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High Corporate Tax Rate Puts US Businesses at a Competitive Disadvantage

May 26th 2016
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At 41.1 percent, the corporate tax rate in the United States is the highest worldwide, according to a new study by UHY, a global accounting and consultancy network.

UHY calculated the rate using a combined federal and assumed state tax rate of 7.1 percent on taxable profits of $1 million for the 2014-15 financial year.

Globally, the average corporate tax rate is 27 percent, while the Group of 7 (G7) rate is 32.3 percent. European companies pay an average rate of 25.3 percent. Results are based on the firm’s analysis of companies in 31 countries within its own business network.

With tax inversions high on governmental and corporate radar screens, the report notes the obvious: Low corporate tax rates create a competitive advantage, and help countries retain domestic companies and discourage them from relocating elsewhere.

“There is a global competition amongst countries to offer a lower corporation tax rate, and there are enormous advantages for those countries that can put themselves ahead of the pack,” Dennis Petri, a partner at UHY LLP, said in a prepared statement. “Enabling companies to retain more of their profits encourages them to reinvest more capital back into their business, helping to drive innovation.”

A corporate tax cutback in the United States would encourage corporate investment from foreign companies, he said.

The report lists the following as the 10 highest corporate tax rates:

  • United States: 41.1 percent
  • Japan: 38.6 percent
  • France: 37.8 percent
  • Argentina: 35 percent
  • Malta: 35 percent
  • Belgium: 34 percent
  • Brazil: 33.7 percent
  • India: 33.1 percent
  • Pakistan: 33 percent
  • Italy: 32.3 percent

And here are the bottom five:

  • Czech Republic: 19 percent
  • Poland: 19 percent
  • Romania: 16 percent
  • Ireland: 12.5 percent
  • United Arab Emirates: 0 percent

Related articles:

New Report Sounds Alarm on US Corporate Tax Rate
US Lags Behind Most OECD Countries in Tax Competitiveness


Replies (2)

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By Clinton Lee
May 26th 2016 15:26 EDT

It's swings and roundabouts. Before you begin to feel too sorry for yourself remember that in the UK the Corporation Tax may be low but we pay VAT, we pay "business rates", we pay employers' National Insurance contributions and all kinds of other taxes that probably take our total up to way above that measly 41.1%

Thanks (1)
By [email protected]
Jun 21st 2016 19:26 EDT

Is the VAT considered in the tax rate for other countries?

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