While in the year 2000 the average corporate tax rate was 28.6 percent (based on 94 jurisdictions), the number had fallen to 21.4 percent in 2018. Only some 20 percent of jurisdictions (covered by the report) had a corporate tax rate that was over 30 percent in 2018. This is in stark contrast to the 60 percent of jurisdictions that had corporate tax rates above 30 percent in 2000.

The reason behind declining corporate tax rates is simple: tax is a factor that drives cross-jurisdiction competitiveness for investment. In other words, by offering lower tax rates, governments aim to attract (foreign and domestic) investment within their borders.

It is also interesting to note that, despite cutting these tax rates, governments have become increasingly dependent on tax revenues from corporate taxes. While in 2000 corporate taxes contributed 12 percent to governments' total tax revenues, the number rose to 13.1 percent in 2018. It is a sign that there has been an increase in business across the world. Moreover, this share of corporate tax revenues is even more significant in developing countries (where the contribution of corporate tax revenues toward total tax income tends to be above the worldwide average).

Corporate Tax Rates in a Selection of Countries:

Jurisdiction 2000 2018
United States 35.0% 21.0%
United Kingdom 30.0% 19.0%
Singapore 26.0% 17.0%
China 33.0% 25.0%
Netherlands 35.0% 25.0%
Switzerland  8.5%  8.5%
Indonesia 30.0% 25.0%
Hong Kong 16.0% 16.5%
Vietnam 32.5% 20.0%
Thailand 30.0% 20.0%

Source: OECD, Corporate Tax Statistics


This articles discusses:

developments related to trends in global corporate tax rates
the use of the corporate tax rate as a tool to attract foreign investment
Indonesia's plan to cut its corporate tax rate
the contribution of corporate income tax to Indonesia's total tax revenues

Read the full article in the January 2019 edition of our monthly research report. This report is scheduled to be released in early February 2019. You can purchase the report by sending an email to info@indonesia-investments.com or a WhatsApp message to the following number: +62(0)8788.410.6944