As scrutiny of global corporate taxation and inversions continue, a new report by the Tax Foundation indicates that the United States has the third-highest corporate income tax rate among 188 countries.
In fact, the United States’ top marginal corporate tax rate of 38.9 percent (the federal tax rate of 35 percent, plus the average tax rate among the states) falls just short of tying for second-highest with Puerto Rico’s 39 percent rate. United Arab Emirates tops the list at 55 percent.
In the Tax Foundation’s 2015 analysis, the United States had the third-highest corporate tax rate at 39 percent, trailing Chad (40 percent) and the United Arab Emirates (55 percent).
Rounding out the top 10 countries with the highest corporate tax rates in 2016 are Argentina, Chad, Democratic Republic of the Congo, Equatorial Guinea, Guinea, Malta, and the US Virgin Islands – all at 35 percent.
The 10 countries with the lowest corporate tax rates include Uzbekistan (7.5 percent), Turkmenistan (8 percent), Montenegro (9 percent), and Bulgaria, Gibraltar, Kyrgyzstan, Macedonia, Paraguay, Qatar, and Timor-Leste (all at 10 percent).
The average of the 188 countries is 22.5 percent, or 29.5 percent when weighted by gross domestic product (GDP).
Among the 35 nations that comprise the Organization for Economic Cooperation and Development, the United States has the highest corporate income tax rate.
Interestingly, while the worldwide GDP-weighted average tax rate has dropped from 34.1 percent to 29.5 percent in the last decade, the United States’ 38.9 percent rate has remained steady. But that doesn’t bode well for the country, according to the report.
“The corporate income tax rate is one of many aspects of what makes a country’s tax code and economy attractive for investment,” the report states. “However, as the rest of the world’s economies mature and their tax rates on corporate income continue to decline, the United States risks losing its competitive edge due to its exceptionally high corporate income tax rate.”
As for countries without any corporate income tax, the report lists these 14: Anguilla, Bahamas, Bahrain (which has a corporate income tax for oil companies), Bermuda, Cayman Islands, Guernsey, Isle of Man, Jersey, Nauru, Palau, Turks and Caicos, Vanuatu, British Virgin Islands, and Wallis and Futuna.
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.