Author: Tina Aridas, Valentina Pasquali
Project Coordinator: Denise Bedell

Taxes paid by corporations can be measured in a number of ways, including the marginal corporate tax rate and the total taxes paid as a percentage of profits .

The highest marginal corporate tax rate , which we consider here, is simply the highest tax rate shown on a country's schedule of corporate taxes.

Data is from KPMG International, Corporate and Indirect Tax Survey 2012.

Highest Marginal Tax Rate, Corporate Rate (%), 2012

Dark red - highest ratesLight red - lowest rates

The highest marginal tax rates in 2012 were found in the United Arab Emirates-at 55%; the United States - at 40%; Japan-with a 38.01% tax rate; Angola, Argentina, Honduras, Malta, Pakistan, Sudan and Zambia-all tied at 35%. In the United States, the corporate tax rate continues to be the subject of much debate. Many politicians in Congress demand a reform of the tax code that will lower it, in exchange for the elimination of a number of exemptions and loopholes. For the time being, political stalemate in Washington has made comprehensive tax reform hard to achieve.

The lowest corporate tax rates of the year were seen, unsurprisingly, in those countries known as offshore corporate tax havens-including the Cayman Islands, Bermuda, The Bahamas, Guernsey, the Isle of Man and Vanuatu. They all had a top marginal corporate tax rate of 0%-along with Bahrain.

In the European Union, the lowest corporate tax rates were to be found in Bulgaria (10%,) Ireland (12.5%,) Latvia and Lithuania (15%,) and Romania (16%.) The highest is Belgium's, at nearly 34%.

In the last decade or so, there has been a big shift in marginal tax rates. Most countries dropped their highest corporate rate over that period, and some of the biggest top tax bracket reductions were seen in Germany-which went from 52.3% in 1999 to 29.5% in 2012; Iran-which went from 54% in 1999 to 25% in 2009 (the latest data available;) and Kuwait, which went from 55% down to 15%.

Between 2011 and 2012, Canada's highest marginal tax rate for corporations was dropped from 28.3% to 26% and Chile's from 20 to 18.5%. Curacao's went from 34.5% to 27.5%. Finland's fell from 26% to 24.5% and Japan's from 40.69% to 38.01%. Thailand decided on the most drastic cut, reducing the top tax bracket from 30% in 2011 to 23% in 2012, followed by the United Kingdom, where the highest rate went from 28% to 24%.

KPMG's analysis is that corporate tax rates have been falling for a decade across the world. "This trend," states the report, "will continue in 2013 - albeit at a slower pace." In fact KPMG notes that though governments will still tinker with corporate tax rates to remain competitive and attract foreign investment, "the global downturn has taken its toll on government finances, and tax authorities in most developed countries are being pressed to raise more revenue from their tax bases with fewer resources." The result is that even where corporate tax rates are on the decline, authorities are getting more aggressive in tax audits, "resulting in larger adjustments, more potential for penalties and interest, and escalating tax controversy."

Data is from KPMG International, Corporate and Indirect Tax Survey 2012.

Highest Marginal Tax Rate, Corporate Rate (%), 2003-2012

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