Global Corporation Tax Levels In Perspective [Infographic]

At the weekend, G7 finance ministers reached a historic agreement regarding corporation tax, with all seven nations endorsing a minimum rate of 15%. The agreement comes after it emerged that an Irish subsidiary of Microsoft

MSFT
raked in $315 billion of profit last year but it paid no tax as it is “resident” in Bermuda for tax purposes. Microsoft Round Island One’s gargantuan profit equals nearly three quarters of Ireland’s GDP and it does not even have any employees. Such practices have become commonplace and in May, for example, Amazon

AMZN
reported revenue of €44 billion for the previous year in Europe. Even though that figure represents record sales, the company’s corporate filings in Luxembourg revealed that its unit there actually made a €1.2 billion loss and therefore it paid no corporate tax.

Reports like these added extra impetus to the G7 negotiations and the agreement means that companies will have to pay a minimum tax rate of 15%, regardless of where they locate their headquarters. It will also aim to close tax loopholes, forcing some of the largest multinationals and tech giants such as Amazon, Facebook and Microsoft, to pay taxes where their goods and services are sold, regardless of whether they are physically present in certain countries. The OECD estimates that the proposals will generate between $50 and $80 billion a year in tax revenues, though the final sum will depend heavily on the final state of the agreement.

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French finance minister Bruno Le Maire described the weekend’s events as “a starting point” and he pledged that “in the coming months we will fight to ensure that this minimum corporate tax rate is as high as possible”. While the G7 reached an agreement, they will have to drum up support among the G20 nations who are scheduled to meet in Venice next month while the wider negotiations will involve 139 countries. So, considering the gravity and implications of the agreement for both multinationals and tax havens, how do corporate tax rates look across developed nations in 2021?

As the following infographic based on OECD data (showing the basic central government statutory corporate income tax rate) illustrates, Ireland’s infamously low corporate tax rate still stands at 12.5%, far below the threshold the G7 agreed upon at the weekend. In the United States, the corporate tax was lowered from 35% to 21% in 2018, though President Biden has suggested increasing it to 28%. He recently offered to drop those proposals and keep a minimum 15% tax rate in exchange for Republican support to hammer out his infrastructure deal. Elsewhere across the OECD, the French corporation tax rate stands at 28.4% in 2021 while the United Kingdom’s rate is 19%.

*Click below to enlarge (charted by Statista)

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