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25 Countries with the Lowest Corporate Tax Rates

In this piece, we will take a look at the 25 countries with the lowest corporate tax rates. For more countries, head on over to the 5 Countries with the Lowest Corporate Tax Rates.

Corporate tax is the amount of money that a company pays the government on its income. It is generally the last calculation on a firm's income statement, computed when expenses such as direct material costs, labor costs, marketing expenses, administrative overhead, research and development, and interest payments are subtracted from the net sales.

Corporate tax rates are not the same around the world. In fact, there is a significant variance between the lowest and highest amounts. For instance, several countries and territories, as we will discuss below, have a corporate tax rate of 0%. In comparison, one of the highest corporate tax rates in the world is for public industrial and commercial enterprises that operate in the Union of the Comoros - a small African nation with a nominal per capita income of $1,349. These Comoran companies can end up paying as much as a staggering 50% of their incomes as tax - a fact that is likely to make many boardrooms shudder. On a side note, as if this weren't enough, Comoros is also one of the few countries in the world that taxes marriage expenses.

These taxes (the corporate ones) are also one of the more controversial topics in finance, government, and public discourse, due to the thorny issue of tax avoidance. Tax avoidance is different from tax evasion, as it is not illegal and simply involves a firm structuring its operations in a way that lets it minimize the tax expense. Research conducted by the Danish think tank Kraka, the University of Berkeley, and the Danish Ministry of Finance suggests that if tax avoidance were eliminated, then the U.S. could see domestic profits exceed by up to 10%. The percentage is even higher for other countries; for instance, EU countries could see profits grow by 20%, and tax haven regions such as Bermuda, Bahamas, and the British Virgin Islands could see their profits drop by a staggering 55%.

The highly, should we say 'profitable' nature of tax avoidance also results in rather creative names for these schemes, such as the Double Irish, Single Malt, the Dutch Sandwich, and the Bermuda Black Hole. In fact, the Bermuda Black Hole saw nonfinancial U.S. firms amass a whopping $1 trillion in offshore operations by 2017 according to McKinsey. Most tech companies, such as Apple Inc. (NASDAQ:AAPL) and Alphabet Inc. (NASDAQ:GOOGL) have been accused of these schemes, and Apple was fined a whopping $13 billion in 2016 by the European Commission because of Black Hole operations.

Due to a lack of a unified global regime on corporate tax tracking, it is tedious to determine how much companies pay. However, for the U.S., corporate tax collection grew by 14% in the fiscal year 2022 to sit at $425 billion.

25 Countries with the Lowest Corporate Tax Rates
25 Countries with the Lowest Corporate Tax Rates

Photo by Vitaly Taranov on Unsplash

Our Methodology

We have used corporate tax rate data primarily from the Tax Foundation to compile our list. The data has been verified from other sources (such as the accounting firms PwC and KPMG) as well to ensure that it is up to date and accurate. For each country, the lowest tax rate is mentioned (except for new business exemptions), which is sometimes different from the figures in the aforementioned sources.

25 Countries with the Lowest Corporate Tax Rates

25. Republic of Cyprus

Latest & Lowest Corporate Tax Rate: 12.5%

The Republic of Cyprus is an island country in the Mediterranean Sea. It has a diverse economy fueled by oil exports, shipping companies, medicines, and agricultural products among others. Cyprus' corporate tax rate is a flat 12.5%, and non resident firms are also taxed on profit from activities that result from its permanent establishment in the country. Cyprus also has higher taxes for special interest income and some kinds of dividends.

24. Republic of Ireland

Latest & Lowest Corporate Tax Rate: 12.5%

The Republic of Ireland is a European country with a special place in global corporate taxes, as it is often used as a hub for tax avoidance by large multinationals. In fact, at some points in time over the previous decade, up to 80% of Irish corporate taxes were paid by foreign multinational firms. Ireland's laws have allowed companies like Apple to create virtual internal assets to reduce their tax base. Ireland's standard tax rate is 12.5% but tools such as the Single Malt and Double Irish have often led to this being reduced to 0%.

23. Principality of Liechtenstein

Latest & Lowest Corporate Tax Rate: 12.5%

The Principality of Liechtenstein, or simply Liechtenstein, is a mountainous European country located in the Alps. Despite being one of the smallest countries in the world, it has a per capita income of $98,432 - the third highest nominally. Additionally, Liechtenstein does not have a tax treaty with the U.S. It has a flat tax rate of 12.5%, and has often been criticized for a lucrative and secretive financial industry claimed to have helped with tax evasion.

22. Republic of Moldova

Latest & Lowest Corporate Tax Rate: 12%

The Republic of Moldova, or simply Moldova, is a landlocked Eastern European country that gained independence from the Soviet Union in 1991. It relies on a mix of agricultural and industrial products for its exports. Moldova follows similar rules to other countries when it comes to calculating corporate tax for resident and non resident firms. Its base tax rate is 12% and can go up to 15% based on government calculations. Additionally, farmers are taxed at a lower 7%, and some small businesses at 4%.

21. Democratic Republic of Timor-Leste

Latest & Lowest Corporate Tax Rate: 10%

The Democratic Republic of Timor-Leste is a country in Southeast Asia that is commonly known as Timor-Leste. Most of its exports are of petroleum and natural gas, with agricultural products also playing a sizeable role. Timor-Leste taxes resident firms on worldwide income and non resident firms operating in the country only have their Timor-Leste income subject to the corporate tax. Its corporate tax is 10% of gross income minus deductions, and the rate goes up to 30% for oil and gas contractors.

20. Principality of Andorra

Latest & Lowest Corporate Tax Rate: 10%

The Principality of Andorra, or Andorra, is a small landlocked country in Europe. It has a flat tax rate of 10%, but provides some exemptions for younger companies, as those with less than EUR100,000 are taxed at 5% for income below EUR50,000 and 10% for the rest.

19. Bosnia and Herzegovina

Latest & Lowest Corporate Tax Rate: 10%

Bosnia and Herzegovina is a Southeastern European nation The country is made up of two entities, which are the Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska (RS). Both also govern a third region. All three have a flat 10% corporate tax rate.

18. Republic of Bulgaria

Latest & Lowest Corporate Tax Rate: 10%

The Republic of Bulgaria is a European country with a per capita income of $27,890. Firms resident in the country for tax purposes are taxed on their worldwide income, while non residents are taxed only on Bulgarian income. It has a flat tax rate of 10%, and a 15% tax for some gambling organizations.

17. Republic of Kosovo

Latest & Lowest Corporate Tax Rate: 10%

The Republic of Kosovo, or simply Kosovo, is a Southeastern European country. It has a flat tax rate of 10%, but the tax code also has exemptions for firms whose annual gross income does not exceed EUR30,000. for these entities, tax rate is segregated based on business activity.

16. Kyrgyz Republic

Latest & Lowest Corporate Tax Rate: 10%

The Kyrgyz Republic, also known as Kyrgyzstan, is a purely landlocked Central Asian country. It has a 10% corporate income tax for nearly all companies whether resident or non-resident. However, the tax rate varies for e-commerce firms and those operating in the gold industry.

15. Republic of Paraguay

Latest & Lowest Corporate Tax Rate: 10%

The Republic of Paraguay is a landlocked South American country. For all businesses except small businesses, income generated within the country is taxed at 10%. However, for small businesses with income less than PGY80,000, a tax charge is determined by the government.

14. State of Qatar

Latest & Lowest Corporate Tax Rate: 10%

The State of Qatar is a Western Asian country. For a long time in its history, Qatar did not have an income tax but changed this to 10% in 2018. For corporate tax, entities earning income from Qatar are taxed at a flat tax rate of 10%. However, certain oil operations are taxed at 35%.

13. Republic of North Macedonia

Latest & Lowest Corporate Tax Rate: 10%

The Republic of North Macedonia is a Southeastern European country that gained independence in 1991. All business entities with a permanent establishment in the country are subject to a 10% corporate tax. However, companies with less than MKD 3 million in revenue are exempt from income tax.

12. Hungary

Latest & Lowest Corporate Tax Rate: 9%

Hungary is a landlocked Central European country. It has a flat tax rate of 9% for nearly all companies and some relaxation for newer firms. Additionally, Hungary has a 41% energy producer and distributor company tax.

11. Turkmenistan

Latest & Lowest Corporate Tax Rate: 2%

Turkmenistan is a Central Asian country with a GDP per capita of $19,526. The country relies on oil for its export revenue and has a tax regime segregated by business category. The lowest tax rate is 2% for small businesses, goes up to 8% for Turkmenistan registered entities, and to 20% for foreign companies, government controlled entities, and oil companies.

10. Barbados

Latest & Lowest Corporate Tax Rate: 1%

Barbados is a Caribbean island region. Corporate tax in the region starts at 5.5%, on the first 1 million Barbados Dollars. However, it drops higher up the income chain, with income exceeding BBD$30 million taxed at just 1%. Additionally, some insurance companies have a 0% tax rate in the country.

9. Belize

Latest & Lowest Corporate Tax Rate: 0.75%

Belize is a Central American country with a $4,890 per capita income. While it was a tax haven earlier, recent law changes have brought its minimum tax rate to 0.75%. This is for media businesses and gas stations, with others such as banks and real estate companies having to pay a double digit tax rate.


8. Bailiwick of Jersey

Latest & Lowest Corporate Tax Rate: 0%

The Bailiwick of Jersey, or simply Jersey, is another British Crown Dependency. Like other British territories, Jersey has a standard 0% corporate tax rate, but a higher rate for financial institutions, property development firms, and large retailers. The region was also used as a tax free fulfillment base until 2012 by firms such as Amazon until 2012 when it changes its laws.

7. Tokelau Islands

Latest & Lowest Corporate Tax Rate: 0%

Tokelau Islands is a dependent territory of New Zealand in the Pacific Ocean. It has its own legislature made up of 20 members. It has no bank and is one of the smallest economies in the world with just $10 million in output. Tokelau also has a 0% corporate tax rate, and there is scarce information on the details.

6. United Arab Emirates

Latest & Lowest Corporate Tax Rate: 0%

The United Arab Emirates, or UAE, is an Asian country that has managed to transform itself into one of the hubs for global business. The UAE currently has a 0% corporate tax rate, however, a new law passed last year will change this soon. Under this law, corporate income below 375,000 AED will be free of tax, and income above this level will be charged a 9% tax starting from June 2023.

Click to continue reading and see 5 Countries with the Lowest Corporate Tax Rates.


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Disclosure: None. 25 Countries with the Lowest Corporate Tax Rates is originally published on Insider Monkey.