UHY International Study Finds Corporate Tax Rates Plunged to New Lows Worldwide

A new study by UHY International (UHYI) shows corporate tax rates in leading economies worldwide have fallen to an average of just 25.1%*.

However, with the COVID-19 pandemic leaving a gaping hole in the public finances of countries around the world, UHYI says that the trend of declining corporate tax rates worldwide is likely to be over for the foreseeable future. The U.K. government already announced its intention to raise corporation tax rates to 25% from April 2023, more than two percentage points higher than the European average. Argentina already increased its headline corporate tax rate from 30% to 35% in 2021. President Joe Biden has also pledged to raise federal corporate income tax to 28%, after it was cut to just 21% by his predecessor Donald Trump in 2017.

Global corporate tax rates have been steadily decreasing over recent years, with the G7 average for a business recording profits of $1 million falling from 32% in 2014/15 to just 26% in 2020/21. Many countries sought to incentivize businesses to invest in their economies with attractive tax rates. France, often seen as a higher tax European economy, has lowered its headline rate from 31% to 26.5% in just the past three years.

Subarna Banerjee, Chairman of UHY International, commented: “Countries around the world have wanted to remain competitive by keeping the tax burden on companies as low as possible in recent years. The cash strapped governments of 2022 will likely now be considering increasing taxes on corporations. Public finances will have to be shored up somehow and corporations can be an easier target politically than individuals. Businesses worldwide should be prepared for their tax costs to begin to rise in the coming years.” 

*According to the average tax rates of 33 UHY international firms, assuming companies have a profit of $1 million

This article was originally published by Accounting Today.