image showing 'OECDpillars.com logo'

Map: 2022 Global Corporate Income Tax Rates

2022 Worldwide Corporate Income Tax Rates

Contents

2022 Headline Corporate Income Tax Rates

Jurisdictions Below 15%

Jurisdictions in the map  above with a headline corporate income tax rate below the Pillar Two 15% rate are:

Andorra – 10% (Article 41 of Legislative decree of 5-6-2019 publishing the revised text of Law 95/2010, of 29 December, on corporate tax)

Anguilla – 0% (No Corporate Income Tax System)

Bahamas – 0% (No Corporate Income Tax System)

Barbados – 5.5% (Section 43 of the Income Tax Act (as amended)

Bermuda – 0% (No corporate income tax system)

Bosnia and Herzegovina – 10% (Article 36 ofthe Law on Profit Tax)

BVI – 0% (No corporate income tax system)

Bulgaria – 10% (Article 20 of the Income Tax Law)

Cayman Islands  – 0% (No corporate income tax system)

Cyprus – 12.5% (Schedule 2 of the Income Tax Law)

Gibraltar – 12.5% (Section 6 of the Rates of Tax Rules, 1989)

Guernsey – 0% (Schedule 5 of the The Income Tax (Guernsey) Law, 1975 )

Hungary – 9% (Section 19 of LXXXI of 1996, law on corporate tax and dividend tax)

Ireland – 12.5% (Section 21 of the  Taxes Consolidation Act, 1997 )

Isle of Man – 0% (Income Tax (Corporate Taxpayers) Act 2006)

Jersey – 0% (Section 1 of the Income Tax (Jersey) Law 1961)

Kosovo – 10% (Article 7 of the Law on Corporate Income Tax)

Kyrgyzstan – 10% (Article 240 of the State Tax Code)

Liechtenstein – 12.5% (Article 61 of the Law on State and Municipal Taxes)

Macau – 12% (Schedule to the Complementary Income Tax Law)

Marshall Islands – 0% (No corporate income tax system)

Moldova – 12% (Article 15 of the Fiscal Code)

Montenegro – 9% (Article 28 of the Law on Corporate Income Tax)

North Macedonia  – 10% (Article 2 of the Profit Tax Law)

Palau – 0% (No corporate income tax system)

Paraguay – 10% (Article 21 of Law No. 6,380/19 on the Modernization and Simplification of the National Tax System)

Qatar – 10% (Article 9 of the Income Tax Law)

Timor-Leste – 10% (Schedule 6 of the Taxes and Duties Act)

Turkmenistan – 8% (Article 172 of the Uniform Law of Turkmenistan on Taxes)

Turks and Caicos Islands – 0% (No corporate income tax system)

Vanuatu – 0% (No corporate income tax system)

However, just because the headline corporate income tax rate is below the 15% global minimum rate doesn’t necessarily mean that there would be top-up tax under Pillar Two.

Similarly, just because the headline rate is above 15% doesn’t mean that there would be no Pillar Two top-up tax.

This is because the 15% global minimum rate under Pillar Two is based on the effective tax rate. And not just any effective tax rate, but the effective tax rate determined under Article 5 of the Pillar Two Model GloBE Rules.

Headline vs Effective Tax Rate
An MNE in a jurisdiction with a relatively high headline corporate income tax rate  could still suffer Pillar Two top-up tax if there were significant tax incentives given.
 
There are countless ways this could occur. Some jurisdictions offer specific lower rates of tax to companies making significant investments in the territory.
 
Others offer substantial tax credits for certain investment activities which reduces the corporate income tax payable. As the effective rate is essentially the tax payable divided by the profits, this could then reduce the effective tax rate to below 15%. 
 
It’s also worth noting that if the incentive is a temporary timing difference, this would have deferred tax implications which would impact on the effective tax rate (unless the deferred tax related to tax credits which is not included for Pillar Two purposes). 
 
An MNE in a jurisdiction that has a low headline corporate income tax rate may not suffer Pillar Two top-up tax as the Pillar Two rules apply special rules for the calculation of the effective tax rate.
 
If, for example, income was excluded for Pillar Two purposes, this would push the Pillar Two effective tax rate up.
 
Similarly if the taxes included in the Pillar Two effective rate calculation were higher than just the domestic jurisdictional tax, this would also increase the effective tax rate.
 
This could occur for instance under a CFC-pushdown. If a low-taxed entity was held by another company that was subject to tax on the profits of the low-taxed entity under a CFC rule, under  Article 4.3.2(c) of the OECD Model Rules, the tax paid by the parent entity are ‘pushed down’ to the low-taxed entity for the purpose of calculating the amount of tax paid by the subsidiary for Pillar Two purposes (subject to the CFC pushdown limitation).
 
Given many jurisdictions with CFC rules apply tax rates significantly above the 15% global minimum rate, this could substantially increase the effective tax rate of a jurisdiction that had a low headline corporate income tax rate.  

Instant Access

Full access to all articles, analysis, modelling tools and trackers.