Introduction

The construction of a rustic’s tax code is a figuring out issue of its financial efficiency. A well-structured tax code is simple for taxpayers to adjust to and may promote financial improvement whereas elevating adequate income for a authorities’s priorities. In distinction, poorly structured tax programs may be pricey, distort financial decision-making, and hurt home economies.

Many nations have acknowledged this and have reformed their tax codes. Over the previous few many years, marginal tax charges on company and particular person revenue have declined considerably throughout the Organisation for Financial Co-operation and Improvement (OECD). Now, most OECD nations increase a big quantity of income from broad-based taxes corresponding to payroll taxes and value-added taxes (VAT).[1]

Not all latest modifications in tax coverage amongst OECD nations have improved the construction of tax programs; some have made a unfavorable affect. Although some nations, like Austria, have decreased their company revenue taxA company revenue tax (CIT) is levied by federal and state governments on enterprise earnings. Many firms will not be topic to the CIT as a result of they’re taxed as pass-through companies, with revenue reportable below the person revenue tax. charges by a number of proportion factors, others, like France, the Slovak Republic, and Slovenia, have elevated them. Company tax base enhancements have occurred in Germany, the UK, and the US, whereas the company tax base has been made much less aggressive within the Czech Republic and Slovenia. Canada and Finland are phasing out short-term enhancements to their company tax bases that the UK and the US have made everlasting and expanded.[2]

Lately, tax coverage has more and more drifted away from its conventional roles of elevating authorities income and inspiring funding into the toolbox of worldwide tax and commerce disputes, with import tariffs, digital service levies, and extraterritorial taxes deployed to exert financial stress. On this setting, policymakers ought to refocus on impartial, internationally aggressive tax insurance policies that increase income with minimal hurt to funding and financial progress. The number of approaches to taxation amongst OECD nations creates a necessity to judge these programs relative to one another. For that goal, we now have developed the Worldwide Tax Competitiveness Index—a relative comparability of OECD nations’ tax programs with respect to competitiveness and neutrality.

The Worldwide Tax Competitiveness Index

The Worldwide Tax Competitiveness Index (ITCI) seeks to measure the extent to which a rustic’s tax system adheres to 2 vital points of tax coverage: competitiveness and neutrality.

A aggressive tax code is one which retains marginal tax charges low. In at the moment’s globalized world, capital is very cell. Companies can select to put money into any variety of nations all through the world to search out the very best price of return. Which means that companies will search for nations with decrease tax charges on funding to maximise their after-tax price of return. If a rustic’s tax price is simply too excessive, it is going to drive funding elsewhere, resulting in slower financial progress. As well as, excessive marginal tax charges can impede home funding and result in tax avoidance.

In keeping with analysis from the OECD, company taxes are most dangerous for financial progress, with private revenue taxes and consumption taxes being much less dangerous. Taxes on immovable property have the smallest affect on progress.[3]

Individually, a impartial tax code is just one which seeks to boost essentially the most income with the fewest financial distortions. Which means that it doesn’t favor consumption over saving, as occurs with funding taxes and wealth taxes. It additionally means few or no focused tax breaks for particular actions carried out by companies or people.

As tax legal guidelines develop into extra complicated, in addition they develop into much less impartial. If, in idea, the identical taxes apply to all companies and people, however the guidelines are such that giant companies or rich people can change their conduct to realize a tax benefit, this undermines the neutrality of a tax system.

A tax code that’s aggressive and impartial promotes sustainable financial progress and funding whereas elevating adequate income for presidency priorities.

There are numerous elements unrelated to taxes which have an effect on a rustic’s financial efficiency. Nonetheless, taxes play an vital position within the well being of a rustic’s economic system.

To measure whether or not a rustic’s tax system is impartial and aggressive, the ITCI seems at greater than 40 tax coverage variables. These variables measure not solely the extent of tax charges, but additionally how taxes are structured. The Index seems at a rustic’s company taxes, particular person revenue taxes, consumption taxes, property taxes, and the therapy of earnings earned abroad. The ITCI provides a complete overview of how developed nations’ tax codes evaluate, explains why sure tax codes stand out nearly as good or dangerous fashions for reform, and offers vital perception into how to consider tax coverage.

On account of some information limitations, latest tax modifications in some nations is probably not mirrored on this yr’s model of the Worldwide Tax Competitiveness Index.

2025 Rankings

For the 12^th yr in a row, Estonia has the most effective tax code within the OECD. Its prime rating is pushed by 4 optimistic options of its tax system. First, it has a 20 p.c tax price on company revenue that’s solely utilized to distributed earnings. Second, it has a flat 20 p.c tax on particular person revenue that doesn’t apply to non-public dividend revenue. Third, its property taxA property tax is primarily levied on immovable property like land and buildings, in addition to on tangible private property that’s movable, like autos and gear. Property taxes are the one largest supply of state and native income within the U.S. and assist fund faculties, roads, police, and different companies. applies solely to the worth of land, fairly than to the worth of actual property or capital. Lastly, it has a territorial tax systemTerritorial taxation is a system that excludes overseas earnings from a rustic’s home tax base. That is widespread all through the world and is the other of worldwide taxation, the place overseas earnings are included within the home tax base. that exempts one hundred pc of overseas earnings earned by home firms from home taxation, with few restrictions.

 

 

2025 Worldwide Tax Competitiveness Index Rankings

Whereas Estonia’s tax system is essentially the most aggressive within the OECD, the opposite prime nations’ tax programs obtain excessive scores because of excellence in a number of of the foremost tax classes. Latvia, which not too long ago adopted the Estonian system for company taxation, additionally has a comparatively environment friendly system for taxing labor revenue. New Zealand has a comparatively flat, low-rate particular person revenue taxA person revenue tax (or private revenue tax) is levied on the wages, salaries, investments, or different types of revenue a person or family earns. The U.S. imposes a progressive revenue tax the place charges improve with revenue. The Federal Revenue Tax was established in 1913 with the ratification of the sixteenth Modification. Although barely 100 years outdated, particular person revenue taxes are the biggest supply that additionally largely exempts capital positive aspects (with a mixed prime price of 39 p.c), a broad-based VAT, and levies no taxes on inheritance, property transfers, property, or monetary transactions.  Switzerland has a comparatively low company tax price (19.7 p.c), a low, broad-based consumption taxA consumption tax is often levied on the acquisition of products or companies and is paid straight or not directly by the patron within the type of retail gross sales taxes, excise taxes, tariffs, value-added taxes (VAT), or revenue taxes the place all financial savings are tax-deductible., and a person revenue tax that partially exempts capital positive aspects from taxation. Luxembourg levies its broad-based VAT on 82 p.c of ultimate consumption, exempts long-term capital positive aspects with out substantial possession from taxation, and has a aggressive cross-border regime with out withholdingWithholding is the revenue an employer takes out of an worker’s paycheck and remits to the federal, state, and/or native authorities. It’s calculated primarily based on the quantity of revenue earned, the taxpayer’s submitting standing, the variety of allowances claimed, and any further quantity the worker requests. taxes on curiosity or royalties. Lithuania has a low company tax price of 17 p.c, permits companies to deduct a excessive share of their capital funding prices, and levies a comparatively flat and low-rate particular person revenue tax.

France has the least aggressive tax system within the OECD. It has the very best prime company tax price within the OECD, at 36.13 p.c, together with a number of surtaxes and distortive manufacturing taxes. It additionally applies a number of distortionary property taxes with separate levies on estates, financial institution property, and monetary transactions, along with a wealth taxA wealth tax is imposed on a person’s web wealth, or the market worth of their whole owned property minus liabilities. A wealth tax may be narrowly or extensively outlined, and relying on the definition of wealth, the bottom for a wealth tax can range. on actual property. Its VAT covers about 50 p.c of ultimate consumption, and it has one of many highest VAT registration thresholds.

Italy has the second-least aggressive tax system within the OECD. It has a number of distortionary property taxes with separate levies on actual property transfers, estates, and monetary transactions, in addition to a wealth tax on chosen property. Italy’s comparatively excessive VAT price of twenty-two p.c applies to the sixth-narrowest consumption tax base within the OECD.

International locations that rank poorly on the ITCI usually levy comparatively excessive marginal tax charges on company revenue or have a number of layers of tax guidelines that contribute to complexity. The 5 nations on the backside of the rankings all have higher-than-average mixed company tax charges. Eire ranks poorly on the ITCI regardless of its low company tax price. This is because of excessive private revenue and dividend taxes and a comparatively slender VAT base. The 5 lowest-ranking nations have unusually slender VAT bases, overlaying solely between 38 and 50 p.c of ultimate consumption. Additionally they are inclined to levy unusually many distortive taxes on slender bases, with all backside 5 nations making use of digital companies taxes, monetary transaction taxes, and inheritance taxes. 4 out of 5 of the lowest-ranking nations additionally levy both some kind of wealth tax or capital duties (or each).

Notable Adjustments from Final Yr

[4]

Canada

In 2024, Canada began to part out full expensingFull expensing permits companies to right away deduct the complete value of sure investments in new or improved expertise, gear, or buildings. It alleviates a bias within the tax code and incentivizes firms to speculate extra, which, in the long term, raises employee productiveness, boosts wages, and creates extra jobs. for equipment and the accelerated funding incentive for buildings. Canada additionally abolished its digital companies tax in 2025 and canceled the deliberate improve within the capital positive aspects inclusion price. Canada’s rank rose from 14^th to 13^th.

Czech Republic

The Czech Republic elevated its company tax price and began taxing long-term capital positive aspects at a prime price of 23 p.c for high-income people. The Czech Republic’s rank fell from 9^th to 10^th.

France

France added a brief surtax on company revenue for firms with excessive revenues, lifting its prime marginal company price from 25.8 to 36.1 p.c, the very best price within the OECD. France’s rank fell from 36^th to 38^th.

Germany

Germany reinstated its accelerated depreciationDepreciation is a measurement of the “helpful life” of a enterprise asset, corresponding to equipment or a manufacturing unit, to find out the multiyear interval over which the price of that asset may be deducted from taxable revenue. As a substitute of permitting companies to deduct the price of investments instantly (i.e., full expensing), depreciation requires deductions to be taken over time, decreasing their worth and disco schedule for equipment and gear at the next price in summer season 2025 and plans to cut back its company tax price by 5 proportion factors over the subsequent 5 years. Germany’s rank improved from 21^st to twenty^th.

Eire

Eire turned one of many final OECD nations to introduce a participation exemption for dividends obtained from overseas, transferring to a extra territorial system. Eire’s rank improved from 33^rd to 31^st.

Portugal

Portugal lowered its tax price on long-term capital positive aspects from 28 to 19.6 p.c and decreased its prime company tax price from 31.5 to 30.5 p.c. In 2025, Portugal additionally made its notional curiosity deduction extra beneficiant. Portugal’s rank rose from 35^th to 33^rd.

Slovak Republic

In 2025, the Slovak Republic elevated its company price from 21 to 24 p.c, elevated its VAT registration threshold, and launched a monetary transaction tax. The Slovak Republic’s rank fell from 10^th to 14^th.

United States

The US reinstated full expensing for crops and gear and prolonged the coverage to chose industrial buildings and buildings. Whereas the relative attractiveness of US cross-border guidelines elevated as many different nations began to implement revenue inclusion guidelines and home top-up taxes inside the international minimal tax course of, the US can be set to tighten its cross-border guidelines in 2026. The US rank improved from 16^th to fifteen^th.

Desk 2. Adjustments from Final Yr

Methodological Adjustments

Every year, we evaluate the Index’s information and methodology to enhance the way it measures each competitiveness and neutrality. This yr, we now have modified the best way the Index treats company taxes and particular person taxes.

We’ve utilized every change to prior years to permit constant comparability throughout years. Knowledge for all years utilizing the present methodology is accessible within the GitHub repository for the Index,[5] and an outline of how the Index is calculated is offered within the Appendix of this report. Prior editions of the Index, nonetheless, will not be akin to the outcomes on this 2024 version because of these methodological modifications.

Company Tax

The online current worth of capital allowances for equipment, industrial buildings, and intangibles now displays inflation-indexing for capital allowances as practiced in Israel and Mexico.

Consumption Taxes

Some nations have revised the calculation of nationwide accounts information, altering the estimated share of ultimate consumption captured by their VAT.

Property Taxes

The true property tax burden as a share of a capital inventory now consists of property tax income collected from taxpayers aside from households.

Company Revenue Tax

The company revenue tax is a direct taxA direct tax is levied on people and organizations and isn’t anticipated to be handed on to a different payer (in contrast to oblique taxes corresponding to gross sales and excise taxes), although financial incidence can nonetheless fall upon others. Typically with a direct tax, corresponding to the person revenue tax, tax charges improve because the taxpayer’s potential to pay, or monetary sources, will increase, leading to what is named a p on the earnings of a company. All OECD nations levy a tax on company earnings, however the tax charges and bases range considerably throughout nations. Company revenue taxes scale back the after-tax price of return on company funding. This will increase the price of capital, which ends up in decrease ranges of funding and financial output. Moreover, the company tax can result in decrease wages for staff, decrease returns for traders, and better costs for shoppers.

Though the company revenue tax has a comparatively important affect on a rustic’s economic system, it raises a comparatively low quantity of tax income for many governments—the OECD common was 11.9 p.c of whole revenues in 2023.[6]

The ITCI breaks the company revenue tax class into three subcategories. Desk 3 shows every nation’s Company Revenue Tax class rank and rating together with the ranks and scores of the subcategories, particularly, the company price, value restorationPrice restoration refers to how the tax system permits companies to recuperate the price of investments by means of depreciation or amortization. Depreciation and amortization deductions have an effect on taxable revenue, efficient tax charges, and funding selections., and incentives and complexity.

Mixed Prime Marginal Company Revenue Tax Fee

The highest marginal company revenue tax price measures the speed at which every further greenback of taxable revenue is taxed. Excessive marginal company tax charges are inclined to discourage capital formation and thus sluggish financial progress.[7] International locations with greater prime marginal company revenue tax charges than the OECD common obtain decrease scores than these with decrease, extra aggressive charges.

France levies the very best prime mixed company revenue tax price, at 36.1 p.c, adopted by Colombia (35 p.c) and Portugal (30.5 p.c). The bottom prime marginal company revenue tax price within the OECD is present in Hungary, at 9 p.c, adopted by Eire (12.5 p.c) and Lithuania (15 p.c). The OECD common mixed company revenue tax price is 24.2 p.c for 2025.[8]

Desk 3. Company Taxes

Price Restoration

Enterprise earnings are typically decided as income (what a enterprise makes in gross sales) minus prices (the price of doing enterprise). The company revenue tax is meant to be a tax on these earnings. Thus, it can be crucial {that a} tax code correctly defines what constitutes taxable revenue. If a tax code doesn’t permit companies to account for all the prices of doing enterprise, it is going to inflate a enterprise’s taxable revenue and thus its tax invoice. This will increase the price of capital, resulting in slower funding and financial progress.

Loss Offset Guidelines: Carryforwards and Carrybacks

Loss carryover provisions permit companies to both deduct present yr losses towards future earnings (carryforwards) or deduct present yr losses towards previous earnings (carrybacks). Many firms have funding initiatives with totally different threat profiles and function in industries that fluctuate significantly with the enterprise cycle. Carryover provisions assist companies “easy” their threat and revenue, making the tax code extra impartial throughout investments and over time.[9]

Ideally, a tax code permits companies to hold ahead their losses for a vast variety of years, guaranteeing {that a} enterprise is taxed on its common profitability over time. Whereas some nations do permit for indefinite loss carryovers, others have time—and deductibility—limits.

In 22 of the 38 OECD nations, firms can carry ahead losses indefinitely in 2025, although 13 of those restrict the quantity of taxable revenue that may be offset by losses from earlier years.[10] Of the 16 nations with deadlines, the typical loss carryforward interval is eight years. Hungary, Poland, and Slovakia have essentially the most restrictive loss carryover provisions within the OECD: carrybacks will not be allowed, and carryforwards will not be solely restricted to 5 years but additionally capped at 50 p.c of taxable revenue (coded as 2.5 years).[11] The ITCI ranks nations that permit losses to be carried ahead indefinitely with out limits higher than nations that impose time or deductibility restrictions on carryforwards.

International locations are usually considerably extra restrictive with loss carryback provisions than with carryforward provisions. In 2025, solely the Estonian and Latvian programs permit, by design, limitless carrybacks of losses.[12] Of the 9 nations that permit time-limited carrybacks, the typical interval is 1.3 years.[13] The ITCI penalizes the 27 nations that don’t permit any loss carrybacks.

Capital Price Restoration: Machines, Buildings, and Intangibles

Companies decide their earnings by subtracting prices—corresponding to wages and uncooked supplies—from income. Nevertheless, in most jurisdictions, capital investments—corresponding to in buildings, equipment, and intangibles—will not be handled like different common prices that may be subtracted from income within the yr the cash is spent. As a substitute, companies are required to put in writing off these prices over a number of years and even many years, relying on the kind of asset.

Depreciation schedules specify the quantities companies are legally allowed to put in writing off, in addition to the time interval over which property must be written off. For example, a authorities could require a enterprise to deduct an equal proportion of the price of a machine over a seven-year interval. By the top of the depreciation interval, the enterprise would have deducted the full preliminary greenback value of the asset. Nevertheless, because of the time worth of cash (a traditional actual return plus inflation), write-offs in later years will not be as beneficial in actual phrases as write-offs in earlier years. In consequence, companies successfully lose the power to deduct the complete current worth of their funding value. This tax therapy of capital bills understates true enterprise prices and overstates taxable revenue in current worth phrases.[14]

The ITCI measures a rustic’s capital allowances for 3 asset varieties, particularly, equipment, industrial buildings, and intangibles.[15] Capital allowances are expressed as a p.c of the current worth value that firms can write off over the lifetime of an asset. A one hundred pc capital allowanceA capital allowance is the quantity of capital funding prices, or cash directed in direction of an organization’s long-term progress, a enterprise can deduct every year from its income by way of depreciation. These are additionally generally known as depreciation allowances. represents a enterprise’ potential to deduct the complete value of an funding over its life in actual phrases. International locations that present quicker write-offs for capital investments obtain higher scores within the ITCI.

On common, throughout the OECD, in actual phrases, companies can write off 85.7 p.c of funding prices in equipment, 49.9 p.c of the price of industrial buildings, and 76.7 p.c of the price of intangibles.

In 2023, the UK made full expensing for equipment and gear a everlasting function of its tax code. In 2025, the US reinstated full expensing for equipment and gear, additionally on a everlasting foundation. Moreover, the US quickly offers one hundred pc expensing for qualifying buildings (overlaying near one hundred pc of all industrial buildings), with the start of building occurring after Jan. 19, 2025, and earlier than Jan. 1, 2029, and positioned in service earlier than Jan. 1, 2031. This represents roughly 10-15 p.c of all buildings and buildings within the US.

Germany partially reinstated accelerated depreciation in 2024 and once more in 2025, at the next depreciation price. The renewal was paired with an elevated depreciation price for dwellings till 2029. Moreover, the federal government has not too long ago elevated and prolonged the accelerated depreciation schedules for equipment into 2027.

In distinction, Canada is frequently phasing out its insurance policies of full expensing whereas Finland’s accelerated depreciation coverage is about to run out after 2025. Moreover, the Czech Republic ended its coverage of extraordinary depreciation for equipment. New Zealand abolished its capital allowances for long-life business buildings completely in 2024 earlier than introducing a 20 p.c speedy allowance for any new bodily property, together with industrial buildings.

Estonia and Latvia are coded as permitting one hundred pc of the current worth of a capital funding to be written off, as their company tax solely applies to distributed earnings and is thus decided by money move.[16]

Inventories

Much like capital investments, the prices of inventories will not be written off within the yr of buy. As a substitute, the prices of inventories are deducted at sale. In consequence, governments have to outline the full value of inventories offered. There are typically three strategies used to calculate inventories: Final In, First Out (LIFO); Common Price; and First In, First Out (FIFO).

The tactic by which a rustic permits companies to account for inventories can considerably affect a enterprise’s taxable revenue. When costs are rising, as is normally the case, LIFO is the popular technique as a result of it permits stock prices to be nearer to true prices on the time of sale. This ends in the bottom taxable revenue for companies. In distinction, FIFO is the least most well-liked technique as a result of it ends in the very best taxable revenue. The Common Price technique is between FIFO and LIFO.[17]

International locations that permit companies to decide on the LIFO technique obtain the most effective scores, those who permit the Common Price technique obtain a mean rating, and nations that solely permit the FIFO technique obtain the worst scores. Fourteen OECD nations permit firms to make use of the LIFO technique of accounting, 19 nations use the Common Price technique of accounting, and 5 nations restrict firms to the FIFO technique of accounting.[18]

Allowance for Company Fairness

Companies can finance their operations by means of debt or fairness. Nevertheless, the return on these two sorts of finance is taxed otherwise. Customary company revenue tax programs permit tax deductions of curiosity funds however not of fairness prices, successfully offering a tax benefit to debt over fairness finance—the so-called “debt bias.” This debt bias may be thought-about an actual threat to financial stability.[19]

There are two broad methods to handle this debt bias, particularly, limiting the tax deductibility of curiosity and offering a deduction for fairness prices. Limiting the tax deductibility of curiosity bills creates new distortions, as curiosity revenue normally continues to be absolutely taxed. An allowance for company fairness—generally known as a notional curiosity deduction—retains the deduction for curiosity bills however provides an identical deduction for the traditional return on fairness, neutralizing the debt bias whereas eliminating tax distortions to funding.

Three OECD nations—Poland, Portugal, and Turkey—have an allowance for company fairness.[20] Belgium and Italy phased out their allowances for company fairness in 2024. The allowance price is often primarily based on the company or authorities bond price and, in some circumstances, is adjusted by a threat premium.[21]

International locations which have carried out an allowance for company fairness obtain a greater rating within the Index.

Tax Incentives and Complexity

Good tax coverage treats financial selections neutrally, neither encouraging nor discouraging one exercise over one other. A tax incentive is a tax credit score, deduction, or preferential tax price that completely applies to a selected kind of financial exercise and may thus distort financial selections.

For example, when an trade receives a tax credit score for producing a selected product, it could select to overinvest in that exercise, though it would in any other case not be worthwhile. Moreover, the price of particular provisions is commonly offset by shifting the burden onto different taxpayers within the type of greater taxes.

As well as, the opportunity of receiving incentives invitations efforts to safe these tax preferences,[22] corresponding to lobbying, which creates further deadweight financial loss as corporations focus sources on influencing the tax code in lieu of manufacturing merchandise. For example, the deadweight losses in the US attributed to tax compliance and lobbying have been estimated to be between $215 billion and $987 billion in 2012. These expenditures for lobbying, together with compliance, have been proven to cut back financial progress by crowding out potential financial exercise.[23]

The ITCI considers whether or not nations present incentives corresponding to patent fieldA patent field—additionally known as mental property (IP) regime—taxes enterprise revenue earned from IP at a price beneath the statutory company revenue tax price, aiming to encourage native analysis and improvement. Many patent packing containers all over the world have undergone substantial reforms because of revenue shifting considerations. provisions and analysis and improvement (R&D) tax subsidies. International locations that present such incentives are scored worse than these that don’t.

Patent Containers

On account of an more and more globalized and cell economic system, nations have searched for methods to forestall firms from reincorporating or shifting operations or earnings elsewhere. One response to the rise in capital mobility has been the creation of patent packing containers.

Patent packing containers—additionally known as mental property, or IP, regimes—present tax charges on revenue derived from IP which can be beneath statutory company tax charges. Eligible sorts of IP are mostly patents and software program copyrights. Patent packing containers are an income-based fairly than an expenditure-based tax incentive, limiting its advantages to profitable R&D initiatives which have produced IP rights fairly than lowering the ex ante dangers of R&D by means of value reductions.

Mental property is extraordinarily cell. Therefore, a rustic can use the decrease tax price of a patent field to entice firms to carry their mental property inside its borders. Analysis means that patent packing containers are more likely to entice new revenue derived from patents, implying that companies scale back their company tax legal responsibility by shifting IP-related revenue. Tax revenues, nonetheless, are more likely to decline, because the unfavorable income results of the decrease statutory price on patent revenue may be solely partially offset by revenues from newly attracted patent revenue.[24]

Lately, patent field guidelines have develop into extra stringent in some nations because the OECD necessities for countering dangerous tax practices have been adopted. International locations that comply with the OECD requirements now require firms to have substantial R&D exercise inside their borders to profit from tax preferences related to their mental property.[25]

As a substitute of offering patent packing containers for mental property, nations ought to acknowledge that every one capital is cell to a point and decrease their company tax charges throughout the board. This might encourage funding of every kind, fairly than merely incentivizing firms to find their patents in a selected nation.

Seventeen OECD nations—Australia, Belgium, France, Hungary, Eire, Israel, Korea, Lithuania, Luxembourg, the Netherlands, Poland, Portugal, Slovakia, Spain, Switzerland, Turkey, and the UK—have patent field laws, with charges and exemptions various amongst nations.[26] The USA has a decreased tax price for earnings from exports associated to mental property held within the US, which is handled as a patent field within the Index. International locations with patent field regimes obtain a decrease rating.

Analysis and Improvement

Within the absence of full expensing, expenditure-based R&D tax incentives (partially) offset the tax prices of enterprise funding. Sadly, R&D tax incentives are hardly ever impartial—they normally outline very particular actions that qualify—and are sometimes complicated of their implementation.

As with different incentives, R&D incentives distort funding selections and may result in an inefficient allocation of sources.[27] Moreover, the need to safe R&D incentives encourages the relabeling of bills as R&D and lobbying actions that devour sources and detract from funding and manufacturing. In Italy, as an illustration, corporations can have interaction in a negotiation course of for incentives, corresponding to simple time period loans and tax credit.[28]

International locations might higher use the income spent on particular tax incentives to offer a decrease enterprise tax price throughout the board, enhance the tax therapy of capital funding, or lengthen loss-carryover provisions.[29]

The implied tax subsidy price on R&D expenditures, developed by the OECD, measures the extent of expenditure-based R&D tax reduction throughout nations. Implied tax subsidy charges are measured because the distinction between one unit of funding in R&D and the pretax revenue required to interrupt even on that funding unit, assuming a consultant agency. In different phrases, it measures the extent of the preferential therapy of R&D in a given tax system. The extra beneficiant the tax provisions for R&D, the upper the implied tax subsidy charges for R&D. An implied subsidy price of zero means R&D doesn’t obtain preferential tax therapy.

OECD nations grant implied tax subsidies of R&D expenditures at a mean price of 15.4 p.c. Iceland has the very best implied tax subsidy price, at 36 p.c. Portugal and France present the second and third most beneficiant reduction, with implied tax subsidy charges of 35 and 34 p.c, respectively.

Of the nations that grant notable reduction, Denmark (1 p.c), the US (3 p.c), Mexico (6 p.c), and Turkey (6 p.c) are the least beneficiant. The implied tax subsidy charges of Costa Rica, Estonia, Israel, Latvia, Luxembourg, and Switzerland don’t present any important expenditure-based R&D tax reduction.[30]

International locations that present extra beneficiant expenditure-based R&D tax incentives obtain a decrease rating on the ITCI.

Digital Companies Taxes

Over the previous few years, a number of OECD nations have carried out so-called digital companies taxes (DSTs). DSTs are taxes on chosen gross income streams of huge digital companies. Their tax base usually consists of revenues both derived from a selected set of digital items or companies (for instance, focused internet marketing) or primarily based on the variety of digital customers inside a rustic. Comparatively excessive home and international income thresholds restrict the tax to giant multinationals.

DSTs successfully ring-fence the digital economic system by limiting the tax to sure income streams of huge digital companies, creating distortions primarily based on agency measurement and enterprise mannequin. As well as, as a result of DSTs are levied on revenues fairly than earnings, they don’t take note of profitability, and thus disproportionally have an effect on corporations with decrease revenue margins.

As of 2025, 12 OECD nations have carried out a DST: Austria, Colombia, Denmark, France, Hungary, Italy, Poland, Portugal, Spain, Switzerland, Turkey, and the UK.[31]

International locations which have carried out a DST obtain a decrease rating on the ITCI.

Complexity

The ITCI quantifies company tax code complexity by measuring the variety of separate taxes (and charges) that apply to enterprise revenue, the existence of surtax charges on enterprise revenue, and the quantity of income nations accumulate from enterprise earnings taxes aside from the company revenue tax. These burdens are measured by tallying up the separate charges that apply to enterprise revenue, figuring out relevant surtaxes, and counting on OECD income information to measure the share of income from taxes on enterprise revenue aside from the company revenue tax. In 2024, many OECD nations have adopted QDMTTs inside the international minimal tax course of.[32]

International locations which have a number of charges that apply to company revenue, surtaxes, and accumulate income on revenue and earnings exterior of regular revenue taxes obtain worse scores on the ITCI.

The nation with the very best variety of separate tax charges is Portugal with six brackets. Costa Rica and Korea comply with with 5 and 4, respectively. There are six OECD nations that shouldn’t have a number of tax charges or bases for his or her company revenue tax.[33]

Company surtaxes are comparatively unusual in OECD nations, with simply 4 making use of a surtax to enterprise revenue. France, Germany, Japan, and Luxembourg all apply a surtax to all or a part of their company revenue tax base.[34]

The OECD information on tax revenues has a class for revenues which can be unallocable to regular private or enterprise revenue taxes.[35] The information present that Italy (1.76 p.c), Iceland (1.58 p.c), New Zealand (1.44 p.c), Costa Rica (1.21 p.c), Switzerland (1.08 p.c), and Israel (1.06 p.c) accumulate non-negligible shares of income from revenue (together with private revenue) from taxes aside from company or private revenue taxes. Seventeen OECD nations accumulate no income in that class.

Particular person Taxes

Particular person taxes are some of the prevalent technique of elevating income to fund authorities spending. Particular person revenue taxes are levied on a person’s or family’s revenue (wages and, usually, capital positive aspects and dividends) to fund common authorities operations. These taxes are usually progressive, that means that the speed at which a person’s revenue is taxed will increase as the person earns extra revenue.

As well as, nations have payroll taxes—additionally known as social safety contributions or social insurance coverage taxes. These usually flat-rate taxes are levied on wage revenue along with a rustic’s common particular person revenue tax. Nevertheless, income from these taxes is often allotted particularly towards social insurance coverage applications corresponding to unemployment insurance coverage, authorities pension applications, and medical insurance.

Particular person taxes can get pleasure from being among the extra clear taxes. Taxpayers are made conscious of their whole quantity of taxes paid in some unspecified time in the future within the course of—in contrast to, for instance, consumption taxes, that are collected and remitted by a enterprise, and a person is probably not conscious of their whole consumption tax burden.

Most nations tax people on their revenue utilizing two approaches. First, nations tax earnings from work with odd revenue taxes and payroll taxes. The construction of those taxes can affect people’ selections to work, take a further part-time job, or whether or not a second earner within the family will work. Second, people are taxed on their financial savings by means of taxes on capital positive aspects and dividends. Generally, these taxes are a second layer of tax on company earnings and may affect selections on how a lot to save lots of and make investments. Excessive taxes on capital positive aspects and dividends can scale back the mixture financial savings and funding in a rustic.

A rustic’s rating for its particular person revenue tax is decided by three subcategories: the speed and progressivity of wage taxation, revenue tax complexity, and the extent to which the revenue tax double taxes company revenue. Desk 4 reveals the ranks and scores for your complete Particular person Taxes class in addition to the rank and rating for every subcategory.

Taxes on Odd Revenue

Particular person revenue taxes are levied on the revenue of people or households. Many nations, corresponding to the US, depend on particular person revenue taxes as a big supply of tax income.[36] They’re used to boost income for each common authorities operations and for particular applications, corresponding to social insurance coverage and government-provided medical insurance.

A rustic’s taxes on odd revenue are measured in line with three variables: the highest price at which odd revenue is taxed, the highest revenue tax threshold, and the financial effectivity of labor taxation.

Desk 4. Particular person Taxes

Prime Statutory Private Revenue Tax Fee

Most nations’ revenue tax programs have a progressive taxA progressive tax is one the place the typical tax burden will increase with revenue. Excessive-income households pay a disproportionate share of the tax burden, whereas low- and middle-income taxpayers shoulder a comparatively small tax burden. construction. Which means that, as people earn extra revenue, they transfer into tax bracketsA tax bracket is the vary of incomes taxed at given charges, which usually differ relying on submitting standing. In a progressive particular person or company revenue tax system, charges rise as revenue will increase. There are seven federal particular person revenue tax brackets; the federal company revenue tax system is flat. with greater tax charges. The highest statutory private revenue tax price is the highest tax price on all revenue over a sure degree. For instance, the US has seven tax brackets, with the seventh (prime) bracket taxing every further greenback of revenue over $626,350 ($741,600 for married submitting collectively) at a price of 37 p.c in 2025.[37] As well as, US taxpayers additionally pay state and native revenue taxes in addition to Medicare contributions, which sum to a mixed prime private revenue tax price of 45.8 p.c.[38]

People contemplate the marginal tax price when deciding whether or not to work a further hour. In lots of circumstances, the choice can be about taking a second, part-time job or whether or not households with two adults may have one or two earners. If a person faces a marginal tax price of 30 p.c on their present earnings, taking further work or one other shift would imply that solely 70 p.c of these earnings may very well be introduced house.

Excessive prime private tax charges make further work costlier, which lowers the relative value of not working. This makes it extra possible that a person will select leisure over work, sustaining present hours fairly than transferring to full-time work or taking a further shift. Excessive tax charges improve the price of labor, which might lower hours labored, and, in flip, can scale back the quantity of manufacturing within the economic system.

International locations with excessive prime statutory private revenue tax charges obtain a worse rating on the ITCI than nations with decrease prime charges. Slovenia has the very best all-in prime statutory private revenue tax price (together with worker social contributions) at 67.5 p.c. Estonia has the bottom, at 21.6 p.c.[39]

Revenue Stage at Which Prime Statutory Private Revenue Tax Fee Applies

The extent at which the highest statutory private revenue tax price first applies can be vital. If a rustic has a prime price of 20 p.c, however nearly everybody pays that price as a result of it applies to any revenue over $10,000, that nation basically has a flat revenue tax. In distinction, a tax system that has a prime price that applies to all revenue over $1 million requires a a lot greater prime tax price to boost the identical quantity of income, as a result of it targets a small variety of those who earn a excessive degree of revenue.

International locations with prime statutory private revenue tax charges that apply at decrease ranges rating higher on the ITCI. The ITCI bases its measure on the revenue degree at which the highest price first applies as in comparison with the nation’s common revenue. In keeping with this measure, Colombia applies its prime tax price on the highest degree of revenue (the highest private revenue tax price applies at 58.9 occasions the typical Colombian revenue), whereas Hungary applies its prime price on the primary greenback, with a flat private revenue tax of 15 p.c.[40]

The Financial Price of Labor Taxation

All taxes create some financial losses; nonetheless, tax programs needs to be designed to reduce these losses whereas supporting income wants.

One technique to study the effectivity of labor taxation in a rustic is to manage for the extent of labor taxation utilizing the ratio of the marginal tax wedge to the typical tax wedge.[41] The marginal tax wedge influences the selection to earn one other greenback of revenue, whereas the typical tax wedge measures the tax burden on the present revenue degree.[42] The next ratio signifies that as one earns extra revenue, the affect of the tax system on these selections and the associated financial losses grows. A decrease ratio signifies that a person can resolve to work extra with out the tax system altering their selections.

For instance, one particular person faces a mean tax wedge on their earnings of 20 p.c and their marginal tax wedge can be 20 p.c. That particular person might work extra hours with out the relative tax burden rising. The ratio of that employee’s marginal tax wedge to their common tax wedge is 1. One other particular person who faces a mean tax wedge of 20 p.c on their earnings and a marginal tax wedge of 30 p.c, nonetheless, would have their determination of whether or not to work extra hours influenced by the tax system. The ratio of that employee’s marginal tax wedge to their common tax wedge is 1.5.

The ITCI provides nations with excessive ratios a worse rating because of the bigger affect that these programs have on staff’ selections.

Hungary has the bottom ratio of 1, that means the subsequent greenback earned faces the identical tax burden as present earnings.[43] It’s because Hungary has a flat revenue tax, so the marginal and common tax wedge are the identical. In distinction, Israel’s ratio is 1.7. The typical throughout OECD nations is 1.27.[44]

Complexity

Complexity is measured by the speed of any surtax on private revenue and the quantity of income raised by means of social safety contributions aside from these collected by means of employer or worker payroll taxes. These measures point out non-standard approaches to the taxation of labor revenue and, within the case of surtaxes, a much less clear private revenue tax system. The Index penalizes nations with surtaxes and important revenues from non-standard employer and worker payroll taxes.

4 OECD nations levy a surtax on private revenue: Germany, Japan, Korea, and Luxembourg. Germany levies a 5.5 p.c solidarity surcharge on all capital positive aspects and dividend revenue tax in addition to revenue tax paid in extra of EUR 18,130, equal to labor revenue above EUR 96,409 for single filers, rising its prime marginal revenue tax price from 45 p.c to 47.475 p.c. Japan applies a 2.1 p.c surtax on all nationwide (however not native) revenue tax legal responsibility.

4 OECD nations increase some significant share of income by means of non-standard social safety contributions. In Costa Rica, these revenues make up 31.1 p.c of whole tax revenues. Mexico (14.1 p.c), Iceland (8.6 p.c), and Colombia (8.3 p.c) make up the others on this group.

Capital Positive aspects and Dividends Taxes

Along with wage revenue, many nations’ particular person revenue tax programs tax funding revenue by levying taxes on capital positive aspects and dividends.

A capital acquire happens when a person purchases an asset (normally company inventory) in a single interval and sells it in one other for a revenue. A dividend is a cost made to a person from after-tax company earnings.

Capital positive aspects taxes and private dividend taxes are a type of double taxationDouble taxation is when taxes are paid twice on the identical greenback of revenue, no matter whether or not that’s company or particular person revenue. of company earnings that contribute to the tax burden on capital. When a company makes a revenue, it pays company revenue tax. It may well then typically do one in all two issues. The company can retain the after-tax earnings, which increase the worth of the enterprise and thus its inventory worth. Stockholders then promote the inventory and understand a capital acquire, which requires them to pay tax on that revenue. Alternatively, the company can distribute the after-tax earnings to shareholders within the type of dividends. Stockholders who obtain dividends then pay dividends tax on that revenue.

An organization that makes a taxable revenue of $1 million and pays 20 p.c in company revenue taxes would have $800,000 left to both reinvest within the firm, which might increase the worth of the inventory, or pay a dividend. A shareholder would possibly face a further 20 p.c tax on the positive aspects from promoting the shares or on a dividend from the corporate. Successfully, the system taxes the enterprise earnings at 36 p.c. A person hoping that an funding offers a ten p.c actual price of return would possibly see solely a 6.4 p.c after-tax price of return.

Some tax programs account for this potential double taxation both by means of credit towards capital positive aspects taxes for company taxes paid or different deductions. Such a tax system offers built-in taxation of company earnings, or “company integration.”[45]

Other than double taxation, taxes on dividends and capital positive aspects can change the incentives for companies after they want to finance new initiatives. If a enterprise can both fund a brand new mission by promoting new shares of inventory or by reinvesting its earnings, the taxes on traders can affect which strategy ends in greater after-tax returns. Norway makes use of a price of return allowance on capital positive aspects taxes to neutralize the choice between reinvesting earnings or promoting new shares.[46]

Typically, greater dividends and capital positive aspects taxes create a bias towards saving and funding, scale back capital formation, and sluggish financial progress.[47]

Within the ITCI, a rustic receives a greater rating for decrease capital positive aspects and dividend taxes.

Capital Positive aspects TaxA capital positive aspects tax is levied on the revenue constructed from promoting an asset and is commonly along with company revenue taxes, often leading to double taxation. These taxes create a bias towards saving, resulting in a decrease degree of nationwide revenue by encouraging current consumption over funding.  Charges

International locations typically tax capital positive aspects at a decrease price than odd revenue, offered that particular necessities are met. For instance, the US taxes capital positive aspects at a decreased price if the taxpayer holds the asset for at the least one yr earlier than promoting it (so-called long-term capital positive aspects).[48] The ITCI provides nations with greater capital positive aspects tax charges a worse rating than these with decrease charges.

Some nations use further provisions to assist mitigate the double taxation of revenue because of the capital positive aspects tax. For example, the UK offers an annual exemption of GBP 3,000 (USD 3,831),[49] and Canada excludes half of all capital positive aspects revenue from taxation.[50]

Denmark has the very best capital positive aspects tax price within the OECD, at 42 p.c. Belgium, Greece, Korea, Luxembourg, New Zealand, Slovakia, Slovenia, Switzerland, and Turkey don’t tax long-term capital positive aspects from the sale of shares.[51]

Dividend Tax Charges

Dividend taxes can adversely affect capital formation in a rustic. Excessive dividend tax charges improve the price of capital, which deters funding and slows financial progress.

International locations’ charges are expressed as the highest marginal private dividend tax price after any imputation or credit score system.

International locations with decrease total dividend tax charges rating higher on the ITCI because of the dividend tax price’s impact on the price of funding (i.e., the price of capital) and the extra impartial therapy between saving and consumption. Eire has the very best dividend tax price within the OECD, at 51 p.c. Estonia and Latvia have dividend tax charges of 0 p.c because of their cash-flow company tax system, and Greece’s prime dividend tax price is 5 p.c. The OECD common is 24.7 p.c.[52]

Consumption Taxes

Consumption taxes are levied on people’ purchases of products and companies. Within the OECD and a lot of the world, the value-added tax (VAT) is the commonest common consumption tax.[53] Most common consumption taxes both don’t tax intermediate enterprise inputs or permit a credit score for taxes already paid on them, making them some of the economically environment friendly technique of elevating tax income.

Nevertheless, many nations outline their tax base inefficiently. Most nations levy decreased tax charges and exempt sure items and companies from VAT, requiring them to levy greater normal tax charges to boost adequate income. Some nations fail to correctly exempt enterprise inputs. For instance, states in the US usually levy gross sales taxes on equipment and gear.[54]

A rustic’s consumption tax rating is damaged down into two subcategories: the tax price and the tax base. Desk 5 shows the ranks and scores for the Consumption Taxes class.

Consumption Tax Fee

If levied on the similar price and correctly structured, a VAT and a retail gross sales tax will every increase roughly the identical quantity of income. Ideally, both a VAT or a gross sales tax needs to be levied at the usual price on all remaining consumption (though they’re carried out in barely alternative ways). With a sufficiently broad consumption tax base, the tax price may be comparatively low. A VAT or retail gross sales tax with a low price and impartial construction limits financial distortions whereas elevating substantial income.

Nevertheless, many nations have consumption taxes that exempt sure items and companies from VAT or tax them at a decreased price, requiring greater normal charges to boost adequate income. If not neutrally structured, excessive tax charges create financial distortions by discouraging the acquisition of extremely taxed items and companies in favor of untaxed, lower-taxed, or self-provided items and companies.

International locations with decrease consumption tax charges rating higher than these with greater tax charges, as decrease charges do much less to discourage financial exercise and permit for extra future consumption and funding.

The typical common consumption tax price within the OECD is nineteen.4 p.c. Hungary has the very best tax price at 27 p.c, whereas the US has the bottom tax price at 7.5 p.c.[55]

Desk 5. Consumption Taxes

Consumption Tax Base

Ideally, both a VAT or a gross sales tax needs to be levied at an ordinary price on all remaining consumption. In different phrases, consumption tax collections needs to be equal to the quantity of ultimate consumption within the economic system occasions the speed of the gross sales tax or VAT. Nevertheless, many nations’ consumption tax bases are removed from this ultimate. Many nations exempt sure items and companies from the VAT or tax them at a decreased price, requiring the next normal price than would in any other case be crucial, or apply the tax to enterprise inputs, rising the price of capital.

VAT/Gross sales Tax ExemptionA tax exemption excludes sure revenue, income, and even taxpayers from tax altogether. For instance, nonprofits that fulfill sure necessities are granted tax-exempt standing by the Inside Income Service (IRS), stopping them from having to pay revenue tax. Threshold

Most OECD nations set exemption thresholds for his or her VATs/gross sales taxes. If a enterprise is beneath a sure annual income threshold, it’s not required to take part within the VAT system. Which means that small companies—in contrast to companies above that threshold—don’t accumulate VAT on their outputs offered to clients but additionally can’t obtain a refund for VAT paid on enterprise inputs.[56] Though exempting very small companies saves administrative and compliance prices, unnecessarily giant thresholds create a distortion by favoring smaller companies over bigger ones.

International locations obtain higher scores for decrease thresholds. The Czech Republic receives the worst threshold rating with a VAT threshold of $154,336.[57] Seven nations obtain the most effective scores for having no common VAT/gross sales tax exemption threshold (Chile, Colombia, Costa Rica, Mexico, Spain, Turkey, and the US). The typical throughout the OECD nations which have a VAT threshold is roughly $69,000.[58]

Consumption Tax Base as a P.c of Complete Consumption

One technique to measure a rustic’s VAT base is the VAT income ratio. This ratio seems on the distinction between the VAT income really collected and collectible VAT income below a VAT that was utilized at the usual price on all remaining consumption. The distinction in precise and potential VAT revenues is because of 1) coverage decisions to exempt sure items and companies from VAT or tax them at a decreased price, and a couple of) missing VAT compliance.[59]

For instance, if remaining consumption in a rustic is $100 and a rustic levies a ten p.c VAT on all items and companies, a pure base would increase $10. Income assortment beneath $10 displays both a excessive variety of exemptions or decreased charges constructed into the tax code or low ranges of compliance (or each). The bottom is measured as a ratio of the pure base collections to the precise collections. International locations with tax base ratios close to 1—signifying a pure tax base—rating higher.

Beneath this measure, New Zealand has the broadest tax base overlaying roughly 96 p.c of whole consumption. Luxembourg and Korea comply with with ratios of 0.82 and 0.70, respectively. Mexico (0.35), the US (0.36), and Colombia (0.39) have the worst ratios. The OECD common tax base ratio is 0.55.[60]

Property Taxes

Property taxes are authorities levies on the property of a person or enterprise. The strategies and intervals of assortment range extensively among the many sorts of property taxes. Property and inheritance taxes, for instance, are due upon the dying of a person and the passing of his or her property to an inheritor, respectively. Taxes on actual property, however, are paid at set intervals–usually yearly–on the worth of taxable property corresponding to land and actual property.

Many sorts of property taxes are extremely distortive and add important complexity for taxpayers. Property and inheritance taxes create disincentives towards further work and saving, which damages productiveness and output. Monetary transaction taxes improve the price of capital, which limits the move of funding capital to its most effective allocations.[61] Taxes on wealth restrict the capital out there within the economic system, which damages long-term financial progress and innovation.[62]

Sound tax coverage minimizes financial distortions. Apart from taxes on land, most property taxes improve financial distortions and have long-term unfavorable results on the economic system and its productiveness.

Desk 6 reveals the ranks and scores for the Property Taxes class and every of its subcategories, that are actual property taxes, wealth and property taxes, and capital and transaction taxes.

Actual Property Taxes

Actual property taxes are levied on a recurrent foundation on taxable property. For instance, in most states or municipalities in the US, companies and people pay a property tax primarily based on the worth of their actual property.

Construction of Property Taxes

Though taxes on actual property are typically an environment friendly technique to increase income, some actual property taxes can develop into direct taxes on capital. This happens when a tax applies to extra than simply the worth of the land itself, such because the buildings or buildings on the land. This will increase the price of capital, discourages the formation of capital (such because the constructing of buildings), and may negatively affect enterprise location selections.

When a enterprise needs to enhance its property by means of renovations or increasing a manufacturing unit, a property tax that applies to each the land and people enhancements straight will increase the prices of these enhancements. Nevertheless, a tax that simply applies to the worth of the land would normally not create an incentive towards property enhancements.

International locations that tax the worth of buildings and buildings, in addition to land, obtain the worst scores on the ITCI. Some nations mitigate this therapy with a deduction for property taxes paid towards company taxable revenue. These nations obtain barely higher scores. International locations obtain the very best rating if they’ve both no property tax or solely tax land.

Desk 6. Property Taxes

Each OECD nation besides Australia and Estonia applies its property tax to all capital (land and buildings/buildings).[63] These two nations solely tax the worth of land, which excludes the worth of any buildings or buildings on the land. Of the 36 OECD nations with taxes on all capital, 31 permit for a deduction towards company taxable revenue.[64]

Actual Property Tax Collections

The variable “property tax collections” measures property tax revenues as a p.c of a rustic’s non-public capital inventory. Increased tax burdens, particularly when on capital, are inclined to sluggish funding, which damages productiveness and financial progress.

International locations with a excessive degree of collections as a p.c of their capital inventory place a bigger tax burden on taxpayers and obtain a worse rating on the ITCI. Seven nations within the OECD have property tax collections which can be larger than 1 p.c of the non-public capital inventory. Main this group are the UK (2.6 p.c), the US (1.8 p.c), and Canada (1.6 p.c). 13 nations have an actual property tax burden of beneath 0.1 p.c of the non-public capital inventory.[65]

Wealth and Property Taxes

Many nations additionally levy property taxes on a person’s wealth. These taxes can take the type of property or inheritance taxes which can be levied both upon a person’s property at dying or upon the property transferred from the decedent’s property to the heirs. These taxes also can take the type of a recurring tax on a person’s wealth. Property and inheritance taxes restrict sources out there for funding or manufacturing and scale back the inducement to save lots of and make investments.[66] This discount in funding adversely impacts financial progress. Furthermore, these taxes, the property and inheritance taxAn inheritance tax is levied upon the worth of inherited property obtained by a beneficiary after a decedent’s dying. To not be confused with property taxes, that are paid by the decedent’s property primarily based on the dimensions of the full property earlier than property are distributed, inheritance taxes are paid by the recipient or inheritor primarily based on the worth of the bequest obtained. particularly, may be prevented with sure planning methods, which makes the tax an inefficient and unnecessarily complicated income.

Wealth Taxes

Along with property and inheritance taxes, some nations levy wealth taxes. Wealth taxes are sometimes low-rate, progressive taxes on a person’s or household’s property or the property of a company. Not like property taxes, wealth taxes are levied on an annual foundation. Whereas some nations levy a complete tax on web wealth, others restrict their wealth taxes to chose property, corresponding to safety accounts, monetary property held overseas, or actual property.

4 nations levy web wealth taxes, particularly Colombia, Norway, Spain, and Switzerland. Belgium, France, and Italy impose wealth taxes on chosen property. International locations with no kind of wealth tax obtain the most effective rating, nations with wealth taxes on chosen property obtain a mean rating, and nations with web wealth taxes obtain the bottom rating.[67]

Property, Inheritance, and Present Taxes

Property taxes are levied on the worth of a person’s taxable property on the time of dying and are paid by the property itself, whereas inheritance taxes are levied on the worth of property transferred to a person’s heirs upon dying and are paid by the heirs (not the property of the deceased particular person). Present taxes are taxes on the switch of property (money, shares, and different property) which can be usually used to forestall people from circumventing property and inheritance taxes by giving freely their property earlier than dying.

Charges, exemption ranges, and guidelines range considerably amongst nations. For instance, the US levies a prime price of 40 p.c on estates however has an exemption degree of $12.92 million. Belgium’s Brussels capital area, however, has an inheritance tax with an exemption of EUR 15,000 (USD 16,250)[68] and quite a lot of tax charges relying on who receives property from the property and what the property are.[69]

Property, inheritance, and present taxes create important compliance prices for taxpayers whereas elevating insignificant quantities of income. In keeping with OECD information for 2023, property, inheritance, and present taxes throughout the OECD raised a mean of 0.14 p.c of GDP in tax income, with the very best quantity raised being solely 0.8 p.c of GDP in France, regardless of France’s prime inheritance tax price of as much as 60 p.c in some circumstances.[70]

International locations with out these taxes rating higher than nations which have them. Twelve nations within the OECD don’t have any property, inheritance, or present taxes: Australia, Austria, Canada, Costa Rica, Estonia, Israel, Latvia, Mexico, New Zealand, Norway, Slovakia, and Sweden. All others levy an property, inheritance, or present tax.[71]

Capital, Wealth, and Property Taxes on Companies

There are numerous taxes nations levy on the property and glued capital of companies. These embody taxes on the switch of actual property, taxes on the web property of companies, taxes on elevating capital, and taxes on monetary transactions. These taxes contribute on to the price of capital for companies and scale back the after-tax price of return on funding.

Property Switch Taxes

Property switch taxes are taxes on the switch of actual property (actual property, land enhancements, equipment) from one particular person or agency to a different. A standard instance in the US is the true property switch tax, which is often levied on the state degree on the worth of properties which can be bought by people.[72] Property switch taxes symbolize a direct tax on capital and improve the price of buying property.

International locations obtain a worse rating if they’ve property switch taxes. Six OECD nations shouldn’t have property switch taxes: Chile, the Czech Republic, Estonia, Lithuania, New Zealand, and Slovakia.[73]

Company Asset Taxes

Much like wealth taxes, asset taxes are levied on the wealth, or property, of a enterprise. For example, Luxembourg levies a 0.5 p.c tax on the worldwide web wealth of nontransparent Luxembourg-based firms yearly.[74] Equally, cantons in Switzerland levy taxes on the web property of firms, various from 0.001 p.c to 0.5 p.c of company web property.[75] Different nations levy these taxes completely on financial institution property.

Twenty OECD nations have some kind of company wealth or asset tax. Fourteen of those nations have financial institution taxes of some kind.[76]

Capital Duties

Capital duties are taxes on the issuance of shares of inventory. Sometimes, nations both levy these taxes at very low charges or require a small, flat price. For instance, Switzerland requires resident firms to pay a 1 p.c tax on the issuance of shares of inventory.[77] A lot of these taxes improve the price of capital, restrict funds out there for funding, and make it tougher to type companies.[78]

International locations with capital duties rating worse than nations with out them. Ten nations within the OECD levy some kind of capital obligation.[79]

Monetary Transaction Taxes

A monetary transaction tax is a levy on the sale or switch of a monetary asset. Monetary transaction taxes take totally different kinds in numerous nations. Finland levies a tax of 1.6 p.c on the switch of Finnish securities. Then again, Poland levies a 1 p.c stamp obligation on exchanges of property rights primarily based on the transaction worth. For transactions on a inventory alternate, the tax is the duty of the customer.[80]

Monetary transaction taxes impose a further layer of taxation on the acquisition or sale of shares. Markets run on effectivity, and capital must move rapidly to its most economically productive use. A monetary transaction tax impedes this course of.[81]

The ITCI ranks nations with monetary transaction taxes worse than nations with out them. Fifteen nations within the OECD have monetary transaction taxes, together with France and the UK, whereas 23 nations don’t impose monetary transaction taxes.[82]

Cross-Border Tax Guidelines

In an more and more globalized economic system, companies usually increase past the borders of their house nations to succeed in clients and construct provide chains all over the world. International locations have outlined guidelines that decide how, or if, company revenue earned in overseas nations is taxed domestically. Cross-border tax guidelines comprise the programs and laws that nations apply to these enterprise actions.

There was a rising pattern of transferring from worldwide taxation towards a system of territorial taxation, wherein a rustic’s company tax is restricted to earnings earned inside its borders.[83] In a pure territorial tax system, firms solely pay taxes to the nation wherein they earn revenue. For the reason that Nineties, the variety of OECD nations with worldwide tax programs has dropped from greater than 20 to a handful.[84]

The US has a considerably distinctive strategy. Along with normal managed overseas company (CFC) guidelines and an exemption for foreign-sourced dividends, it has each inbound and outbound anti-avoidance measures. As a part of the Tax Cuts and Jobs Act (TCJA) in December 2017, the US adopted a hybrid worldwide tax system that exempted foreign-sourced dividends from home taxation, but additionally erected stronger and extra complicated base erosion guidelines.[85] The US system below the TCJA has three items: international intangible low-taxed revenue (GILTI), foreign-derived intangible revenue (FDII), and the bottom erosion and anti-abuse tax (BEAT). GILTI legal responsibility is successfully a ten.5 p.c minimal tax on supra-normal returns derived from sure overseas investments earned by US firms. FDII is designed to be a decreased price on exports of US firms related to mental property situated within the US. Successfully, FDII earnings are taxed at 13.125 p.c. Paired collectively, GILTI and FDII create a worldwide tax on intangible revenue.

BEAT is a coverage centered on cross-border deductible funds. It’s designed as a ten p.c minimal tax on US-based multinationals with gross receipts of $500 million or extra. The tax applies to funds by these giant multinationals if funds to CFCs exceed 3 p.c (2 p.c for sure monetary corporations) of whole deductions taken by a company.

The One Massive Lovely Invoice Act (OBBBA) of July 2025 amended a few of these provisions by eradicating their limitation to revenue from intangible property and renamed them. Starting in 2026, GILTI can be changed with web CFC-tested revenue (NCTI) and FDII can be changed with foreign-derived deduction eligible revenue (FDDEI). NCTI acts at the least tax of between 12.6 and 14 p.c on all overseas revenue of US firms. FDDEI is a 14 p.c tax on US revenue related to exports.[86]

The proposal for a worldwide minimal tax is dramatically altering the panorama for cross-border tax guidelines.[87] Many OECD nations are continuing to implement the worldwide minimal tax guidelines. As of July 2025, 27 OECD nations have adopted an income-inclusion rule below Pillar Two. Eleven nations haven’t adopted an IIR but. Additional, 24 OECD nations have up to now adopted an undertaxed-profits rule (UTPR), much like BEAT within the US.[88]

Desk 7 shows the general rank and rating for the Cross-Border Tax Guidelines class in addition to the ranks and scores for the subcategories—which embody a class for dividends and capital positive aspects exemptions (territoriality), withholding taxes, tax treaties, and anti-tax avoidance guidelines.

Territoriality

Beneath a territorial tax system, multinational companies pay taxes to the nations wherein they earn their revenue. Which means that territorial tax regimes don’t typically tax company revenue firms earn in overseas nations. A worldwide tax systemA worldwide tax system for firms, versus a territorial tax system, consists of foreign-earned revenue within the home tax base. As a part of the 2017 Tax Cuts and Jobs Act (TCJA), the US shifted from worldwide taxation in direction of territorial taxation.—such because the system beforehand employed by the US—requires firms to pay taxes on worldwide revenue, no matter the place it’s earned. A number of nations—as is now the case within the US—function some type of hybrid system.

International locations enact territorial tax programs by means of so-called “participation exemptions,” which embody full or partial exemptions for foreign-earned dividend or capital positive aspects revenue (or each). Participation exemptions remove the extra home tax on overseas revenue by permitting firms to disregard—some or all—overseas revenue when calculating their taxable revenue. A pure territorial system absolutely exempts foreign-sourced dividends and capital positive aspects revenue.

Firms primarily based in nations with worldwide tax programs are at a aggressive drawback as a result of they face doubtlessly greater ranges of taxation than their rivals primarily based in nations with territorial tax programs. Moreover, taxes on repatriated company revenue in an organization’s house nation improve complexity and discourage funding and manufacturing.[89]

The territoriality of a tax system is measured by the diploma to which a rustic exempts foreign-sourced revenue by means of dividend and capital positive aspects exemptions.

Desk 7. Cross-Border Tax Guidelines

Dividends Obtained Exemption

When a overseas subsidiary of a father or mother firm earns revenue, it pays company revenue tax to the nation wherein it does enterprise. After paying the tax, the subsidiary can both reinvest its earnings into ongoing actions (by buying gear or hiring extra staff, for instance) or it will probably distribute its earnings again to the father or mother firm within the type of dividends.

Beneath a worldwide tax system, the dividends obtained by a father or mother firm are taxed once more by the father or mother firm’s house nation, minus a tax credit score for taxes already paid on that revenue. Beneath a pure territorial system, these dividends are exempt from taxation within the father or mother’s nation.

International locations obtain a rating primarily based on the extent of dividend exemption they supply. International locations with no dividend exemption (worldwide tax programs) obtain the worst rating.

Twenty-seven OECD nations exempt all foreign-sourced dividends obtained by father or mother firms from home taxation. Eight nations permit 95 p.c or 97 p.c of foreign-sourced dividends to be exempt from home taxation. Three OECD nations—Chile, Colombia, and Mexico—have a worldwide or hybrid tax system that typically doesn’t exempt foreign-sourced dividends from home taxation. Eire is the newest nation to undertake a dividends-received exemption ranging from 2025.[90]

Department or Subsidiary Capital Positive aspects Exclusion

One other function of a world tax system is its therapy of capital positive aspects earned by means of overseas investments. When a father or mother firm invests in a overseas subsidiary (i.e., purchases shares in a overseas subsidiary), it will probably understand a capital acquire on that funding if it later divests the asset. A territorial tax system would exempt these positive aspects from home taxation, as they’re derived from abroad exercise.

Taxing foreign-sourced capital positive aspects revenue at home tax charges can discourage saving and funding.

International locations that exempt foreign-sourced capital positive aspects from home taxation obtain a greater rating on the ITCI. International-sourced capital positive aspects are absolutely excluded from home taxation in 25 OECD nations. Six nations partially exclude foreign-sourced capital positive aspects. Seven nations don’t exclude foreign-sourced capital positive aspects revenue from home taxation.[91]

Restrictions on Eligible International locations

A great territorial system would solely concern itself with the earnings earned inside the house nation’s borders. Nevertheless, many nations have restrictions on their territorial programs that decide when a enterprise’ dividends or capital positive aspects obtained from overseas subsidiaries are exempt from home tax.

Some nations deal with overseas company revenue otherwise relying on the nation wherein the overseas revenue was earned. For instance, a number of nations limit their territorial programs primarily based on a “blacklist” of nations that don’t comply with sure necessities. Amongst EU nations, it is not uncommon to limit the participation exemption to member states of the European Financial Space.

The eligibility guidelines create further complexity for firms and are sometimes established in an arbitrary method. Portugal, as an illustration, limits exemptions for foreign-sourced dividends and capital positive aspects to these earned in nations that aren’t listed as a tax haven and that impose an revenue tax listed within the EU parent-subsidiary directive or have an revenue tax equal to at the least 60 p.c of the Portuguese company tax price.[92] Italy, which usually permits a 95 p.c tax exemption for foreign-sourced dividends paid to Italian shareholders, doesn’t permit the exemption if the revenue was earned in a subsidiary situated in a blacklisted nation, except proof that an sufficient degree of taxation was borne by the overseas entity may be offered.[93]

Within the OECD, 20 of 35 nations that present participation exemptions place restrictions on whether or not they exempt foreign-sourced revenue from home taxation primarily based on the supply nation of the revenue.[94] International locations which have these restrictions on their territorial tax programs obtain a worse rating on the ITCI.

Withholding Taxes

When corporations pay dividends, curiosity, and royalties to overseas traders or companies, governments usually require these corporations to withhold a sure portion to pay as tax. For instance, the US requires companies to withhold a most 30 p.c tax on dividends, curiosity, and royalty funds to overseas people except a tax treaty offers in any other case.

These taxes make funding extra pricey each for traders, who will obtain a decrease return on dividends, and for corporations, that should pay the next quantity in curiosity or royalty funds to compensate for the price of the withholding taxes. These taxes additionally scale back funds out there for funding and manufacturing and improve the price of capital.

International locations with greater withholding tax charges on dividends, curiosity, and royalties rating worse within the ITCI. Dividends, curiosity, and royalties from these nations don’t at all times face the identical tax price as when distributed to home shareholders. Tax treaties between nations both scale back or remove withholding taxes.

Chile and Switzerland levy the very best dividend and curiosity withholding charges, requiring corporations to withhold 35 p.c of a dividend or curiosity cost paid to overseas entities or individuals. In the meantime, Estonia, Hungary, and Latvia don’t levy withholding taxes on dividends or curiosity funds.

For royalties, Mexico requires corporations to retain the very best quantity, at 35 p.c, adopted by Australia, Belgium, and the US, at 30 p.c. Hungary, Latvia, Luxembourg, the Netherlands, Norway, Sweden, and Switzerland don’t require firms to retain any quantity of royalties for withholding tax functions.[95]

Tax Treaty Community

Tax treaties align many tax legal guidelines between two nations and try to cut back double taxation, significantly by decreasing or eliminating withholding taxes between the nations. International locations with a larger variety of companions of their tax treaty community have extra engaging tax regimes for overseas funding and obtain a greater rating than nations with fewer treaties.

The UK has the broadest community of tax treaties (131 nations) and thus receives the most effective rating. Costa Rica receives the worst rating, with a treaty community of solely 4 nations. Throughout the OECD, the typical measurement of a tax treaty community is 75 nations.[96]

Anti-Avoidance Guidelines

Anti-avoidance guidelines search to forestall firms from minimizing their tax legal responsibility by means of aggressive tax planning. These guidelines can take a number of kinds, corresponding to guidelines for managed overseas firms (CFC guidelines), skinny capitalization guidelines, and diverted earnings taxes.

Anti-avoidance guidelines can have the impact of creating nations with uncompetitive tax buildings even much less aggressive, as these guidelines can add important complexity.[97]

Managed International Company (CFC) Guidelines

CFC guidelines are supposed to forestall firms from shifting their pretax earnings from a high-tax nation to a low-tax nation by utilizing extremely cell types of revenue. CFC guidelines are typically utilized in a number of steps. First, they decide whether or not a overseas subsidiary is deemed a “managed overseas company” for tax functions. Second, if a overseas entity is deemed “managed,” there’s an applicability check to find out whether or not the CFC guidelines apply—typically by means of an revenue check, a predefined minimal tax price, or a black/white record for nations. Third, if each exams are handed, the CFC guidelines topic the overseas company’s passive revenue (hire, royalties, curiosity) and generally energetic revenue to the tax price of the house nation of the subsidiary’s father or mother company.

CFC guidelines range extensively amongst nations. The definition of what constitutes “management” is a considerably arbitrary determination that usually will increase tax code complexity. For example, the Subpart F guidelines in the US outline a subsidiary with 50 p.c US possession to be managed, whereas Australia considers a overseas firm that’s 50 p.c owned by 5 or fewer Australian residents, or 40 p.c owned by one Australian resident, to be managed.[98]

In 2016, an EU directive established that every one EU member states tax sure multinational, non-distributed revenue of CFCs if the father or mother firm situated in that member state owns greater than 50 p.c of the shares of the CFC, and if the tax paid by the CFC is decrease than the distinction between the tax paid by the CFC if it had been located within the member state and the tax it really paid.[99] All EU member states have adopted CFC guidelines.[100]

Every nation’s rating on this subcomponent relies on three points of CFC guidelines: 1) whether or not there are CFC guidelines, 2) whether or not CFC guidelines apply to passive revenue or all revenue, and three) whether or not there are exemptions from the final CFC guidelines. International locations obtain the most effective rating if they don’t have CFC guidelines. International locations with CFC guidelines which have exemptions or solely apply to passive revenue or revenue related to non-genuine preparations obtain a greater rating. International locations rating the worst if they’ve CFC guidelines that apply to all revenue and don’t have any exemptions.

CFC guidelines exist in 36 of the 38 OECD nations, with Costa Rica and Switzerland being the one exceptions. In 4 of the 36 nations with CFC guidelines the foundations seize each energetic and passive revenue, whereas in 13 nations the foundations have a threshold for treating all revenue as passive revenue. Within the remaining 21 nations with CFC guidelines, they solely apply to passive revenue or revenue related to non-genuine preparations.[101]

Curiosity Deduction Limitations

Many nations restrict the quantity of curiosity bills a multinational company, or one in all its subsidiaries, can deduct for tax functions. Low-tax nations create an incentive for firms to finance their investments with fairness, whereas high-tax nations create an incentive for firms to finance investments with debt and use curiosity deductions to cut back their tax liabilities. To forestall companies from lending cash internally from entities in low-tax jurisdictions to entities in high-tax jurisdictions for tax functions, most nations restrict the quantity firms can deduct in curiosity.

Curiosity deduction limitations can range extensively amongst nations, and there’s a lot discretion out there to governments in implementing these legal guidelines.[102] Some nations restrict curiosity deductions by making use of switch pricing laws to rates of interest. Others apply what are referred to as “skinny capitalization guidelines,” which restrict the quantity of deductible curiosity. The 2 most typical varieties utilized in observe are “secure harbor guidelines” and “earnings stripping guidelines.”

Secure harbor guidelines limit the quantity of debt for which curiosity is tax-deductible by defining a debt-to-equity ratio. Curiosity paid on debt exceeding this set ratio will not be tax-deductible. Earnings stripping guidelines restrict the tax-deductible share of debt curiosity to pretax earnings.

Curiosity deduction guidelines, significantly skinny capitalization guidelines, have been proven to cut back the worth of corporations and warp agency selections about tips on how to put money into capital.[103] Whereas curiosity deduction limitations may be seen as a technique to deal with the debt bias inherent to most company tax programs, limiting the tax deductibility of curiosity bills creates new distortions if curiosity revenue continues to be absolutely taxed.[104]

International locations that restrict curiosity deductions with solely switch pricing laws obtain the most effective rating. International locations with debt-to-equity ratios obtain a mean rating, and nations with interest-to-pretax-earning limits obtain the worst rating.

Curiosity deduction limitations are present in 37 of the 38 nations measured within the ITCI. For example, Canada limits curiosity deductions if a agency’s debt-to-equity ratio reaches 1.5 to 1, whereas Slovenia limits deductions at a 4 to 1 ratio. Germany and Spain restrict curiosity deductions (no matter whether or not they’re for cross-border loans) to 30 p.c of working revenue. Israel has no established limitations on curiosity deductions and depends on switch pricing guidelines.[105]

International Minimal Tax

There was a robust motion in direction of taxing giant multinational enterprises primarily based on their international accounting earnings. The proposal for a worldwide minimal tax will dramatically change the panorama for cross-border tax guidelines. Many OECD nations are continuing to implement the worldwide minimal tax guidelines.[106] These comprise three essential parts: 1) a QDMTT, 2) an IIR, and three) a UTPR. The minimal tax guidelines are dangerous, as a result of they outline the company tax base in a means that’s lower than ultimate, favoring non-refundable tax credit and incentivizing subsidy races detrimental to international commerce, whereas not correctly accounting for options of a tax base, corresponding to full expensing.

Over 140 jurisdictions signed on to the worldwide minimal tax deal. In 2024, many nations have carried out laws for IIR and UTPR, with the European Union directive mandating the adoption of each of those guidelines. Outdoors of Europe, adoption is extra hesitant. Contained in the European Union, Estonia and Latvia opted for a six-year deferral of the worldwide minimal tax guidelines to adapt them to their distribution-based tax programs. Lithuania additionally opted for deferring all guidelines till 2029, whereas Slovakia selectively carried out solely a home top-up tax in 2024.

In the US, GILTI and BEAT are much like the Pillar Two IIR and UTPR. GILTI is successfully a ten.5 p.c minimal tax on supra-normal returns derived from sure overseas investments earned by US firms. The OBBBA removes GILTI’s limitation to revenue from intangible property and renames it to NCTI, which is able to act at the least tax of between 12.6 and 14 p.c on all overseas revenue of US firms beginning in 2026.[107]

The BEAT is designed as a ten p.c minimal tax (initially 5 p.c in 2018) on US-based multinationals with gross receipts of $500 million or extra. The tax applies to funds by these giant multinationals if funds to CFCs exceed 3 p.c (2 p.c for sure monetary corporations) of whole deductions taken by a company. The brand new international minimal tax variable signifies if a rustic levies a minimal tax on resident firms international revenue and taxes its worldwide revenue. It takes the worth 0.5 for having an IIR, and the worth of 1 for having each an IIR and a UTPR. For the US, it absorbs the same provisions of GILTI and BEAT. Beforehand, the CFC guidelines variable contained an indicator for the worldwide minimal tax. International locations adopting international minimal tax guidelines are rated worse.

Basic Anti-Tax Avoidance Guidelines

Many nations apply common anti-tax avoidance guidelines to tax multinational firms with enterprise buildings designed particularly for tax benefits fairly than financial causes. These guidelines usually comply with the substance over type precept in figuring out how earnings needs to be taxed.

As talked about above, the BEAT within the new US tax legislation is a minimal tax designed to forestall multinationals from shifting earnings exterior the US to foreign-affiliated firms.

Australia and the UK each apply a diverted earnings tax. A diverted earnings tax is a set of complicated guidelines and penalty charges that apply if an organization is discovered to have minimized its tax burden by means of a construction with out financial substance. Australia applies a price of 40 p.c to diverted earnings whereas the UK applies a 25 p.c price, although firms in sure industries can face greater charges within the UK.[108] These complicated tax regimes end in excessive compliance prices for multinational firms in addition to double taxation of some company earnings.

Anti-abuse provisions of this nature will not be at present accounted for within the Index. Nevertheless, in the event that they have been appropriately accounted for, nations like Australia, the UK, and the US would possible obtain worse scores on their cross-border tax guidelines—doubtlessly additionally impacting their total rating on the Index.

Nation Profiles

Australia

Australia ranks 7^th total on the 2025 Worldwide Tax Competitiveness Index, 4 locations higher than in 2024.

Some strengths of the Australian tax system:

• Property taxes in Australia are assessed on the worth of the land fairly than actual property or different enhancements to land.
• Australia’s company and particular person taxes have an built-in therapy of dividends, assuaging the burden of double taxation on distributed earnings.
• Australia ranks effectively on consumption taxes because of its low items and companies tax (GST) price of 10 p.c, although it applies to a comparatively slender base.

Some weaknesses of the Australian tax system:

• Australia’s treaty community consists of simply 48 nations, when the typical amongst OECD nations is 76.
• The company tax price in Australia is 30 p.c, above the OECD common (24.2 p.c).
• Firms are restricted of their potential to put in writing off investments.

Austria

Austria ranks 19^th total on the 2025 Worldwide Tax Competitiveness Index, 4 locations worse than in 2024.

Some strengths of the Austrian tax system:

• After a number of years of reductions, Austria’s company tax price (23 p.c) is beneath the OECD common of 24.2 p.c.
• Austria presents comparatively good value restoration for equipment and industrial buildings.
• There are not any property, inheritance, or wealth taxes.

Some weaknesses of the Austrian tax system:

• Austria carried out a digital companies tax (DST) in 2020.
• The labor tax wedge on the typical single employee ranks 3^rd highest amongst OECD nations.
• Austria has a comparatively excessive prime private revenue tax price of 55 p.c, setting in on the fifth-highest threshold within the OECD at 18 occasions the typical wage.

Belgium

Belgium ranks 30^th total on the 2025 Worldwide Tax Competitiveness Index, two ranks worse than in 2024.

Some strengths of the Belgian tax system:

• Belgium has a broad tax treaty community, with 95 nations, and a territorial tax system because it absolutely exempts foreign-sourced dividends and capital positive aspects with none nation limitations.
• Capital positive aspects ensuing from regular administration of personal wealth are exempt from tax.
• Enterprise investments in equipment, buildings, and intangibles all obtain better-than-average therapy for company write-offs.

Some weaknesses of the Belgian tax system:

• Belgium levies among the highest withholding tax charges amongst OECD nations with 30 p.c on dividends, royalties, and curiosity funds.
• Belgium levies an property tax and a monetary transaction tax and launched a brand new annual tax on securities accounts.
• The Belgian tax wedge on labor is the very best amongst OECD nations, with the typical wage single employee dealing with a tax burden of 53 p.c.

Canada

Canada ranks 13^th total on the 2025 Worldwide Tax Competitiveness Index, one place higher than in 2024.

Some strengths of the Canadian tax system:

• Consumption taxes are low, although the consumption tax base is comparatively slender.
• Canada has among the greatest capital value restoration provisions for equipment and industrial buildings within the OECD.
• Canada doesn’t levy wealth, property, or inheritance taxes.

Some weaknesses of the Canadian tax system:

• Canada taxes capital positive aspects at a price of 26.8 p.c and dividends at 39.3 p.c, effectively above the respective OECD averages of 20 p.c and 24.7 p.c.
• The company price of 26.2 p.c is above common amongst OECD nations (24.2 p.c).
• Canada levies excessive withholding taxes on curiosity, dividends, and royalties at a price of 25 p.c.

Chile

Chile ranks 28^th total on the 2025 Worldwide Tax Competitiveness Index, two locations higher than in 2024.

Some strengths of the Chilean tax system:

• Chile has a comparatively broad consumption tax base, taxing 67 p.c of ultimate consumption, and no VAT thresholds.
• Chile has the third-lowest tax wedge on labor amongst OECD nations, at 7.2 p.c, in comparison with the OECD common of 34.9 p.c. Chile levies no wealth tax, capital duties, monetary transaction taxes, or taxes on the switch of actual property.

Some weaknesses of the Chilean tax system:

• Chile operates an uncompetitive system of cross-border taxation, combining a worldwide tax system with a small tax treaty community of simply 37 treaties, and the very best withholding tax charges of 35 p.c on dividends and curiosity.
• The tax price on capital positive aspects is 40 p.c, effectively above the OECD common of 20 p.c.
• After phasing out full expensing, Chilean firms face the worst capital value restoration provisions within the OECD.

Colombia

Colombia ranks 36^th total on the 2025 Worldwide Tax Competitiveness Index, one place higher than in 2024.

Some strengths of the Colombian tax system:

• A employee incomes the nation’s common wage faces the bottom tax burden within the OECD.
• Colombia taxes dividends and capital positive aspects at comparatively low charges of 15 and 20 p.c, respectively.
• The VAT price of 19 p.c matches the OECD common and is utilized with out a minimal earnings threshold.

Some weaknesses of the Colombian tax system:

• At 35 p.c, Colombia’s company revenue tax price is considerably above the OECD common of 24.2 p.c.
• Colombia is without doubt one of the three remaining OECD nations that operates a worldwide company tax system (fairly than a territorial system).
• Colombia levies a web wealth tax and a monetary transactions tax.

Costa Rica

Costa Rica ranks 17^th total on the 2025 Worldwide Tax Competitiveness Index, three locations higher than in 2024.

Some strengths of the Costa Rican tax system:

• Costa Rica has neither a web wealth nor an property tax.
• The VAT price is simply 13 p.c, beneath the OECD common of 19 p.c.
• Capital positive aspects and dividends are each taxed at charges beneath the OECD common.

Some weaknesses of the Costa Rican tax system:

• Costa Rica has simply 4 tax treaties whereas the typical within the OECD is 76.
• Costa Rica has 5 separate tax brackets for company revenue, with a prime price of 30 p.c considerably above the OECD common (24.2 p.c).
• Costa Rica’s carryover provisions are essentially the most restrictive within the OECD, with carryforwards restricted to a few years and no carrybacks.

Czech Republic

The Czech Republic ranks 10^th total on the 2025 Worldwide Tax Competitiveness Index, one place worse than in 2024.

Some strengths of the Czech tax system:

• The company price of 21 p.c is beneath the OECD common (24.2 p.c), with few complicated incentives.
• The Czech Republic entertains a comparatively broad community of 98 tax treaties, above the OECD common of 76 treaties.
• The Czech Republic levies no taxes on web wealth, company property, capital will increase, monetary transactions, or transfers of actual property.

Some weaknesses of the Czech tax system:

• By way of buying energy, the Czech VAT threshold is the very best within the OECD, contributing to a distortionary VAT design.
• Web working losses can solely be carried ahead for 5 years (they’ll, nonetheless, even be carried again for 2 years).
• The price of stock may be accounted for utilizing the First In, First Out technique or the Common Price technique (Final In, First Out will not be permitted).

Denmark

Denmark ranks 27^th total on the 2025 Worldwide Tax Competitiveness Index, the identical as in 2024.

Some strengths of the Danish tax system:

• The company tax price of twenty-two p.c lies beneath the OECD common (24.2 p.c), and the company revenue tax system options few complicated incentives.
• Denmark has a territorial tax system, exempting each overseas dividends and capital positive aspects revenue for its treaty companions and different European nations.
• Denmark has a comparatively broad VAT base that covers 63 p.c of ultimate consumption and a low registration threshold.

Some weaknesses of the Danish tax system:

• Along with a mixed prime private revenue tax price of 55.9 p.c, the private revenue tax charges on dividends and capital positive aspects are each at 42 p.c, effectively above the OECD averages of 24.7 p.c and 20 p.c, respectively.
• Web working losses may be carried ahead indefinitely however are restricted to 60 p.c of taxable revenue in the event that they exceed a certain quantity.
• Denmark makes use of First In, First Out for assessing the price of stock for tax functions.

Estonia

Estonia ranks 1^st total on the 2025 Worldwide Tax Competitiveness Index, the identical as in 2024, and for the 12^th consecutive yr.

Some strengths of the Estonian tax system:

• Estonia’s company revenue tax system solely taxes distributed earnings, permitting firms to reinvest their earnings tax-free.
• The VAT applies to a broad base and has a low compliance burden.
• Property taxes solely apply to the worth of land.

Some weaknesses of the Estonian tax system:

• Estonia has tax treaties with simply 63 nations, beneath the OECD common (76 nations).
• Estonia’s territorial tax system is restricted to European nations.
• Estonia’s skinny capitalization guidelines are among the many extra stringent ones within the OECD.

Finland

Finland ranks 24^th total on the 2025 Worldwide Tax Competitiveness Index, six spots worse than in 2024.

Some strengths of the Finnish tax system:

• Finland has a comparatively low company tax price of 20 p.c and the sixth-most engaging capital value restoration provisions for investments in equipment within the OECD.
• The design of company and private revenue taxes makes them comparatively much less complicated than in different nations.
• Finland has a territorial tax system and a broad tax treaty community with 76 nations.

Some weaknesses of the Finnish tax system:

• Finland levies each an property and a monetary transactions tax.
• Firms are restricted of their potential to hold ahead web working losses and are restricted to utilizing First In, First Out as the fee accounting technique for stock.
• Finland’s prime statutory price on private revenue is comparatively excessive at 51.4 p.c, and social contributions will not be capped.

France

France ranks 38^th total on the 2025 Worldwide Tax Competitiveness Index, two spots worse than in 2024.

Some strengths of the French tax system:

• France has above-average value restoration provisions for investments in equipment, buildings, and intangibles (although compromised by the French manufacturing taxes).
• French firms can carry ahead web working losses indefinitely, although deductions are capped at a share of annual revenue after exceeding a certain quantity.
• France has a broad tax treaty community with 123 nations.

Some weaknesses of the French tax system:

• France has a number of distortionary property taxes with separate levies on estates, financial institution property, monetary transactions, and a wealth tax on actual property.
• The tax burden on labor of 47 p.c is among the many highest for OECD nations.
• France has the very best prime company tax price within the OECD, at 36.1 p.c, together with a number of surtaxes and a fancy design.

Germany

Germany ranks 20^th total on the 2025 Worldwide Tax Competitiveness Index, one place higher than in 2024.

Some strengths of the German tax system:

• Germany has a broad tax treaty community, with 95 nations.
• Stock can obtain Final In, First Out therapy, essentially the most impartial therapy of stock prices.
• Germany has above-average value restoration provisions for intangible property and equipment.

Some weaknesses of the German tax system:

• Germany has the fourth-highest company revenue tax price amongst OECD nations, at greater than 30 p.c, together with a 5.5 p.c surtax.
• Germany’s prime revenue tax charges imposed on employment revenue, dividends, and capital positive aspects, together with a 5.5 p.c surtax, all lie above the respective OECD averages.
• Firms are restricted within the quantity of web working losses they’ll use to offset revenue on future or earlier tax returns, with particular limits on native enterprise tax legal responsibility.

Greece

Greece ranks 23^rd total on the 2025 Worldwide Tax Competitiveness Index, three locations higher than in 2024.

Some strengths of the Greek tax system:

• The online private tax price of 5 p.c on dividends is considerably beneath the OECD common of 24.7 p.c, and capital positive aspects from listed shares with out substantial possession are exempt from taxation.
• The company revenue tax price of twenty-two p.c is beneath the OECD common of 24.2 p.c.
• Managed overseas company guidelines in Greece are modest and solely apply to passive revenue.

Some weaknesses of the Greek tax system:

• Firms are severely restricted within the quantity of web working losses they’ll use to offset future earnings, and corporations can’t use losses to cut back previous taxable revenue.
• Greece has a comparatively slender tax treaty community (58 treaties in comparison with an OECD common of 76 treaties).
• At 24 p.c, Greece has one of many highest VAT charges utilized to one of many narrowest bases within the OECD, overlaying solely 43 p.c of ultimate consumption.

Hungary

Hungary ranks 9^th total on the 2025 Worldwide Tax Competitiveness Index, two spots worse than in 2024.

Some strengths of the Hungarian tax system:

• Hungary has the bottom company tax price within the OECD, at 9 p.c.
• Private revenue is taxed at a flat price of 15 p.c.
• Hungary operates a territorial tax system that absolutely exempts dividends and capital positive aspects, doesn’t have withholding taxes, and has better-than-average CFC guidelines.

Some weaknesses of the Hungarian tax system:

• Firms are severely restricted within the quantity of web working losses they’ll use to offset future earnings, and corporations can’t use losses to cut back previous taxable revenue.
• Hungary levies the very best VAT price amongst OECD nations, at 27 p.c, albeit on a comparatively broad base.
• Hungary levies taxes on estates, actual property transfers, monetary transactions, and financial institution property.

Iceland

Iceland ranks 29^th total on the 2025 Worldwide Tax Competitiveness Index, two spots higher than in 2024.

Some strengths of the Icelandic tax system:

• Iceland’s company tax price of 20 p.c is beneath the OECD common of 24.2 p.c, and value restoration for industrial buildings is without doubt one of the greatest within the OECD.
• The Icelandic VAT threshold is without doubt one of the lowest within the OECD.
• Iceland has a territorial tax system that absolutely exempts overseas dividends and capital positive aspects with no nation limitations.

Some weaknesses of the Icelandic tax system:

• Firms are restricted within the quantity of web working losses they’ll use to offset future earnings, and corporations can’t use losses to cut back previous taxable revenue.
• The VAT of 24 p.c applies to a comparatively slender tax base round half of ultimate consumption.
• Iceland’s managed overseas company guidelines apply to each passive and energetic revenue.

Eire

Eire ranks 31^st total on the 2025 Worldwide Tax Competitiveness Index, two spots higher than in 2024.

Some strengths of the Irish tax system:

• Eire has a low company tax price of 12.5 p.c.
• Web working losses may be carried bak one yr and carried ahead indefinitely, permitting firms to be taxed on their common profitability.
• The tax treaty community (74 treaties) is just under the OECD common of 76 nations.

Some weaknesses of the Irish tax system:

• Eire’s private tax price on dividend revenue of 51 p.c is the very best amongst OECD nations.
• The VAT price of 23 p.c is without doubt one of the highest within the OECD and applies to a comparatively slender tax base, topic to one of many highest VAT thresholds.
• Firms are restricted of their potential to put in writing off investments.

Israel

Israel ranks 8^th total on the 2025 Worldwide Tax Competitiveness Index, two spots worse than in 2024.

Some strengths of the Israeli tax system:

• Web working losses may be carried ahead indefinitely and capital allowances are listed for inflation.
• The VAT price is comparatively low at 18 p.c and applies to a comparatively broad base.
• Israel doesn’t levy wealth or property taxes.

Some weaknesses of the Israeli tax system:

• Israel has complicated incentives that scale back the company tax price to as little as 7.5 p.c on sure expertise firms.
• The steep progressivity of Israel’s taxes on labor results in excessive effectivity prices.
• Israel has a comparatively slender tax treaty community of 60 nations (the OECD common is 76), mixed with excessive withholding tax charges on dividends, royalties, and curiosity.

Italy

Italy ranks 37^th total on the 2025 Worldwide Tax Competitiveness Index, one spot higher than in 2024.

Some strengths of the Italian tax system:

• Italy has above-average value restoration provisions for investments in equipment, buildings, and intangibles.
• Final In, First Out therapy of the price of stock is allowed.
• Italy has a broad tax treaty community with 103 nations.

Some weaknesses of the Italian tax system:

• Italy has a number of distortionary property taxes with separate levies on actual property transfers, estates, and monetary transactions, in addition to a wealth tax on chosen property.
• The VAT price of twenty-two p.c applies to the sixth-narrowest consumption tax base within the OECD, topic to the second-highest VAT threshold.
• The company tax price of 27.8 p.c is considerably above the OECD common of 24.2 p.c.

Japan

Japan ranks 22^nd total on the 2025 Worldwide Tax Competitiveness Index, one spot higher than in 2024.

Some strengths of the Japanese tax system:

• Japan has a low VAT price of 10 p.c.
• The consumption tax base is comparatively broad, overlaying 71 p.c of consumption.
• Japan’s private revenue tax price on dividends is 20.3 p.c, beneath the OECD common of 24.7 p.c.

Some weaknesses of the Japanese tax system:

• Japan has a company tax system with a excessive price of 29.7 p.c and poor value restoration provisions for enterprise investments in equipment, buildings, and intangibles.
• Japan has a hybrid worldwide tax system with a 95 p.c exemption for overseas dividends and no exemption for overseas capital positive aspects, whereas many OECD nations have moved to a totally territorial system.
• Firms are severely restricted within the quantity of web working losses they’ll use to offset future earnings.

Korea

Korea ranks 26^th total on the 2025 Worldwide Tax Competitiveness Index, one spot worse than in 2024.

Some strengths of the Korean tax system:

• Korea has a low VAT of 10 p.c that’s utilized to a comparatively broad base, overlaying 65 p.c of ultimate consumption.
• Korea has a broad tax treaty community with 96 nations.
• Enterprise investments in equipment and buildings obtain better-than-average therapy for company write-offs.

Some weaknesses of the Korean tax system:

• Korea has a number of distortionary property taxes with separate levies on actual property transfers, estates, and monetary transactions.
• The non-public revenue tax price on dividends is 44.5 p.c (in comparison with an OECD common of 24.7 p.c).
• Korea operates a progressive company revenue tax system with 4 totally different tax brackets.

Latvia

Latvia ranks 2^nd total on the 2025 Worldwide Tax Competitiveness Index, the identical as in 2024 and for the 8^th yr in a row.

Some strengths of the Latvian tax system:

• Latvia’s company revenue tax system solely taxes distributed earnings, permitting firms to reinvest their earnings tax-free.
• Latvia operates a territorial tax system, exempting overseas dividends and capital positive aspects, and doesn’t levy withholding taxes on foreign-bound curiosity funds, dividends, or royalties.
• Latvia’s VAT applies to a comparatively broad base, overlaying about two-thirds of ultimate consumption.

Some weaknesses of the Latvian tax system:

• Latvia’s community of tax treaties consists of 63 nations, a comparatively low quantity.
• Latvia’s thin-capitalization guidelines are among the many stricter ones within the OECD.
• The edge at which the VAT applies is considerably greater than the typical VAT threshold for OECD nations.

Lithuania

Lithuania ranks 5^th total on the 2025 Worldwide Tax Competitiveness Index, the identical as in 2024.

Some strengths of the Lithuanian tax system:

• Enterprise investments in equipment, buildings, and intangibles obtain considerably better-than-average tax therapy.
• Lithuania’s company tax price is 16 p.c, effectively beneath the OECD common of 24.2 p.c.
• Lithuania’s taxes on labor are flatter than common, permitting the federal government to boost income from taxes on staff with only a few distortions.

Some weaknesses of the Lithuanian tax system:

• Lithuania has tax treaties with simply 58 nations, beneath the OECD common (75 nations).
• Lithuania has each a patent field and a brilliant deduction for Analysis and Improvement expenditures.
• The edge at which VAT applies is considerably greater than the OECD common threshold, contributing to a distortive VAT design.

Luxembourg

Luxembourg ranks 6^th total on the 2025 Worldwide Tax Competitiveness Index, two spots higher than in 2024.

Some strengths of the Luxembourg tax system:

• Enterprise investments in equipment and intangibles obtain better-than-average tax therapy.
• Luxembourg applies its comparatively low VAT price of 17 p.c to the second-broadest base within the OECD, overlaying 82 p.c of ultimate consumption.
• Capital positive aspects are tax-exempt if a movable asset, corresponding to shares, was held for at the least six months, encouraging long-term financial savings.

Some weaknesses of the Luxembourg tax system:

• Firms are restricted within the time interval wherein they’ll use web working losses to offset future earnings and are unable to make use of losses to offset previous taxable revenue.
• Luxembourg has a number of distortionary property taxes with separate levies on actual property transfers, estates, and company web property.
• Luxembourg has a solidarity tax which acts as a 7 p.c surtax on company revenue and a 7 to 9 p.c surtax on private revenue.

Mexico

Mexico ranks 18^th total on the 2025 Worldwide Tax Competitiveness Index, one spot higher than in 2024.

Some strengths of the Mexican tax system:

• The non-public revenue tax price on dividends is 17.1 p.c, beneath the OECD common of 24.7 p.c, and capital positive aspects from domestically listed shares are taxed at a low price of 10 p.c.
• Firms can deduct property taxes when calculating taxable revenue.
• Mexico permits for Final In, First Out therapy of the price of stock.

Some weaknesses of the Mexican tax system:

• Companies are severely restricted within the time interval wherein they’ll use web working losses to offset future earnings and are unable to make use of losses to cut back previous taxable revenue.
• Mexico’s VAT covers solely 35 p.c of ultimate consumption, revealing each coverage and enforcement gaps.
• Mexico has a worldwide tax system with the very best withholding tax price within the OECD of 35 p.c on curiosity and royalties and a comparatively small treaty community of 60 nations (OECD common of 76 nations).

Netherlands

The Netherlands ranks 16^th total on the 2025 Worldwide Tax Competitiveness Index, one spot higher than in 2024.

Some strengths of the Dutch tax system:

• The Netherlands permits web working losses to be carried again one yr, and the Final In, First Out therapy of the price of stock is allowed.
• The Netherlands has a territorial tax system exempting each overseas dividends and capital positive aspects and a broad tax treaty community, with 97 nations.
• Firms can deduct property taxes when calculating taxable revenue.

Some weaknesses of the Dutch tax system:

• The Netherlands has a progressive tax system with a prime statutory price on private revenue of 49.5 p.c.
• The capital positive aspects price of 36 p.c is considerably above the OECD common of 20 p.c.
• Firms are restricted within the quantity of web working losses that they’ll use to offset future earnings.

New Zealand

New Zealand ranks 3^rd total on the 2025 Worldwide Tax Competitiveness Index, the identical as in 2024.

Some strengths of the New Zealand tax system:

• New Zealand levies no taxes on inheritance, property transfers, property, capital positive aspects, or monetary transactions.
• The VAT of 15 p.c applies to almost your complete potential consumption tax base.
• New Zealand permits company losses to be carried ahead indefinitely, permitting companies to be taxed on their common profitability.

Some weaknesses of the New Zealand tax system:

• New Zealand has an above-average company tax price of 28 p.c (the OECD common is 24.2 p.c) and the second-worst value restoration provisions for enterprise investments within the OECD.
• New Zealand has a slender tax treaty community, with 41 nations.
• The price of stock may be accounted for utilizing First In, First Out technique or the Common Price technique (Final In, First Out will not be permitted).

Norway

Norway ranks 21^st total on the 2025 Worldwide Tax Competitiveness Index, three spots higher than in 2024.

Some strengths of the Norwegian tax system:

• Norway permits company losses to be carried ahead indefinitely.
• Norway’s company revenue tax price of twenty-two p.c is near the OECD common (24.2 p.c).
• Norway has a territorial tax system, a community of 83 tax treaties, and no withholding taxes on curiosity and royalties.

Some weaknesses of the Norwegian tax system:

• Firms are restricted of their potential to put in writing off investments.
• Norway is without doubt one of the few OECD nations that levies a web wealth tax.
• Managed overseas company guidelines are utilized to each passive and energetic revenue.

Poland

Poland ranks 35^th total on the 2025 Worldwide Tax Competitiveness Index, six spots worse than in 2024.

Some strengths of the Polish tax system:

• Poland has a below-average company tax price of 19 p.c (the OECD common is 24.2 p.c).
• Poland has a broad tax treaty community, together with 88 nations.
• Poland has an allowance for company fairness that limits the debt-bias of taxation.

Some weaknesses of the Polish tax system:

• Poland has a number of distortionary property taxes with separate levies on actual property transfers, estates, financial institution property, and monetary transactions.
• Firms are severely restricted within the quantity of web working losses they’ll use to offset future earnings and are unable to make use of losses to cut back previous taxable revenue.
• Firms can write off simply 33.8 p.c of the price of industrial buildings in actual phrases (the OECD common is 49.9 p.c).

Portugal

Portugal ranks 33^rd total on the 2025 Worldwide Tax Competitiveness Index, two spots higher than in 2024.

Some strengths of the Portuguese tax system:

• Firms can deduct their property taxes from their taxable revenue, and there’s an ACE that limits the debt-bias of taxation.
• Portugal has a territorial tax system, exempting overseas dividends and capital positive aspects revenue for many nations.
• Portugal offers above-average capital value write-offs for investments in equipment.

Some weaknesses of the Portuguese tax system:

• Portugal has a progressive company revenue tax system with a excessive prime price of 30.5 p.c, together with a number of distortive top-up taxes.
• Portugal’s company tax system options extremely complicated incentives.
• Portugal has a excessive prime statutory tax price on private revenue of 53 p.c, together with top-up taxes, and there’s no ceiling on social contributions.

Slovak Republic

The Slovak Republic ranks 14^th total on the 2025 Worldwide Tax Competitiveness Index, 4 locations worse than in 2024.

Some strengths of the Slovakian tax system:

• The non-public revenue price on dividends may be very low at 7 p.c (in comparison with an OECD common of 24.7 p.c), and capital positive aspects are tax-free after a minimal holding interval, encouraging long-term saving.
• The Slovak Republic has a low statutory tax price on private revenue of 25 p.c.
• The Slovak Republic has better-than-average tax therapy of enterprise funding in equipment, buildings, and intangibles.

Some weaknesses of the Slovakian tax system:

• Firms are severely restricted within the quantity of web working losses they’ll use to offset future earnings and are unable to make use of losses to cut back previous taxable revenue.
• The VAT of 24 p.c applies to a comparatively slender base and is topic to one of many highest VAT thresholds.
• The Slovak Republic has each a patent field and a brilliant deduction for Analysis and Improvement expenditures, including to the complexity of the system.

Slovenia

Slovenia ranks 25^th total on the 2025 Worldwide Tax Competitiveness Index, three place worse than in 2024.

Some strengths of the Slovenian tax system:

• Slovenia taxes company revenue at a 22 p.c price, beneath the OECD common of 24.2 p.c, and with comparatively few complicated incentives.
• Slovenia’s 22 p.c VAT applies to a broader tax base than the OECD common.
• Capital positive aspects taxes are decreased the longer property are held (a zero p.c price applies after holding an asset for at the least 20 years), encouraging long-term financial savings.

Some weaknesses of the Slovenian tax system:

• Slovenia levies a comparatively excessive statutory prime price on private revenue at 50 p.c, and there’s no common ceiling on social contributions.
• Slovenia restricts loss carryforwards to 5 years, capped at 63 p.c of current revenue, and prohibits carrybacks.
• Slovenia has a number of distortionary property taxes with separate levies on actual property transfers, estates, and financial institution property.

Spain

Spain ranks 34^th total on the 2025 Worldwide Tax Competitiveness Index, the identical as in 2024.

Some strengths of the Spanish tax system:

• Spain has a territorial tax system that exempts 95 p.c of overseas dividends and capital positive aspects revenue from taxation.
• The Spanish tax treaty community is made up of 95 nations.
• Property taxes may be deducted towards company revenue taxes.

Some weaknesses of the Spanish tax system:

• The VAT of 21 p.c applies to lower than half of the potential consumption tax base.
• Spain has a number of distortionary property taxes with separate levies on actual property transfers, web wealth, estates, and monetary transactions.
• Spain has each a patent field and a credit score for analysis and improvement.

Sweden

Sweden ranks 11^th total on the 2025 Worldwide Tax Competitiveness Index, two spots higher than in 2024.

Some strengths of the Swedish tax system:

• Sweden has a lower-than-average company tax price of 20.6 p.c and offers for web working losses to be carried ahead indefinitely.
• Sweden has a territorial tax system that exempts each overseas dividends and capital positive aspects revenue from taxation with none nation limitations.
• Sweden has a broader-than-average VAT base overlaying 57 p.c of ultimate consumption (in comparison with an OECD common of 55 p.c).

Some weaknesses of the Swedish tax system:

• Sweden’s private dividend tax price and capital positive aspects tax price are each 30 p.c, above the OECD averages (24.7 p.c for dividends and 20 p.c for capital positive aspects).
• Sweden has a prime statutory private revenue tax price of 52.2 p.c.
• Sweden has managed overseas company guidelines that apply to each passive and energetic revenue.

Switzerland

Switzerland ranks 4^th total on the 2025 Worldwide Tax Competitiveness Index, the identical as in 2024.

Some strengths of the Swiss tax system:

• Switzerland has above-average value restoration provisions for investments in machines, buildings, and intangibles.
• Switzerland has a broad tax treaty community with 110 nations and no CFC guidelines.
• The Swiss VAT of 8.1 p.c applies to a broad base that covers 68 p.c of ultimate consumption.

Some weaknesses of the Swiss tax system:

• Switzerland has a number of distortionary property taxes with separate levies on actual property transfers, web wealth, estates, property, and monetary transactions.
• Firms are restricted within the time interval wherein they’ll use web working losses to offset future earnings and are unable to make use of losses to cut back previous taxable revenue.
• The VAT exemption threshold is nearly twice as excessive because the OECD common.

Turkey

Turkey ranks 12^th total on the 2025 Worldwide Tax Competitiveness Index, the identical as in 2024.

Some strengths of the Turkish tax system:

• Turkey has a territorial tax system, exempting overseas dividends and capital positive aspects revenue with none nation limitations, and a tax treaty community of 93 nations.
• The non-public revenue tax on dividends is 20 p.c, beneath the OECD common (24.7 p.c), and capital positive aspects from domestically listed shares held for greater than two years are tax-exempt.
• Turkey offers an allowance for fairness (ACE), addressing the debt bias inherent to the usual company revenue tax.

Some weaknesses of the Turkish tax system:

• Firms are severely restricted within the time interval wherein they’ll use web working losses to offset future earnings and are unable to make use of losses to cut back previous taxable revenue.
• Turkey’s VAT price of 20 p.c applies to lower than half of the potential tax base.
• Turkey has a number of distortionary property taxes with separate levies on actual property transfers, estates, and monetary transactions.

United Kingdom

The UK ranks 32^nd total on the 2025 Worldwide Tax Competitiveness Index, the identical spot as in 2024.

Some strengths of the UK tax system:

• The UK offers full expensing for enterprise investments in equipment and above-average value restoration for investments in intangible property.
• The UK has a territorial tax system exempting each overseas dividends and capital positive aspects revenue with none nation limitations.
• The UK operates the broadest tax treaty community within the OECD with 132 nations.

Some weaknesses of the UK tax system:

• The highest private revenue tax price on dividends is 39.35 p.c, whereas the highest price on capital positive aspects is 24 p.c, effectively above the OECD averages of 24.7 p.c and 20 p.c, respectively.
• The true property tax burden is the very best within the OECD.
• The VAT at a price of 20 p.c applies to lower than half of the potential consumption tax base, and the VAT exemption threshold is 2.8 occasions as excessive because the OECD common.

United States

The USA ranks 15^th total on the 2025 Worldwide Tax Competitiveness Index, one spot higher than in 2024.

Some strengths of the US tax system:

• The US permits for Final In, First Out therapy of the price of stock.
• US firms can absolutely expense their investments in equipment and most industrial buildings.
• US states have comparatively low gross sales taxes of seven.7 p.c on common.

Some weaknesses of the US tax system:

• US states’ gross sales taxes apply on common to lower than 40 p.c of the potential tax base.
• The US has a partial territorial system and doesn’t exempt overseas capital positive aspects revenue.
• The true property tax burden is among the many highest within the OECD.

Appendix

To entry the complete appendix, together with methodology, information sources, and tables, click on “Obtain the Full Report” button on the prime of the web page.

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References

[1] Cristina Enache, “Sources of Authorities Income within the OECD,” Tax Basis, Might 22, 2025, https://taxfoundation.org/information/all/international/oecd-tax-revenue-by-country/.

[2] Cristina Enache, “One US Tax Coverage OECD International locations Ought to Copy,” Tax Basis, Jul. 23, 2025, https://taxfoundation.org/weblog/us-bonus-depreciation-oecd-tax-policy/.

[3] Organisation for Financial Co-operation and Improvement (OECD), “Tax and Financial Progress,” Economics Division Working Paper No. 620, July 11, 2008.

[4] Final yr’s scores revealed on this report can differ from beforehand revealed rankings because of each methodological modifications and corrections made to earlier years’ information.

[5] Tax Basis, “Worldwide Tax Competitiveness Index,” https://github.com/TaxFoundation/international-tax-competitiveness-index.

[6] Cristina Enache, “Sources of Authorities Income within the OECD.”

[7] OECD, “Tax Coverage Reform and Financial Progress,” OECD Tax Coverage Research, No. 20, Nov. 3, 2010, https://oecd.org/ctp/tax-policy/tax-policy-reform-and-economic-growth-9789264091085-en.htm.

[8] OECD, “Company revenue tax statutory and focused small enterprise charges, Mixed company revenue tax price,” up to date April 2025, https://data-explorer.oecd.org/.

[9] Tibor Hanappi, “Loss carryover provisions: Measuring results on tax symmetry and computerized stabilisation,” OECD Taxation Working Papers No. 35, Feb. 22, 2018, https://oecd-ilibrary.org/taxation/loss-carryover-provisions_bfbcd0db-en; and Michael P. Devereux and Clemens Fuest, “Is the Company Tax an Efficient Computerized Stabilizer?” Nationwide Tax Journal 62:3 (September 2009): 429-437, https://journals.uchicago.edu/doi/abs/10.17310/ntj.2009.3.05.

[10] International locations with limitless carryforwards are coded as having durations of 100 years. Some nations limit the quantity of taxable revenue that may be offset by losses every year. For instance, Slovenia permits for indefinite carryforwards however solely 63 p.c of taxable revenue may be offset by losses in any given yr. These restrictions are coded as the share of taxable revenue that may be offset by losses occasions the variety of allowable years. Thus, Slovenia is coded as 63.

[11] Bloomberg Tax, “Nation Guides,” https://bloomberglaw.com/product/tax/toc/supply/511920/147664382; PwC, “Worldwide Tax Summaries,” https://pwc.com/gx/en/companies/tax/worldwide-tax-summaries.html; and particular person authorities web sites.

[12] Estonia and Latvia shouldn’t have specific loss carryover provisions. Nevertheless, their cash-flow company tax system implicitly permits for limitless loss carryforwards and carrybacks.

[13] Bloomberg Tax, “Nation Guides;” PwC, “Worldwide Tax Summaries”; and particular person authorities web sites.

[14] Alex Mengden, “Capital Price Restoration throughout the OECD,” Tax Basis, Jun. 6, 2024, https://taxfoundation.org/information/all/international/capital-allowances-cost-recovery-2024/.

[15] Intangible property are usually amortized, however the write-off is much like depreciation.

[16] Knowledge and calculations are primarily based on Mengden, “Capital Price Restoration throughout the OECD.”

[17] Kyle Pomerleau, “The Tax Remedy of Inventories and the Financial and Budgetary Affect of LIFO Repeal,” Tax Basis, Feb. 9, 2016, https://taxfoundation.org/tax-treatment-inventories-and-economic-and-budgetary-impact-lifo-repeal/.

[18] Christoph Spengel, Frank Schmidt, Jost Heckemeyer, and Katharina Nicolay, “Efficient Tax Ranges Utilizing the Devereux/Griffith Methodology,” European Fee, October 2021, https://taxation-customs.ec.europa.eu/system/information/2022-03/final_report_2021_effective_tax_levels_revised_en.pdf; PwC, “Worldwide Tax Summaries: Company – Revenue Dedication,” https://taxsummaries.pwc.com/australia/company/income-determination; and EY, “Worldwide Company Tax Information 2024.”

[19] IMF, “Tax Coverage, Leverage and Macroeconomic Stability,” Coverage Papers, Oct. 12, 2016, https://imf.org/en/Publications/Coverage-Papers/Points/2016/12/31/Tax-Coverage-Leverage-and-Macroeconomic-Stability-PP5073.

[20] The European Fee additionally included an allowance for company fairness in its proposal for a typical company tax base within the European Union. See European Fee, “Frequent Consolidated Company Tax Base (CCCTB),” https://ec.europa.eu/taxation_customs/enterprise/company-tax/common-consolidated-corporate-tax-base-ccctb_en. Switzerland has an non-compulsory allowance for company fairness on the cantonal degree, which is at present solely in impact within the canton of Zurich. See PwC, “Worldwide Tax Summaries: Company – Deductions,” https://taxsummaries.pwc.com/switzerland/company/deductions.

[21] Bloomberg Tax, “Nation Guides;” PwC, “Worldwide Tax Summaries: Company – Deductions”; and Spengel, Schmidt, Heckemeyer, and Nicolay, “Efficient Tax Ranges Utilizing the Devereux/Griffith Methodology.”

[22] Christopher J. Coyne and Lotta Moberg, “The Political Financial system of State-Offered Focused Advantages,” The Assessment of Austrian Economics 28:3 (June 2014), 337.

[23] Jason J. Fichtner and Jacob M. Feldman, “The Hidden Prices of Tax Compliance,” George Mason College, Mercatus Middle, Might 20, 2013, http://mercatus.org/websites/default/information/Fichtner_TaxCompliance_v3.pdf.

[24] Rachel Griffith, Helen Miller, and Martin O’Connell, “Possession of Mental Property and Company Taxation,” Journal of Public Economics 112 (April 2014): 12–23, https://sciencedirect.com/science/article/pii/S0047272714000103.

[25] OECD, “Motion 5: Settlement on Modified Nexus Method for IP Regimes,” 2015, https://oecd.org/ctp/beps-action-5-agreement-on-modified-nexus-approach-for-ip-regimes.pdf; and OECD, “Dangerous Tax Practices – Peer Assessment Outcomes,” January 2022, http://oecd.org/tax/beps/harmful-tax-practices-peer-review-results-on-preferential-regimes.pdf.

[26] Bloomberg Tax, “Nation Guides;” PwC, “Worldwide Tax Summaries: Company – Tax credit and incentives,” https://taxsummaries.pwc.com/australia/company/tax-credits-and-incentives; and OECD, “Mental Property Regimes – Company tax statistics,” https://data-explorer.oecd.org/.

[27] This doesn’t suggest that R&D credit don’t meet their coverage aim of fostering innovation by means of R&D exercise, expertise switch, and entrepreneurship. See IMF, “Appearing Now, Appearing Collectively,” April 2016, https://imf.org/en/Publications/FM/Points/2016/12/31/Appearing-Now-Appearing-Collectively. Nevertheless, R&D credit profit sure corporations and industries greater than others, creating distortions within the economic system. See Gary Guenther, “Analysis Tax Credit score: Present Legislation and Coverage Points for the 114th Congress,” Congressional Analysis Service, Mar. 13, 2015, https://fas.org/sgp/crs/misc/RL31181.pdf, and Fulvio Castellacci and Christine Mee Lie, “Do the results of R&D tax credit range throughout industries? A meta-regression evaluation,” Analysis Coverage 44:4 (Might 2015), 819-832, https://sciencedirect.com/science/article/abs/pii/S0048733315000128.

[28] Deloitte, “Worldwide Tax– Italy Highlights 2022,” January 2022, https://www2.deloitte.com/content material/dam/Deloitte/international/Paperwork/Tax/dttl-tax-italyhighlights-2023.pdf .

[29] Andreas Lichter et al., “Revenue Taxation, R&D Spending, and Innovation,” American Financial Journal: Financial Coverage, 2024, https://aeaweb.org/articles?id=10.1257/pol.20220580&from=f; Dominika Langenmayr and Rebecca Lester, “Taxation and Company Danger Taking,” The Accounting Assessment, Might 2018, https://publications.aaahq.org/accounting-review/article-abstract/93/3/237/4039/Taxation-and-Company-Danger-Taking.

[30] OECD, “Implied tax subsidy charges on R&D expenditures,” https://data-explorer.oecd.org/. The measure used within the Index is the typical implied tax subsidy price of loss-making and worthwhile SMEs and enormous corporations.

[31] KPMG, “Taxation of the digitalized economic system: Developments abstract,” up to date Jun. 11, 2025, https://kpmg.com/kpmg-us/content material/dam/kpmg/pdf/2023/digitalized-economy-taxation-developments-summary.pdf.

[32] PwC, “OECD Pillar Two nation tracker,” up to date Jul. 7, 2025, https://pwc.com/gx/en/companies/tax/pillar-two-readiness/country-tracker.html.

[33] EY, “Worldwide Company Tax Information 2024.”

[34] Ibid.

[35] OECD Knowledge Explorer, “Comparative tables of Income Statistics in OECD member nations,” https://data-explorer.oecd.org/. The measure used within the Index is tax income as a p.c of whole taxation, code 1300: Unallocable between 1100 and 1200.

[36] Cristina Enache, “Sources of Authorities Income within the OECD.”

[37] Alex Durante, “2024 Tax Brackets,” Tax Basis, Nov. 9, 2023, https://taxfoundation.org/information/all/federal/2024-tax-brackets/.

[38] OECD, “Prime statutory private revenue tax price and marginal tax price for workers on the earnings threshold the place the highest statutory private revenue tax price first applies,” up to date July 2024, https://data-explorer.oecd.org/. Worker social safety taxes are included when these will not be phased out earlier than the highest threshold and the mixed price is greater than the highest statutory price.

[39] Ibid.

[40] Ibid.

[41] The marginal tax burden confronted by a mean employee in a rustic and the full tax value of labor for a mean employee in a rustic are referred to as the marginal and common tax wedge, respectively. The tax wedge consists of revenue taxes and social safety contributions (each the employee-side and employer-side). The ratio of marginal to common tax wedges is calculated utilizing the OECD information of marginal and common whole tax wedges at 4 ranges of revenue for single people with out dependents. It’s the common of marginal whole tax wedges at 67 p.c, one hundred pc, and 167 p.c of common earnings divided by the typical of whole tax wedges at 67 p.c, one hundred pc, and 167 p.c of common earnings.

[42] Cristina Enache, “A Comparability of the Tax Burden on Labor within the OECD,” Tax Basis, Jun. 3, 2025, https://taxfoundation.org/information/all/eu/tax-burden-on-labor-europe/.

[43] Colombia’s ratio is 0. Nevertheless, it’s because a single employee incomes the nation’s common wage doesn’t pay private revenue tax.

[44] OECD, “Labour taxation – common and marginal tax wedge decompositions,” up to date June 2025, https://data-explorer.oecd.org/.

[45] Taylor LaJoie and Elke Asen, “Double Taxation of Company Revenue in the US and the OECD,” Tax Basis, Jan. 13, 2021, https://taxfoundation.org/double-taxation-of-corporate-income/.

[46] Jan Södersten, “Why the Norwegian Shareholder Revenue Tax is Impartial,” Worldwide Tax and Public Finance, Apr. 26, 2019, https://hyperlink.springer.com/content material/pdf/10.1007/s10797-019-09544-x.pdf.

[47] Daniel Bunn and Elke Asen, “Financial savings and Funding: The Tax Remedy of Inventory and Retirement Accounts within the OECD,” Tax Basis, Might 26, 2021, https://taxfoundation.org/savings-and-investment-oecd/.

[48] Erica York, “An Overview of Capital Positive aspects Taxes,” Tax Basis, Apr. 16, 2019,  https://www.taxfoundation.org/capital-gains-taxes/.

[49] The typical 2024 GBP-USD alternate price was used. See IRS, “Yearly Common Forex Trade Charges,” https://irs.gov/people/international-taxpayers/yearly-average-currency-exchange-rates.

[50] Deloitte, “Tax Guides and Highlights.”

[51] Bloomberg Tax, “Nation Information”; PwC, “Fast Charts: Capital positive aspects tax (CGT) charges,” https://taxsummaries.pwc.com/quick-charts/capital-gains-tax-cgt-rates; and PwC, “Worldwide Tax Summaries: Particular person – Revenue dedication,” https://taxsummaries.pwc.com/. When the capital positive aspects tax price varies by kind of asset offered, the tax price making use of to the sale of listed shares after an prolonged time period is used. Contains surtaxes if relevant.

[52] OECD, “Mixed (company and shareholder) statutory tax charges on dividend revenue, Web private tax,” up to date April 2025, https://data-explorer.oecd.org/.

[53] There are different sorts of consumption taxes, corresponding to excise taxes. Nevertheless, these are typically narrowly primarily based, as they’re levied on particular items, companies, and actions, fairly than all remaining consumption. The Index solely considers common consumption taxes (VAT and retail gross sales tax).

[54] Andrey Yushkov, Jared Walczak, and Katherine Loughead, 2025 State Tax Competitiveness Index, Tax Basis, Oct. 24, 2023, https://taxfoundation.org/analysis/all/state/2025-state-tax-competitiveness-index/.

[55] OECD, “Consumption Tax Traits 2024,” Nov. 21, 2024, https://oecd.org/en/publications/consumption-tax-trends-2024_dcd4dd36-en.html; Jacinta Caragher, “2025 EU VAT registration & Intrastat reporting threshold,” VATCalc, Jul. 25, 2025, https://www.vatcalc.com/eu/2023-eu-vat-registration-intrastat-thresholds/; Bloomberg Tax, “Nation Guides”; and PwC, “Worldwide Tax Summaries: Company – Different Taxes,” https://taxsummaries.pwc.com/france/company/other-taxes. The US gross sales tax price is the typical of all US state gross sales tax charges (weighted by inhabitants). See Janelle Fritts, “State and Native Gross sales Tax Charges, 2024,” Tax Basis, Feb. 6, 2024, https://taxfoundation.org/information/all/state/2024-sales-taxes/. The Canadian consumption tax price is the typical of all Canadian province tax charges (weighted by inhabitants). See Retail Council of Canada, “Gross sales Tax Charges by Province,” https://retailcouncil.org/sources/quick-facts/sales-tax-rates-by-province/.

[56] The VAT exemption thresholds listed within the Index typically apply to resident companies. Nonresident companies would possibly face totally different thresholds.

[57] Measured in US {dollars} (buying energy parity, PPP).

[58] OECD, “Taxes on Consumption: Worth Added Tax/Items and Companies Tax (VAT/GST) (1976-2023): VAT/GST: Registration/Assortment Thresholds (2023).”

[59] The identical idea may be utilized to retail gross sales taxes.

[60] The VAT Income Ratio was calculated utilizing the next components consistent with the OECD’s VRR calculations: VRR = VAT Income/[(Consumption – VAT revenue) x standard VAT rate]. The calculations are primarily based on OECD, “Consumption Tax Traits 2018,” Dec. 5, 2018, https://learn.oecd-ilibrary.org/taxation/consumption-tax-trends-2018_ctt-2018-en#page92.

[61] Colin Miller and Anna Tyger, “The Affect of a Monetary Transaction Tax,” Tax Basis, Jan. 23, 2020, https://taxfoundation.org/financial-transaction-tax/.

[62] Huaqun Li and Karl Smith, “Evaluation of Sen. Warren and Sen. Sanders’ Wealth Tax Plans,” Tax Basis, Jan. 27, 2020, https://taxfoundation.org/wealth-tax/; Cristina Enache, “The Hight Price of Wealth Taxes,” Tax Basis, Jun. 26, 2024, https://taxfoundation.org/analysis/all/eu/wealth-tax-impact/.

[63] When the property tax base is about on the sub-national degree, the Index evaluates essentially the most consultant mannequin. For instance, efficient from 2025, the German state of Baden-Württemberg solely taxes the worth of the land. Nevertheless, most states use the federal mannequin, which additionally taxes to the worth of buildings. See https://grundsteuerreform.de/.

[64] Deloitte, “Tax Guides and Highlights,” https://dits.deloitte.com/#TaxGuides; Bloomberg Tax, “Nation Guides”; and PwC, “Worldwide Tax Summaries: Company – Revenue Dedication.”

[65] Creator’s calculations utilizing OECD, “OECD Income Statistics – OECD International locations: Comparative tables,” up to date March 2024, https://data-explorer.oecd.org/ and IMF, “IMF Funding and Capital Inventory Dataset, 1960-2019,” Might 2021, https://infrastructuregovern.imf.org/content material/dam/PIMA/Information-Hub/dataset/IMFInvestmentandCapitalStockDataset2021.xlsx.

[66] Jared Walczak, “State Inheritance and Property Taxes: Charges, Financial Implications, and the Return of Interstate Competitors,” Tax Basis, Jul. 17, 2017, https://taxfoundation.org/state-inheritance-estate-taxes-economic-implications/#_ftn84.

[67] Bloomberg Tax, “Nation Guides”; and EY, “Worldwide Property and Inheritance Tax Information 2024,” https://ey.com/en_gl/tax-guides/worldwide-estate-and-inheritance-tax-guide.

[68] The typical 2023 EUR-USD alternate price was used. See IRS, “Yearly Common Forex Trade Charges.”

[69] EY, “Worldwide Property and Inheritance Tax Information 2024.”

[70] OECD Knowledge Explorer, “A comparative desk of tax revenues for Income Statistics in OECD member nations,” https://data-explorer.oecd.org/.

[71] Bloomberg Tax, “Nation Guides”; EY, “Worldwide Property and Inheritance Tax Information 2024”; PwC, “Worldwide Tax Summaries: Particular person Taxes – Different taxes.”

[72] Andrey Yushkov, Jared Walczak, and Katherine Loughead, 2025 State Tax Competitiveness Index.

[73] Deloitte, “Tax Guides and Highlights”; Bloomberg Tax, “Nation Guides.”

[74] Luxembourg levies this tax on non-Luxembourg firms as effectively, however solely on wealth held inside Luxembourg. See Authorities of the Grand Duchy of Luxembourg, “Web wealth tax,” Mar. 22, 2017, http://guichet.public.lu/entreprises/en/fiscalite/impots-benefices/impots-divers/impot-fortune/index.html.

[75] PwC, “Worldwide Tax Summaries: Company Taxes – Different taxes.”

[76] Bloomberg Tax, “Nation Guides – Different Taxes,” and “Nation Guides – Particular Industries,” https://bloomberglaw.com/product/tax/toc_view_menu/3380.

[77] PwC, “Worldwide Tax Summaries: Company Taxes.”

[78] EUR-Lex, “Council Directive 2008/7/EC, regarding oblique taxes on the elevating of capital,” February 2008, http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:32008L0007.

[79] Bloomberg Tax, “Nation Guides;” and PwC, “Worldwide Tax Summaries: Company Taxes.”

[80] Ibid.

[81] Colin Miller and Anna Tyger, “The Affect of a Monetary Transaction Tax.”

[82] Ibid.

[83] Narine Nersesyan, “Chapter 3: The Present Worldwide Tax Structure: A Quick Primer,” in Company Revenue Taxes below Strain Why Reform Is Wanted and How It May Be Designed (Washington, D.C.: Worldwide Financial Fund, 2021), https://imf.org/en/Publications/Books/Points/2021/03/01/Company-Revenue-Taxes-under-Strain-Why-Reform-Is-Wanted-and-How-It-May-Be-Designed-48604.

[84] Ibid.

[85] Kyle Pomerleau, “A Hybrid Method: The Remedy of International Income below the Tax Cuts and Jobs Act,” Tax Basis, Might 3, 2018, https://taxfoundation.org/treatment-foreign-profits-tax-cuts-jobs-act/.

[86] Alan Cole and Patrick Dunn, “Reviewing the Worldwide Tax Provisions within the One Massive Lovely Invoice Act,” Tax Basis, Aug. 6, 2025, https://taxfoundation.org/weblog/big-beautiful-bill-international-tax-changes/.

[87] Daniel Bunn and Sean Bray, “What’s within the New International Tax Settlement?” Tax Basis, Feb. 27, 2025, https://taxfoundation.org/global-tax-agreement/.

[88] PwC, “OECD Pillar Two nation tracker,” as of Jul. 7, 2025, https://pwc.com/gx/en/companies/tax/pillar-two-readiness/country-tracker.html.

[89] Kyle Pomerleau, Daniel Bunn, and Thomas Locher, “Anti-Base Erosion Provisions and Territorial Tax Techniques in OECD International locations,” Tax Basis, Jul. 7, 2021, https://taxfoundation.org/anti-base-erosion-territorial-tax-systems.

[90] Deloitte, “Tax Guides and Highlights 2024”; Bloomberg Tax, “Nation Information”; EY, “Worldwide Company Tax Information 2024”; and PwC, “Worldwide Tax Summaries.”

[91] Ibid.

[92] Deloitte, “Tax Guides and Highlights – Portugal Highlights 2024,” https://deloitte.com/content material/dam/Deloitte/international/Paperwork/Tax/dttl-tax-portugalhighlights-2023.pdf.

[93] Deloitte, “Tax Guides and Highlights – Italy Highlights 2024,” https://deloitte.com/content material/dam/Deloitte/international/Paperwork/Tax/dttl-tax-italyhighlights-2023.pdf.

[94] Deloitte, “Tax Guides and Highlights 2023”; Bloomberg Tax, “Nation Information”; EY, “Worldwide Company Tax Information 2024”; and PwC, “Worldwide Tax Summaries.”

[95] Deloitte, “Home charges: Withholding tax,” https://dits.deloitte.com/#DomesticRatesSubMenu.

[96] EY, “Worldwide Company Tax Information: 2024.” The supply could not embody all energetic tax treaties, doubtlessly underestimating the scope of tax treaty networks. Tax treaties with former nations, corresponding to the united states, Yugoslavia, and Czechoslovakia, will not be counted as one. Each nation the treaty applies to is counted individually.

[97] Thomas Hoppe, Deborah Schanz, Susann Sturm, and Caren Sureth-Sloane, “The Tax Complexity Index – A Survey-Based mostly Nation Measure of Tax Code and Framework Complexity,” TRR 266 Accounting for Transparency Working Paper Collection No. 5, WU Worldwide Taxation Analysis Paper Collection No. 2019-06, Sept. 16, 2020, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3469663.

[98] Kyle Pomerleau, Daniel Bunn, and Thomas Locher, “Anti-Base Erosion Provisions and Territorial Tax Techniques in OECD International locations.”

[99] European Fee, “The Anti Tax Avoidance Directive,” Jan. 28, 2016, https://ec.europa.eu/taxation_customs/anti-tax-avoidance-directive_en.

[100] Sebastian Dueñas and Daniel Bunn, “Tax Avoidance Guidelines Enhance the Compliance Burden in EU Member International locations,” Tax Basis, Mar. 28, 2019, https://taxfoundation.org/eu-tax-avoidance-rules-increase-tax-compliance-burden/.

[101] Bloomberg Tax, “Nation Guides: Anti-Avoidance Provisions – Managed International Firm (CFC) Guidelines,” https://bloomberglaw.com/product/tax/bbna/chart/3/10077/347a743114754ceca09f7ec4b7015426; and PwC, “Worldwide Tax Summaries: Company – Group taxation,” https://taxsummaries.pwc.com/australia/company/group-taxation.

[102] Jennifer Blouin, Harry Huizinga, Luc Laeven, and Gaëtan Nicodème, “Skinny Capitalization Guidelines and Multinational Agency Capital Construction,” Worldwide Financial Fund Working Paper WP/14/12, January 2014, https://imf.org/exterior/pubs/ft/wp/2014/wp1412.pdf.

[103] Ibid.

[104] For extra particulars, see “Allowance for Company Fairness” within the ITCI part “Company Revenue Tax.”

[105] Bloomberg Tax, “Nation Guides: Anti-Avoidance Provisions – Skinny Capitalization/Different Curiosity Deductibility Guidelines,” https://bloomberglaw.com/product/tax/bbna/chart/3/10077/a8a08d05c9450b676b4d835dbb64348c; and PwC, “Worldwide Tax Summaries: Company – Group taxation.”

[106] Daniel Bunn and Sean Bray, “What’s within the New International Tax Settlement?,” Tax Basis, Aug. 15, 2025, https://taxfoundation.org/global-tax-agreement/.

[107] Alan Cole and Patrick Dunn, “Reviewing the Worldwide Tax Provisions within the One Massive Lovely Invoice Act,” Tax Basis, Aug. 6, 2025, https://taxfoundation.org/weblog/big-beautiful-bill-international-tax-changes/.

[108] Kyle Pomerleau, Daniel Bunn, and Thomas Locher, “Anti-Base Erosion Provisions and Territorial Tax Techniques in OECD International locations.”

[109] To calculate the usual deviation, we discover the imply of a variable (company tax charges, for instance) and the distinction of every nation’s tax price from the imply tax price among the many 38 nations. We then take every nation’s distinction from the imply and discover the typical distinction for the group.

[110] The true regular rating is 0.5. The rating is a unfavorable worth to replicate the truth that being greater than the OECD common is much less ultimate.

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