Economy

5 Latin American countries appear on a Top 20 corporate taxation ranking

A new OECD report shows that the average rate on corporate income globally is 20%, while in Brazil it reaches 34%

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  • Of the 109 countries surveyed, only 21 have a rate equal to or above 30% in 2020 – 5 of them in Latin America;
  • Between 2000 and 2020, the OECD finds that 88 countries have lowered the corporate income tax.
  • When considering effective taxes (after rebates and deductions), Brazil, the biggest economy in the region, slips from 4th to 7th position.

Brazil and Colombia display, respectively, the fourth and seventh highest taxation on corporations among 109 countries, according to a new report by the Organization for Economic Cooperation and Development (OECD). Other Latin American countries in the Top 20 ranking of corporate income tax in 2020 are Mexico (14th place), Costa Rica (18th) and Argentina (20th).

The annual “Corporate Tax Statistics” report shows that the average rate on corporate income globally is 20%, while in Brazil it reaches 34% while in Colombia applies a 32% average rate. Mexico, Costa Rica and Argentina charge 30%. 

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Of the 109 countries surveyed, only 21 have a rate equal to or above 30% in 2020. India is the global champion, charging 48.3%, including a tax on dividend distribution.Malta ranks second with a rate of 35%, but a tax rebate is granted for the distribution of dividends and the effective levy ranges from 0% to 10%. The Democratic Republic of Congo is in third place. Following Brazil, France comes in fifth place.

Comparing rates between 2000 and 2020, the OECD finds that 88 countries have lowered the corporate income tax. On the other hand, Andorra, Chile, Hong Kong, China, India, Maldives and Oman increased their taxation.

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While Andorra and Chile raised the tax by 10 percentage points, in countries like Germany, Paraguay and Barbados the rate fell by 20 percentage points or more.

Between 2019 and 2020, the tax on companies decreased in the USA, Belgium, Canada, France, Greenland, and Monaco and there was no tax increase in the 109 countries surveyed. The biggest reduction in this period occurred in Belgium and Greenland, with around -5 percentage points.

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Effective rates

According to the report, Brazil has the seventh highest average effective rate (considering rebates and other deductions) on companies among 74 countries surveyed, with 30.1%. On this list, Costa Rica and Chile are the Latin American countries with the heaviest tax burden on corporations, with rates of 37.3% and 31.1% – respectively the second and fourth highest among surveyed nations. India keeps the top global position, with its 45.7% effective rate.