict requirements. Supplies of certaingoods and services are exempt fromVAT, for example equipment, machineryand means of transportation usedexclusively in technological chains,construction supplies, transfer of landuse rights, credit services, investmentfunds and securities trading activities,certain insurance services, healthcare services, computer software,printing, publishing and distributionof newspapers, magazines, andcertain books.
104 ZambiaThe standard rate of value-added taxwas reduced from 17.5 percent to16 percent effective 1 April 2008.There is reduced rate of 0 percentwhich applies to exports of goods,supplies to privileged persons, buildingsupplies to charitable organizations,hotel accommodation in Livingstonedistrict medical supplies etc. Suppliesof certain goods and services areexempt from VAT, for example, watersupply services, health services,educational services, books andnewspapers, transport services,conveyance of real property, financialservices, relief at importation, domesticNotes© 2008 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
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KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member © 2008 KPMG International. KPMG International isfirms. KPMG International provides no audit or other client services. Such services are provided solely by member a Swiss cooperative. Member firms of the KPMGfirms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate network of independent firms are affiliated withentities. They are not and nothing contained herein shall be construed to place these entities in the relationship of KPMG International. KPMG International provides noparents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied client services. No member firm has any authorityor otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever or vice versa. to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMGThe information contained herein is of a general nature and is not intended to address the circumstances of any International have any such authority to obligate orparticular individual or entity. Although we endeavor to provide accurate and timely information, there can be no bind any member firm. All rights reserved.guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the Printed in the United Kingdom.future. No one should act on such information without appropriate professional advice after a thorough examination KPMG and the KPMG logo are registered trademarksof the particular situation. of KPMG International, a Swiss cooperative. Publication name: KPMG's Corporate and Indirect Tax Rate Survey 2008 Publication number: RRD-96142 Publication date: August 2008 Printed on recycled material