Corporate tax is a tax imposed by governments on the profits made by companies. Companies pay taxes on revenues after deducting operational and capital expenses, and the difference between them is considered taxable income.
Rates of this tax vary between countries, and some countries are known as “tax havens” due to their low tax rates.
Taxation of corporate income constitutes an important source of public revenue and has a significant impact on global growth.
According to the Organization for Economic Co-operation and Development (OECD), tax evasion by multinational corporations leads to significant losses and distortions of foreign investment.
The organization’s corporate tax database contributes to providing comprehensive insights into the economic activities of these companies globally.
How do multinational companies evade taxes?
A common way for multinational companies to evade corporate tax is to shift profits to tax havens, which reduces the taxes paid in the countries in which they do business.
According to the Tax Justice Network, a multinational corporation can set up a shell company in a tax haven such as Ireland and impose royalties on its subsidiaries, reducing its apparent profits and thus reducing the taxes owed.
Tax havens
Tax havens are countries that offer low or no tax rates to foreign investors, as well as political and economic stability.
According to the Visual Capitalist platform, companies use tax havens to legally avoid higher taxes by creating shell companies.
These countries generate government profits from capital flows, duties, and reduced tax rates.
The 10 most famous tax havens in the world
The following is a list of the 10 most famous countries considered tax havens, according to the “World Publication Review” platform and the “Visual Capitalist” platform:
- Luxembourg
- Cayman Islands
- Isle of Man (British island)
- Jersey (an island state in northwestern Europe that belongs to the British Crown)
- Ireland
- Macau
- singapore
- Hong Kong
- Switzerland
- Bahamas
Combating tax evasion
To combat tax evasion, the G20 is considering imposing a global minimum tax on 3,000 billionaires, with the aim of ending the “race to the bottom,” according to The Guardian.
During its presidency of the group, Brazil proposed a 2% tax on the very wealthy (those who own more than a billion US dollars), which could generate revenues of up to 250 billion dollars annually.
The plan aims to complement the 15% global minimum tax on multinational companies, which was implemented last January.
But the proposal was postponed due to opposition from some developed countries, and the group’s finance ministers decided to focus on cooperation to ensure taxation of those with great wealth.
The top 10 countries in the world that pay corporate tax
Below we present to you a list of the top 10 global countries that impose corporate income taxes in 2024, according to the “Trading Economist” platform.
1- Puerto Rico: 37.5%
2- Suriname: 36%
3- Guinea: 35%
4- Colombia: 35%
5- Argentina: 35%
6- Equatorial Guinea: 35%
7- Malta: 35%
8- Chad: 35%
9- Sudan: 35%
10- India: 34.94%
The 10 lowest countries in the world that pay corporate tax
Below we present to you a list of the 10 lowest global countries that impose corporate income tax in 2024, according to the previous source:
1- Barbados: 5.5%
2- Hungary: 9%
3- Montenegro: 9%
4- UAE: 9%
5- Qatar: 10% (imposed on foreign-owned companies)
6- Kosovo: 10%
7- Macedonia: 10%
8- Bosnia and Herzegovina: 10%
9- Bulgaria: 10%
10- Paraguay: 10%
The top 10 Arab countries that pay corporate tax
Below is a list of the top 10 Arab countries that impose corporate income taxes in 2024, based on data from the Trading Economist, which takes into account tax rates until December 2024 and their performance over 20 years.
For example, the corporate tax rate in Egypt is currently 22.50%, while it averaged 22.11% from 2006 to 2024, with the highest level at 25% in 2012 and the lowest level at 20% in 2007, according to the Egyptian Tax Authority.
It is worth noting that some Arab countries adopt a progressive tax according to the company’s capital or annual income, with tax exemptions for specific periods.
For example, in Saudi Arabia, companies whose capital does not exceed 5 million riyals ($1.3 million) are exempt from income tax, while a 20% tax is imposed on companies with higher capital. Startups established after January 1, 2018 also benefit from a full tax exemption for 5 years.
Here is the list according to the Trading Economist:
1- Sudan: 35%
2- Morocco: 32%
3- Syria: 28%
4- Algeria: 26%
5- Mauritania: 25%
6- Egypt: 22.5%
7- Saudi Arabia: 20%
8- Jordan: 20%
9- Libya: 20%
10- Lebanon: 17%
The 7 Arab countries that impose the least corporate tax in 2024, according to the previous source
1- Bahrain: 0%
2- United Arab Emirates: 9%
3- Qatar: 10%
4- Kuwait: 15%
5- Sultanate of Oman: 15%
6- Iraq: 15%
7- Tunisia: 15%
Zero states
Below is a list of a number of countries that do not impose any corporate income tax (0%)These countries are considered tax havens and paradise for multinational companies.
- Bahamas
- Bermuda
- Cayman Islands
- Isle of Man (an island belonging to Britain)
- Vanuatu (island in the South Pacific Ocean)
