International corporate income tax rates vary, with the average rate sitting comfortably around 23.45%.
There are extremes. Some countries – think the Caribbean –offer 0% rates, while the tiny African nation of the Union of Comoros has the undesirable reputation of being the nation with the highest corporate tax rate – a whopping 50%.
The good news is that corporate tax rates have actually gone down on average since the 1980s, and countries like the Comoros are outliers. As already mentioned, you can find countries with a general corporate income tax as low as 0%, so you have to ask yourself, why pay 30, 20 or even 10% in corporate tax?
Nobody likes paying high taxes, but getting the right advice is critical. At Nomad Capitalist, we’ve advised thousands of entrepreneurs and investors on fully compliant and legal tax reduction strategies, resulting in over US$1 billion in total client savings. Talk to us about creating a holistic, custom-created Action Plan today.
Corporate Income Tax Rates
Corporate income tax rates refer to a percentage rate of tax placed on businesses. These rates vary depending on where your business is located and the amount of income.
However, 140 countries have agreed to implement a new standard global tax agreement proposed by the Organisation for Economic Co-operation and Development (OECD) aimed at ensuring multinational companies pay a minimum tax rate. This agreement imposes a minimum effective rate of 15% on corporate profits and countries with tax rates below this will face top-up taxes to meet the minimum level.
Corporate tax-friendly jurisdictions such as Ireland, Luxembourg, Switzerland and Barbados are already implementing the minimum rates, though it’s worth noting that only companies with earnings over €750 million are subject to the new 15% rate.
Low-corporate-tax countries attract entrepreneurs and foreign investors looking to take advantage of favourable tax policies. These countries are generally more business-friendly overall.
Countries with 0% Corporate Taxes
The Bailiwick of Jersey
A British Overseas Territory, The Bailiwick of Jersey is a self-governing island off the coast of Normandy, France and is one of the Channel Islands between Britain and France.
Jersey has a 0% corporate tax rate. However, for some institutions, like property development firms and large retailers, higher rates of 10-20% (on average) can apply. Jersey’s economy is focused heavily on the financial sector, with banking, trust and investment services being the main contributors to GDP.
The Cayman Islands
The Cayman Islands offers the advantage of a 0% corporate tax rate and also forgoes tax on income, dividends or capital gains. However, companies operating in this tiny Caribbean nation pay a licensing fee to the state rather than corporate taxes.
Tokelau Islands
Unless you are from Oceania, you may be forgiven for not knowing much about the Tokelau Islands.
Tokelau is a New Zealand territory in the South Pacific Ocean. It includes three coral atolls, Atafu, Nukunonu and Fakaofo, and has a tiny population of 1,500 people. This small nation has zero corporate tax.
Despite the challenge of being particularly vulnerable to the effects of climate change, Tokelau has been working towards improving its economic situation through sustainable tourism and renewable energy projects.
Low Corporate Tax Rates in 2024
Barbados
Barbados sits in the Lesser Antilles of the Caribbean Sea and is known for its beaches, crystal clear waters and having one of the lowest corporate tax rates in the world. It levies just 1% for income over BBD$30 million, while a corporate tax of 5.5% is applicable for revenue of BBD$1 million or less.
Barbados has a mixed economy based on tourism, manufacturing and agriculture. The service sector accounts for the largest share of the economy, representing approximately 80% of GD
The United Arab Emirates (UAE)
The UAE is located in the southeastern part of the Arabian Peninsula and has seven emirates, each with a distinct identity. The UAE is known for its thriving economy and, until recently, had a corporate tax rate of 0%. Then, in 2022, the UAE announced that a new Corporate Tax Law was coming into effect as of June 2023. The new corporate tax rate is set at 9% on profits above AED375,000.
The UAE has greatly diversified its economy and has become a global tourism, financial services and trade hub. The Arab nation is also home to a diverse expat population, with people from all over the world living and working in the UAE.
Montenegro
The beautiful nation located in Southeast Europe, Montenegro, has a progressive corporate income tax.
Depending on profit, it varies from 9% to 15%. On profits up to €100,000, tax is 9%. On profits between €100,000 to €1,500,000, a corporate tax of €9,000 plus 12% is payable, while above €1,500,000, means a tax of €177,000 plus 15%. Although not a eurozone or EU member, and despite not having a formal agreement with the EU, Montenegro has already adopted the euro as its de facto currency.
Montenegro – think sun-kissed beaches – is an attractive spot for affordable, luxury living in Europe, making it ideal for retirement properties and property investments in general. In short, Montenegro is a great destination for those looking for a new home.
Entrepreneurs and investors have been quick to see the potential of getting in early while the country is still an EU candidate. Joining the European Union is one of Montenegro’s primary objectives and it’s predicted to become a member sometime between 2025 and 2030.
Hungary
A Central European nation with a population of around 9.7 million, Hungary has one of the best corporate tax rates in the EU, at a flat 9%.
In recent years, Hungary has seen economic growth and development, specifically in the fields of car manufacturing, food processing and electronics. The country is both a member of the European Union and NATO and is known for its strong cultural identity and traditions.
Andorra
The Principality of Andorra is a small, landlocked country located between France and Spain, with a population of approximately 80,000. Although part of the eurozone, it’s not part of the European Union. Even so, it enjoys a special relationship with the EU and, like Montenegro, uses the euro as its official currency.
Andorra is known for its stunning mountain views, ski resorts and the incredibly low tax rate of 10%. As of January 2023, companies now pay an ‘object tax’ on profits at a minimum of 3%. However, the low corporate tax rate of 10% remains one of the lowest in Europe. You can reduce the 10% corporate income tax even further on corporation tax on profits for business income derived from outside Andorra.
The special tax regime of Andorra requires government permission, which we can help you navigate as a Nomad Capitalist client.
Andorra’s economy is mainly based on tourism and banking, as the country has low tax rates and strict banking secrecy laws. In recent years, Andorra has made efforts to diversify its economy by investing in technology and renewable energy.
Bulgaria
Bulgaria is a country in southeastern Europe, bordered by Romania, Serbia, North Macedonia, Greece and Turkey. With a population of about 7 million, Bulgaria is one of the least-populated countries in the European Union.
Bulgaria generally applies a flat corporate income tax rate of 10%. Local companies are taxed on worldwide revenue and non-resident companies are taxed only on income generated within Bulgaria.
Foreign investment has played an important role in driving the growth of the Bulgarian economy. Bulgaria has become an attractive destination for investment due to its strategic location and skilled workforce. Major investors in Bulgaria include companies from Austria, Germany, the Netherlands and the United States.
North Macedonia
While it’s had a bumpy ride in terms of nomenclature, North Macedonia, or to use its official name, the Republic of North Macedonia, is another potential EU candidate from the former Yugoslavia which offers low corporate tax rates.
North Macedonia’s current corporate tax rate is just 10% and both resident and non-resident companies can benefit from the simplified tax regime based on overall annual income.
With a small population of around 2 million people, the country’s economy is focused on the service and industrial sectors. North Macedonia has been working towards integration into the European Union, which would mean significant economic benefits.
Overall, North Macedonia’s economy has excellent growth potential, but it is still developing and will require continuous effort to overcome its challenges and achieve sustainable growth.
Gibraltar
Known locally as ‘The Rock’, and to British expats as ‘Gib’, Gibraltar is a tiny 6.7 kilometres/2.58 square miles region located at the southern tip of the Iberian Peninsula, bordering Spain.
In 2021, Gibraltar raised its statutory corporate income tax rates from 10% to 12.5%.The corporate tax rate is payable on income made in, or that comes from, Gibraltar. Basically, if the majority of the income-generating activity takes place in Gibraltar, it will be subject to corporation tax.
Gibraltar offers one of the lowest tax rates for companies with activities outside the owner’s country of origin, such as marketing, research, software development, website maintenance and administration, among other things. Even traditional companies physically based in Gibraltar can benefit by paying a 10% corporation tax on profits from within the country.
Gibraltar is home to a thriving financial services and banking sector. There’s various banks, investment firms and insurance companies here, as well as many of the UK’s leading online gambling companies, all benefiting from the attractive low tax regime.
Despite exiting the EU alongside Britain in 2020, Gibraltar maintains close legislative harmony with EU directives.Its diversified economy means that, despite the challenges surrounding Brexit, it continues to attract investment and offer opportunities for growth and prosperity. ‘The Rock’ is also of particular interest to those looking for a European base of operations which also offers easier access to the UK market.
Liechtenstein
Another popular low-tax jurisdiction, the small principality of Liechtenstein rests, landlocked, between Austria and Switzerland in central Europe.Despite its tiny size of 61.7 square miles/160 square kilometres, Liechtenstein has a very strong economy, driven by a thriving financial services sector.
Liechtenstein’s corporate tax rate is 12.5% and, as outlined above, it implements the global minimum tax of 15% for qualifying companies.
With a population of under 40,000, this central European nation is also known for providing a high quality of life, low crime rates and excellent healthcare. Chief among its non-financial attractions are the wide range of tourist activities it offers, including skiing, hiking and mountain biking.
Cyprus
The Republic of Cyprus is an island in the eastern Mediterranean Sea, with a population of 1.2 million. One of the biggest islands in the Mediterranean, it’s close to Turkey, Greece and Egypt so, as you might expect, tourism, financial services, oil exports, agriculture and shipping dominate the country’s economy.
With a flat corporate tax rate of 12.5%, Cyprus has one of the lowest rates in the EU. However, non-resident companies are also taxed on profit from sources within Cyprus.
Cyprus’ economy is set to perform well this year, with a predicted growth rate of 2.8%. FinTech, entrepreneurship and innovation are all big drivers of the Cyprus economy, while betting and online gambling companies continue to benefit from increased revenue.
Ireland
Ireland has the advantage over Cyprus for entrepreneurs, with a stronger economy and numerous foreign companies flocking to the small island. ‘Big Tech’ and ‘Big Pharma’ companies, in particular, choose to go to Ireland for a combination of reasons: Ireland’s favourable tax climate; educated workforce; excellent lifestyle plus, following Brexit, it’s the EU’s only native-English-speaking country.
As an EU member state, Ireland is easily accessible but, courtesy of its exclusive Common Travel Area (CTA) agreement with Britain, it’s also in the unique position of having easy access to the UK market, making it one of the world’s most exciting economic zones.
Companies such as Apple, Google and Pfizer have already taken advantage of the significant tax breaks and investment incentives for companies on offer in Ireland. On top of this, Ireland offers a highly skilled and educated workforce, with one of the world’s highest numbers of science and engineering graduates per capita.
The Irish government has been proactive in creating policies encouraging economic growth and entrepreneurship, making it a supportive environment for businesses of all sizes. Ireland’s strong international connections and position in the European Union make it an ideal location for companies looking to expand into global markets.
Corporate Income Tax Rates Globally
What Is Corporate Tax?
Corporate tax rates are taxes applied to the profits corporations or businesses earn. Income generated from business activities such as sales, goods, services or other revenue-generating activities is generally subject to corporate income tax. The corporate tax rates are typically calculated as a percentage amount.
Corporate taxes vary from country to country, with some countries imposing lower rates than others. In places like the US, corporate taxes generate revenues for governments at the federal, state or local levels.
Noncompliance with corporate tax laws can result in significant penalties, fines or legal action. Therefore, companies must ensure that they comply with all regulations and reporting requirements to avoid damages.
Which Countries Have the Highest Corporate Tax Rates?
Corporate tax rates vary significantly around the world. Some countries have high corporate tax rates to generate government tax revenue. Some of the countries with the highest corporate tax rates include:
- Comoros – corporate tax rate of 50%
- Puerto Rico – corporate tax rate of 37.5%
- Argentina – corporate tax rate of 35%
- Brazil – corporate tax rate of 34%
- Venezuela – has a corporate tax rate of 34%
- American Samoa – corporate tax rates of 34%.
It’s important to mention that some countries with the highest corporate tax rates may offer tax rate breaks or incentives for specific industries or types of businesses. Also, corporate tax rates can change over time as national governments look to adjust policies.
As always, getting the right advice from the start can save you lots of time, effort and money. Rather than always relying on local providers, it pays to have impartial advice from international experts with no specific allegiance to any one jurisdiction.
That’s just one of the reasons people choose Nomad Capitalist – we have direct experience across multiple jurisdictions and will help you weigh up the pros and cons of each.
We have helped thousands of entrepreneurs and investors with legal tax reduction strategies, company formation and offshore investment. Remove all the guesswork, skip past the gatekeepers and speed up the entire process with a Nomad Capitalist Action Plan.
Benefit from the Lowest Corporate Tax Rates
Clearly, corporate tax rates can, and do, vary wildly from one country to the next. Some are extremely high, some quite low, while others have no corporate tax at all.
Knowing which option is best for your needs involves firstly understanding the motivation behind each country’s approach to corporate taxes and whether or not they tax locally sourced income.Some countries are small and lack resources, so they drop their rates to attract business, while others are so wealthy they need not levy tax at all and only do so at the behest of foreign governments.
In the end, it comes down to a trade-off. Each country has a different niche market it is trying to best cater to, which gives you plenty of choices, but only if you have the time to shop around.
That’s where the team at Nomad Capitalist can help. If you’re an entrepreneur looking to reduce taxes and move your operations overseas, become a client today, save valuable time and spare yourself the prospect of running into hassle further down the line.
