KPMG: 'Reduction in corporate income tax rates stagnates' 

This year, the worldwide corporate income tax rate reached its lowest level ever. From an international perspective, the average rate for 2011 is 22.96%; a decrease of more than 2% in relation to 2010. In 2000, the average rate was 29.03%. This year, the average worldwide rate for indirect taxes, such as the Dutch VAT rate, is 15.41%; a decrease of 0.17% in relation to 2010. These are the results of an international survey carried out by KMPG regarding worldwide rates for corporate income tax and indirect taxes. Only Europe saw an increase in the corporate income tax rate - from 19.98% in 2010 to 20.12% this year. Latin America currently has the highest average rate - 25.06%.
According to Wilbert Kannekens of KPMG Meijburg & Co, the continual decrease in corporate income tax rates has now clearly come to an end. Kannekens: "The last 10 years saw a continual decrease in the rate, initially sometimes nearly 1% per year, but most recently by tenths of a percent. For the most part this implies that governments consider that they have done everything possible to make their country attractive to foreign investors. Moreover, it would be almost impossible to justify a further lowering of the tax rate to the public."

According to Kannekens, the indirect tax rate level shows that this taxation has become an increasingly important source of revenue for many governments. Kannekens: "Economic highs and lows influence indirect tax rates to a lesser extent than they do income tax. They are therefore much more stable and in general are a more consistent source of revenue. However, it is also apparent that economic circumstances are not the only motivating factor for the choices governments make in respect of taxation; political factors play an increasingly dominant role. Many countries lower their corporate income tax rate to ensure they remain as competitive as possible for foreign investors. The downside is that a low rate limits the revenue that can be raised from taxing profits."

KPMG's survey shows that since 2006 the average indirect tax rate has been approximately 15%. Kannekens: "While the rate has remained relatively stable, more and more countries are implementing this tax and implementing it more broadly. The tax regime is thereby being continuously improved. Europe's rate of 19.71% is relatively high. In Asia the average rate is 11.73%. In Europe, we are seeing a recurrent pattern. In general, new VAT rates are introduced at a low level, and only after they have been publicly accepted are they increased and applied to more products. This European system is, worldwide, the most developed, and as such the approach adopted in Europe is not surprising."

KPMG's Corporate and Indirect Tax Survey 2011

Online tax rate tool (KPMG Global)