Zero Corporation Tax Rate Countries Forecast 2023

Corporate tax rates are not static, they do change based on a lot of different factors such as the political and economical climate and the policies that the government is implementing and in 2023 quite a few countries are changing their corporate tax structure.

Picking a country to set up your company is not a simple decision as tax rates is just one of the questions that you will need to answer as well as.

What Is Corporate Tax?

Corporate tax is the tax applied to the profits of a company. Companies pay taxes on their taxable income (which can be structured differently by country). This figure usually includes total revenue less expenses, depreciation, operating costs, and other costs. These taxes vary by country with some taxing corporations more than others all the way down to zero tax.

Zero Tax Rate Countries

There are ten countries that offer companies a zero-tax setup with five of them located in the Americas and three in Europe.:

1. Asia – Bahrain – 0%
2. Americas – Anguilla – 0%
3. Americas – Bahamas – 0%
4. Americas – Bermuda – 0%
5. Americas – Cayman Islands – 0%
6. Americas – Turks and Caicos Islands – 0%
7. Australia – Vanuatu – 0%
8. Europe – Guernsey – 0%
9. Europe – Isle of Man – 0%
10. Europe – Jersey – 0%

Low Tax Rate Countries

In addition to the mostly Caribbean countries with no corporate taxes, many countries in Eastern Europe have lower than average corporate tax rates, including:

1. Europe – Hungary – 9%
2. Europe – Montenegro – 9%
3. Europe – Andorra – 10%
4. Europe – Bosnia and Herzegovina – 10%
5. Europe – Bulgaria – 10%
6. Europe – Gibraltar – 10%
7. Europe – Macedonia – 10%
8. Europe – Moldova – 12%
9. Europe – Cyprus – 12.5%
10. Europe – Ireland – 12.5%
11. Europe – Liechtenstein – 12.5%

Europe has the lowest average corporate tax rate at 18.98%, lower than the average tax rate in Asia at 21.43%, the Americas at 27.16%, and Africa at 27.46%.

What Is Corporate Tax Avoidance?

Corporate tax avoidance is a strategy that companies use to lower the amount they pay in corporation tax. This may be done by shifting money and business units to offshore locations that have more favourable tax regulations.

Although it may seem like an illegal activity, it isn’t necessarily illicit. Many companies take legal steps to manoeuvre their money around the globe to cut down their tax bill within the laws of the countries they are based in and do business in keeping them a legal entity.

Sources

1. Investopedia
2. Trading Economics