In 2012, Aruba had the smallest VAT, at 1.5 percent, followed by a number of countries with a 5 percent VAT/GST rate includingJapan, Canada, Yemen and Nigeria. On the indirect tax side, Hungary (27 percent), Iceland (25.5 percent), Sweden, Denmark, Norway and Croatia (25 percent) had the highest indirect tax rates, shows the annual KPMG International Corporate and Indirect Tax Rate Survey.
“Romania increased the VAT rate from 19 to 24% in 2010, just below the highest tax rates - a few points less than Hungary’s 27% worldwide record. Romanian profit tax has been 16% since 2005, when the flat tax was first introduced, and there are no signs of potential hikes. Although there has been some discussion about reducing VAT rate, a decrease is unlikely given the expected economic and budgetary context in 2013,” comments Ramona Jurubita, Tax Partner, at KPMG in Romania.
The Survey shows that the global indirect tax average increased in 2012 by 0.17 percent to 15.50. Africa and Asia had the most significant increases, from 14.17 to 14.57 percent and 11.84 to 12.24 percent respectfully. A notable indirect development in 2012 saw the introduction of a VAT Pilot Program in Shanghai and its subsequent extension to 10 other provincial-level regions.
“We expect the global indirect tax rate average to continue to rise in 2013 as more governments continue their path to economic recovery,” says Tim Gillis, KPMG’s Head of Global Indirect Tax Services. “In 2013 a number of countries’ VAT rates are expected to rise, including Finland, the Dominican Republic and Cyprus.”
Meanwhile, the global corporate tax rate average remained almost the same. There was a small decline of 0.09 percent to 24.43 percent compared to January 2012. For 2013 many countries’ budget proposals include corporate tax rate reductions. These include Mexico, Sweden and Ecuador.
The average changes in rates as shown by the KPMG tax rates online tool:
|
Country |
Corporate |
Corporate |
% increase |
Indirect |
Indirect |
% increase |
|
Africa |
28.55% |
29.02% |
14.17% |
14.57% |
||
|
North America |
34% |
33% |
5% |
5% |
- |
|
|
Asia |
23.1% |
22.89% |
11.84% |
12.24% |
||
|
Europe |
20.88% |
20.5% |
19.71% |
20% |
||
|
Latin America |
29.02% |
28.3% |
12.78% |
12.79% |
||
|
Oceania |
28.6% |
28.6% |
- |
12.92% |
12.92% |
- |
|
EU |
22.8% |
22.6% |
20.76% |
21.13% |
||
|
OECD |
25.50% |
25.25% |
18.53% |
18.85% |
||
|
Global |
24.52% |
24.43% |
15.33% |
15.50% |
The highest and lowest tax rates
For 2012, the United Arab Emirates claimed the highest corporate tax rate (55 percent), followed by the United States (40 percent) and Japan (38.01 percent). Of those countries with a corporate income tax above zero, Montenegro had the lowest rate (9 percent), followed by a number of countries at 10 percent including Serbia, Cyprus, Paraguay and Qatar. However, “statutory tax rates” can differ from the “effective tax rate”. For example the United Arab Emirates in practice does not levy corporate income tax.
|
Corporate lowest rates 2012 |
Corporate highest rates 2012 |
Indirect lowest rates 2012 |
Indirect highest rates 2012 |
|
9% |
55% |
1.5% |
27% |
|
10% |
40% |
5% |
25.5% |
|
12% |
38.01% |
6% |
25% |
As Serban Toader, Senior Partner at KPMG in Romania comments: “Romania has a relatively low rate of corporate tax, which is attractive to investors. However, one of the continuing difficulties is that there are frequent changes to legislation on both direct and indirect taxation, often at very short notice. While I understand the challenges which the government faces in maintaining budget revenue in these straitened economic times, greater stability in tax legislation would be highly beneficial to business and the overall health of the economy. Businesses need to plan ahead, and have a clear idea about what taxes they will need to pay in the future. Unexpected changes with little warning can be very disruptive to business.”
Users can compare corporate, indirect and individual income tax rates for over 120 countries, or compare a particular tax rate across multiple countries by using KPMG’s online tax rates tool:www.kpmg.com/taxrates.
About KPMG
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have 152,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
KPMG in Romania and Moldova operates from six offices located in Bucharest, Cluj-Napoca, Constanta, Iasi, Timisoara and Chi?in?u. We currently employ more than 650 partners and staff; Romanians and Moldovans as well as expatriates.
