EU leads world in race to cut company tax: survey

New Delhi, May 22 (UNI) Company tax rates across Europe are being driven steadily down due to competition amongst EU member states for jobs and capital, and economic liberalisation, according to KPMG International's latest global corporate tax rates survey released here today.

Average corporate tax rates in the EU fell by 0.28 per cent to 25.04 per cent in 2005, due to rate cuts in six EU member states including France, Greece and the Netherlands. This compared with average rates of 28.31 per cent for the OECD countries, 28.25 per cent for Latin America and 29.99 per cent in the Asia Pacific region, says the survey.

The countries with the highest tax rates were Japan with 40.69 per cent and the United States with 40 per cent. Lowest was the Cayman Islands with a corporate tax rate of 0 per cent.

Of the 86 countries surveyed, the majority had either kept their tax rates unchanged since 2004, or had reduced them. The largest reductions were in Barbados (-5 per cent to 25 per cent), Albania (-3 per cent to 20 per cent), Israel (-3 per cent to 31 per cent) and India (- 2.9 per cent to 33.66 per cent).

Countries reporting significant increases were the Dominican Republic (+5 per cent to 30 per cent) and the Philippines (+3 per cent to 35 per cent).

KPMG's Tax practice global head Loughlin Hickey said, "Effective tax burdens can vary significantly depending on the attitude of governments and their tax authorities to corporate taxpayers, ranging from aggressive policing to actively promoting business collaboration. Clarity and certainty in the application of tax laws is a rare, but much prized commodity." KPMG International's Corporate Tax Rates covers 86 countries, including the 30 member countries of the OECD, the 25 EU countries, 19 countries in Asia.

UNI