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When a Low Statutory Corporate Tax Rate Doesn’t Create Pillar 2 Top-Up Tax

A number of jurisdictions have a statutory headline corporate income tax rate below 15%. This includes:
 
CountryHeadline CIT RateLaw
Andorra10%Article 41 of Legislative decree of 5-6-2019 publishing the revised text of Law 95/2010, of 29 December, on corporate tax
Anguilla0%No Corporate Income Tax System
Bahamas0%No Corporate Income Tax System
Bahrain0%No Corporate Income Tax System
Barbados5.5%Section 43 of the Income Tax Act
Bermuda0%No Corporate Income Tax System
Bosnia and Herzegovina10%Article 36 of the Law on Profit Tax
BVI0%No Corporate Income Tax System
Bulgaria10%Article 20 of the Income Tax Law
Cayman Islands0%No Corporate Income Tax System
Cyprus12.5%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 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 Man0%Income Tax (Corporate Taxpayers) Act 2006
Jersey0%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 Islands0%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-Leste10%Schedule 6 of the Taxes and Duties Act
Turkmenistan 8%Article 172 of the Uniform Law of Turkmenistan on Taxes
Turks and Caicos Islands0%No corporate income tax system
United Arab Emirates 0% (9% from June 1, 2023)Article 3 of the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses
Vanuatu 0%No corporate income tax system
 
However,  just because the statutory rate of corporate income tax is significantly below 15% does not necessarily mean that top-up tax would apply under the Pillar Two global minimum tax. 

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Picture of Lee Hadnum

Lee Hadnum

Lee is a qualified Chartered Accountant and Chartered Tax Adviser. A former Senior Tax Analyst at Bloomberg Tax, Lee began his career in Ernst & Young's Entrepreneurial Services department and has 20 years of international tax planning experience. Lee's books have been recommended by The Times, The Guardian and The Telegraph.

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