
Radar | Jan 03,2021
December 19 , 2020
By Lucy Desai ( a content writer at QuickBooks, a global company offering the world's leading accountancy software. )
While corporation tax rates are influenced by a country’s policies, there is clearly a pattern with developing countries and emerging economies paying higher rates to sustain the country.
Some of the wealthiest countries in the world’s corporation tax are relatively varied, with Luxemburg standing at 27.08pc, Norway at 22pc, Iceland at 20pc, Switzerland at 18pc and Ireland at 12.5pc. It would appear that some countries’ cultures factor into how much tax they pay.
For instance, Scandinavian countries are proud to pay higher taxes to contribute to social welfare. In fact, Norway, Denmark and Iceland, the top three happiest countries, are all among the highest taxed countries in the Organisation for Economic Cooperation & Development (OECD). This is in terms of total tax revenue as a percentage of gross domestic product (GDP).
On average, Africa has the highest corporation tax rate throughout the world’s continents at 28.45pc and South America, the second highest with an average rate of 27.63pc. However, Europe stands at the lowest rate of 20.27pc.
Does this contradict the claim that developed countries pay higher tax?
Corporation tax plays a key part in government revenue, according to the OECD. This is particularly true in developing countries, despite the global trend of falling rates since the 1980s. This is not true of two continents, South America and Africa, which pay the highest corporation tax rates in the world.
South America has the most countries in the top 10 with the highest corporate taxes. Brazil and Venezuela have the most formidable, at 34pc, followed closely by Colombia at 33pc, and Argentina at 30pc. This makes South America the continent with the most countries in the top 10 that pay the highest corporation tax.
It is unclear whether South America, as an emerging continent, is charging higher taxes to raise government revenue or to benefit from businesses that are looking to expand internationally and enter new markets. But it is true that the continent is becoming a popular choice for business to enter, with strong trade links and an advantageous geographic location. Indeed, South America is a large continent where some countries are business-friendly, and others are harder to penetrate.
Africa leads the world as the continent with the highest average corporation tax. Being the poorest region in the world, Africa has the highest average corporation tax at 28.45pc, with the highest being that of Zambia’s at 35pc. The lowest is that of Libya and Madagascar at 20pc. South Africa stands roughly in the middle at 28pc, slightly above average for Africa overall.
Let us take the South African case a little further. It is one of Africa’s largest economies, among the 54 diverse countries, in terms of political stability, development, growth and population. South Africa has nonetheless been a relatively slow growth nation. It was one of the reasons that its government dropped corporation tax from 34.55pc in 2012 to the current rate.
Was this effective?
It is hard to say. GDP in South Africa has fluctuated quite dramatically since the 1960s. Business favours countries with political stability, which is something South Africa does not currently have.
Between 1996 to 2019, the Political Stability and Absence of Violence/Terrorism index by the World Bank rated South Africa at an average of -0.15 points. The latest value from 2019 is -0.22 points. For comparison, the world average in 2019 based on 195 countries is -0.05 points.
It is thus hard to say that any single factor influenced the trajectory of growth of the country, but it is indicated that the country’s GDP growth rate has not changed in any significant way since the corporate tax rate was lowered.
PUBLISHED ON
Dec 19,2020 [ VOL
21 , NO
1077]
Radar | Jan 03,2021
Radar | Feb 22,2020
Viewpoints | Jan 05,2019
Fortune News | Mar 23,2019
Radar | Dec 12,2020
Radar | Nov 21,2018
Fortune News | Jun 23,2019
Fortune News | Jul 20,2019
Radar | Nov 02,2019
Radar | May 11,2019
Fortune News | 33521 Views | Jul 18,2020
Fortune News | 15689 Views | Oct 12,2019
Fortune News | 14636 Views | Mar 19,2020
Agenda | 14168 Views | Mar 16,2019
January 16 , 2021
It was a sunny day on September 12, 1974. A machine gun mounted on top of a tank was...
January 3 , 2021 . By ABDUREZAK LESMAN
Women wearing netela, a white cotton garment with woven coloured borders, and men in...
December 26 , 2020 . By MAYA MISIKIR
Black and white markings on their legs and large semi-circular rimmed horns that stre...
December 12 , 2020
Dietrich Rogge, founder and CEO of Rockstone, a German-based real estate developer an...
January 23 , 2021
Usually, millions facing food insecurity in Ethiopia does not make headline news. Not...
January 16 , 2021
It was a sunny day on September 12, 1974. A machine gun mounted on top of a tank was...
January 9 , 2021
There is something curious about elections that have been conducted in Ethiopia since...
January 2 , 2021
One by one, Workneh Gebeyehu (PhD), executive secretary of the Intergovernmental Auth...
January 23 , 2021
With celebrants dressed in white, prominently carrying the flag of the Ethiopian Orthodox Tewahedo Church, horns were blared and drums struc...
January 23 , 2021 . By FASIKA TADESSE
Ethio telecom, the lone telecom operator, hired KPMG East Africa to conduct its business valuation. Kicke...
January 23 , 2021 . By FASIKA TADESSE
The first securities exchange, where traders can buy and sell securities such as company stocks and bonds...
January 23 , 2021 . By FASIKA TADESSE
The Ministry of Trade & Industry has ordered the cancellation of Muleg Oil Importer's trade name. The...
Put your comments here