Lowest corporate tax rates.
Regardless of the sector your offshore venture belongs to, the main purpose behind expanding business in foreign nations is generating more revenues. No matter how hard you try and deploy numerous cost cutting measures to boost profits, the country’s taxation system may spoil the party. Some of the most well developed nations in the world are known for really steep corporate tax rates. The UAE and the USA lead the pack, followed by several European nations. That explains why several companies flock to lesser known countries, mostly located in Asia and Africa to reduce spending in corporate taxes.
The Corporate Tax rate stands at 40% in the United States and the UAE seems to have taken it to another level with a massive 55% corporate tax. What is even more astounding is the fact that the Corporate tax rate has taken a nosedive in the rest of the world but there are some countries that are going on the exact opposite direction. If you take the example of Japan, it has cut down on corporate tax massively by reducing the rate to 33.06% from 52.40%. So, it is quite obvious that companies will be trying to evade this massive tax by opening subsidiaries in countries that have not imposed huge tax burdens on corporates.
Countries where corporate tax does not exist
It sounds amazing and it is true, too. In the below listed countries, offshore businesses need not pay any corporate tax on their income because this tax simply does not exist. These ‘tax haven’ countries include:
- Hungary (9%)
- Bulgaria (10%,)
- Ireland (12.5%,)
- Latvia and Lithuania (15%)
- Romania (16%)
Bahrain does not have general corporate income tax. However, it imposes corporate income tax on the oil companies.
Countries with competitive corporate tax rates
In some countries of the EU and Asia, the corporate tax rate has been revised in recent years and can be considered reasonable.
- Leading the pack of countries with low corporate tax rates in the EU is The 8.5% federal level tax sounds tempting but the cantons impose additional taxes on the companies.
- Hungary has cut down its corporate tax rate to 9% from 19%-which is a big drop. The new govt led by PM Viktor Orban is keen on wooing foreign investors.
- Other EU countries with lower tax rates are Bulgaria, Bosnia and Herzegovina, Gibraltar and Montenegro. Ireland has a tax rate of 12.5% and Latvia and Lithuania follow at 15%.
The ground reality is registering your company in an offshore country with lower tax rates can be profitable. It is especially good for SMBS on expansion spree those want to keep expenses on lower side.
To get expert advice and consultation on viability of low tax offshore locations for your business, consult BRIS group.