KPMG's Tax 2009

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1/56 2009 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member frms o the KPMG network are a fliated. All rights reserved.

AUDIT TAX ADVISORY

KPMGs Corporate andIndirect Tax Rate Survey2009

TAX

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2/56 2009 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member rms o the KPMG network are a liated. All rights reserved.

Across KPMGs global network o member rms, we have 22,000 tax pro essionals.The insights they o er both in local tax knowledge and cross-border tax skills canprovide organizations, large and small, with an advantage in the immediate and long term.Drawing on the experience o our people and multi-disciplinary approach, we are able tohelp our rms clients to think beyond the present, see beyond borders and achievelong-lasting success.

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1 KPMGs Corporate and Indirect Tax Rate Survey 2009

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CommentaryThe rise o indirect taxationWhile headline corporate tax rates have been declining globally, average VAT/GSTrates have remained very stable. For the 115 countries included in our indirect taxsurvey this year, up rom 90 last year, the average VAT/GST rate has risen verymarginally to 15.25 percent. The global average VAT/GST rate has moved verylittle in the past 6 years, remaining within the 15.2 percent to 15.85 percent range.

This stability is evidence o the long-term shi ttowards increased reliance by many governments

on indirect taxation. This is an understandable policychange as governments seek to achieve the di cultbalance between creating long term sustainable taxrevenues while at the same time accelerating shortterm cash collections.

Although this shi t towards indirect taxation has beenhappening over a number o years, its importance hasbecome clearer in the last year as governments cometo terms with the global economic crisis and its e ecton their tax revenues.

Why is this shi t towards indirect

taxation happening?

Indirect taxes such as VAT are charged onconsumption o goods and services, which issigni cantly less mobile and less volatile thancorporate pro ts or labor. They are also levied onthe gross value added o an economy rather thanon net pro ts. Accordingly, they present a moresustainable long term source o tax revenue whichis less prone to avoidance and cyclical economicchanges. In addition, as VAT and similar taxes aregenerally payable to the tax authorities throughout

the year as transactions occur, they give rise tomore real-time collection o tax.

This has become particularly important in the lastyear as governments ace major cash crunches due to

alling tax receipts and increasing public expenditure.There is also clear evidence that VAT/GST is a verye cient tax rom a government perspective due tothe relatively low collection cost to the tax authoritiescompared with other taxes.

How is the shi t towards indirect tax occurring?

The shi t towards indirect tax is occurring in a

number o ways. Firstly, as demonstrated by theresults o this survey series, average VAT/GSTrates are remaining very stable, and in some casebeginning to trend upwards, while headline corporatetax rates all. As the economy grows, the net e ect isthat the proportion o tax being collected rom indirecttax is increasing.

Secondly, new indirect tax regimes are beingintroduced throughout the world (e.g. the Gulregion, India and China) as these jurisdictionsmodernize their tax systems the number o

countries with national VAT/GST systems isnow over 150 and rising annually.

Thirdly, there is signi cant re orm o existing indirectregimes with a view to protecting and broadening thebase to which the tax is applied. The actions beingtaken by the EU Commission, EU governments andtax authorities in combating VAT raud and broadeningthe charge to VAT on services supplied rom outsidethe EU is clear evidence in this regard.

What evidence has there been in the last

12 months?

As noted above, the average VAT/GST rate across115 countries in 2009 now stands at 15.25 percent.This marginal increase rom 15.22 percent in 2008is largely driven by increases in VAT rates in Estonia,Hungary, Ireland, Israel and Venezuela.

KPMGs Corporate and Indirect Tax Rate Survey 20094

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At a regional level, the average VAT rate in theEuropean Union has increased rom 19.5 percent in

2008 to 19.8 percent in 2009. This increase wouldhave been greater but or the temporary cut o 2.5percent in the UK (scheduled to be reversed inJanuary 2010) and one percent in Portugal.

While both o these reductions are intended asmeasures to stimulate spending, it is anticipatedthat the UK VAT rate will revert to 17.5 percent on1 January 2010, with a urther increase possiblewithin the ollowing 12 to 18 months. The nete ect is that we are likely to see the average VATrate in the EU hit 20 percent during 2010 or 2011.

In Asia-Paci c, the small increases in the averageVAT/GST rates since 2006 have e ectively beenreversed by a cut o three percent in Sri Lanka.However, the general trend is still that the averageVAT/GST rate in Asia-Paci c remains stable withina very narrow range; 10.6 percent to 10.9 percent

or the last 6 years.

The rate or 2009 is 10.8 percent, giving theAsia-Paci c region the lowest average regionalindirect tax rate. This is not surprising given therelative newness o many o the regimes compared,

or example, with the EU. However, given theevidence rom other countries which shows thatVAT/GST rates tend to increase over time a ter beinginitially introduced at more modest levels, combinedwith the need or governments to collect more taxrevenues, it would be surprising i the average VAT/ GST rate in Asia-Paci c didnt increase more towardsthe current global average over the coming years.

The picture in Latin America is very similar,with rates remaining stable within a narrow 15.9

percent to 16.6 percent range over the last 6 years.In 2009, a mid-year increase rom Venezuela, whichincreased the standard rate rom 9 percent to 12percent, took the Latin America average back upto 16.2 percent rom 15.9 per cent in 2008.

Taking the OECD countries together, a similar levelo stability in VAT/GST rates is evident. The materialchanges in the last year were the VAT rate increasesin Hungary and Ireland and the decreases in Portugaland the UK. The net result is a very minor reductionin the average rate rom 17.7 percent in 2008 to 17.6

percent in 2009. However, as the UKs temporary 2.5percent cut will expire on 1 January 2010, the averageOECD rate will likely return to at least 17.7 percent,i not higher, during 2010.

It is worth noting that the US remains the onlyOECD country without a national VAT/GST system.During 2009, however, there were a number o signsthat the US could now be seriously considering theintroduction o a VAT/GST system. I this were tooccur, it would be one o the most signi cant globaltax events o this generation.

While there are a growing number o economic andacademic reports which explain the need or a VAT/ GST system in the US, the decision now is a politicalone. We believe that it is only a matter o time be oreit happens, but this could still be our or ve yearsaway due to the serious political challenges whichits introduction would pose. That said, given thesigni cant gap in the US public nances, US policymakers may decide that now is the time.


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Commentary

What is 2010 and beyond likely to bring?

In the short term, we are likely to see many

governments and tax authorities globally usingindirect taxation in a range o ways when dealingwith the current economic situation. Depending onthe jurisdiction, we are likely to see a mixed bag o

scal stimulus measures (such as temporary ratereductions, exemptions, payment holidays etc) aswell as tax raising or tax acceleration measures(limiting scope o reduced VAT rates, acceleratedpayment arrangements etc). Any resulting changes inthe recently observed global trends should probablybe treated as temporary blips which do not alterthe general medium to long term trends.

In the medium to longer term, global trends that arelikely to continue, include,

More jurisdictions will adopt new VAT/GST systems,

There will be further increases in standard and reduced VAT/GST rates,

The average EU VAT rate will hit 20 percent,

The average VAT rate in Asia Paci c will trend

closer to the global average,

There will be greater focus on fraud, anti-avoidance

and broadening the indirect tax base to bring neworms o trade into the indirect tax net,

There will be more systems-based tax audit activity

ocused on identi cation o systematic indirect taxerrors or avoidance, and

There will be tougher penalty regimes

What does this shi t to indirect tax mean or

global businesses?

The shi t towards indirect tax is creating newchallenges or many global businesses, particularly inthe areas o compliance, risk management andvalue creation. As a result, global businesses shouldask themselves seriously whether their systems,processes and resources are adequate to managethe increasing risks adequately and e ectively whilerealizing the genuine opportunities which exist.This requires an ongoing assessment o theentire process by which indirect taxes arereported, managed and resourced withinthe business.

Based on our analysis o global trends and on ourmember rms experiences, KPMG has developed anapproach, Driving Indirect Tax Performance , designedto assist global businesses in this assessment.This approach o ers a practical ramework withinwhich the twin objectives o managing riskand creating value can be achieved. For morein ormation, go tohttp://www.kpmg.com/Global/IssuesAndInsights/ArticlesAndPublications/

Pages/Driving-indirect-tax-per ormance.aspx

Niall Campbell Global Head o Indirect Tax ServicesKPMG in Ireland

http://www.kpmg.com/Global/IssuesAndInsights/ArticlesAndPublications/Pages/Driving-indirect-tax-performance.aspxhttp://www.kpmg.com/Global/IssuesAndInsights/ArticlesAndPublications/Pages/Driving-indirect-tax-performance.aspxhttp://www.kpmg.com/Global/IssuesAndInsights/ArticlesAndPublications/Pages/Driving-indirect-tax-performance.aspxhttp://www.kpmg.com/Global/IssuesAndInsights/ArticlesAndPublications/Pages/Driving-indirect-tax-performance.aspxhttp://www.kpmg.com/Global/IssuesAndInsights/ArticlesAndPublications/Pages/Driving-indirect-tax-performance.aspx

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Corporate Income Tax - the story behind the rateThe decline o statutory corporate income tax rates is a development thatcannot be seen in isolation. Other global trends have an impact on corporatetax payers and also governments. It is the net result o these trends that helpsto determine the global tax climate.

Protecting the tax base

One o these trends is the protection o the taxable

base. Clearly, the statutory rate is just one elementthat determines the e ective tax rate on companiespro ts. The tax base is another.

The current economic crisis will obviously havehad an adverse impact on almost all governmentstax revenue. This seems likely to continue at least

or the short to medium term. Governments willthere ore be keen to prevent urther erosion othe tax take.

One possible way to do this is, o course, by raisingthe statutory rate, but there are long term competitivepressures which can make it di cult or countries todo this in an increasingly globalized economy.Another, perhaps more e ective, approach isto ocus on preserving the tax base.

This approach mani ests itsel in di erentways, including:

Limitations on deductibility of interest expenses.

In many jurisdictions around the globe debt-equityratios, earnings stripping rules and speci c antiabuse rules, such as those aimed at debt push

down restructurings, have been introduced. Restrictions on the utilization of losses, either in

time or in amount.

Speci c transfer pricing rules: many of these involve documentation, but tax authoritiesseem also to take a more aggressive approachin challenging intercompany trans er pricing.

Introduction of generic anti-abuse rules and treaty

override policies. A good example o this can be

ound in the new dra t tax code or India that hasrecently been published.

Speci c clauses in bilateral tax treaties that limit treaty bene ts on the basis o requirementsregarding substance or quali cation ocertain entities.

A key concern - or businesses as well asgovernments - is that these rules should not cuto the oxygen supply to recovering businesses.That aside, these measures may remain in orce ora long time - perhaps with short term relaxations -independent o any economic recovery.

Fiscal incentives or companies

Another trend is in quite the opposite direction.Partly driven by the current economic downturn,many jurisdictions are likely to continue to use

scal incentives to attract businesses and stimulatecompanies to invest.

Accelerated depreciation, R&D credits, andinvestment grants are clear examples o this.This trend is only partly driven by the current crisis.

Globalization and mobility o capital and intangibleproperty, all o which have stimulated competitionbetween states, are also responsible.


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Commentary

Transparency and co-operation

Greater demands or transparency and cooperation

are also driving changes to the corporate taxlandscape, which in turn are having animportant impact on both corporate taxpayers and tax authorities.

The call or transparency is one o the main driversor tax authorities in creating plat orms or

cooperation with corporate tax payers. Taxpayers arebeing asked today to disclose much more data thanin the past. Many tax authorities are moving away

rom vertical control to a model where companieshave to carry out a kind o sel -audit, a horizontal

audit, even in a time when deregulation is no longerthe key word. This requires companies to be moretransparent with regard to their tax strategy andinternal systems.

Tax authorities and governments themselves are alsobeing a ected by the call or transparency, a ectingtheir tax systems, speci c rules and the way taxadministrations actually work.

This is happening across the world, so notwithstanding the closer co-operation betweentax authorities and taxpayers, co-operation betweentax authorities seems likely to continue to grow.

Governmental co-operation

The recent attention paid to tax havens by theOECD, G-20, the European Union and individualstates has resulted in signi cantly increased pressureon those jurisdictions with low tax rates, a limitedexchange o in ormation, a lack o transparency in

their tax systems/execution and little in the wayo requirements as to substance.

Once the current round o tailor-made in ormationexchange agreements has run its course many largereconomies are likely to return their ocus to controlled

oreign company regulations.

In the long term, i the degree o internationalco-operation continues that has been apparentthroughout the nancial crisis, there may be pressure

or lower but more closely harmonized rates.Headline corporate rates could all, but overalle ective tax rates or global companies would rise,due to the broadening o the tax base. There mayalso be pressure on some countries to raise ratesas others reduce them.

These pressures could be exerted by acombination o three orces. First, reneweddiscussion around worldwide rather than territorialtaxation. Second, more co-ordinated action on ratesby governments in an attempt to limit tax arbitrage,and third the hurdles or white listing o taxhavens being moved rom in ormation exchangeto consideration o the rate o tax on pro ts.

These are likely to be very signi cant developmentsor companies everywhere, and tax people shouldensure that their voice is heard in the debates thatwill take place on this globally important subject.

Wilbert Kannekens Global Head o International Corporate TaxKPMG in the Netherlands


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KPMGs Corporate and Indirect Tax Rate Survey 2009 10

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Source or all rates: KPMG member frms

OECD EuropeanUnion

Asia -Pacifc

LatinAmerica

Country 1 Jan 99(%)

1 Jan 00(%)

1 Jan 01(%)

1 Jan 02(%)

A ghanistan 20AlbaniaAngola 35 35 35 35

n Argentina 35 35 35 35Armenia

n Aruban n Australia 36 36 34 30n n Austria 34 34 34 34

Bahamas 0 0 0 0Bahrain 0 0 0 0

n Bangladesh 35 35 35 35n Barbados 40 40 40 37.5

Belarusn n Belgium 40.17 40.17 40.17 40.17

Bermudan Bolivia 25 25 25 25

Bosnia and HerzegovinaBotswana 25 25 25 25

n Brazil 33 37 34 34n Bulgaria

n Canada 44.6 44.6 42.1 38.6n Cayman Islands 0 0 0 0n Chile 15 15 15 16

n China 33 33 33 33n Colombia 35 35 35 35n Costa Rica 30 30 30 30

Croatia 35 35 20 20n Cyprus 28 28

n n Czech Republic 35 31 31 31n n Denmark 32 32 30 30

n Dominican Republic 25 25 25 25n Ecuador 15 25 25 25

Egyptn Estonia

n Fiji 35 35 34 32n n Finland 28 29 29 29n n France 40 36.66 35.33 34.33n n Germany 52.3 51.6 38.36 38.36

Gibraltarn n Greece 40 40 37.5 35

Guatemala 27.5 25 31 31Guernsey

n Honduras 25 25 25 25n Hong Kong 16 16 16 16

n n Hungary 18 18 18 18n Iceland 30 30 30 18

n India 35 38.5 39.55 35.7n Indonesia 30 30 30 39

Iran 54 54 54 54n n Ireland 28 24 20 16

Isle o ManIsrael 36 36 36 36

n n Italy 41.25 41.25 40.25 40.25n Jamaica 33 1/3 33 1/3 33 1/3 33 1/3

n n Japan 48 42 42 42Jordan 25 25 25 25Kazakhstan 30 30 30 30

n n Korea, Republic o 30.8 30.8 30.8 29.7



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Corporate Tax Rates 1999 - 20091 Jan 03 1 Jan 04 1 Jan 05 1 Jan 06 1 Jan 07 1 April 08 1 Jan 09 Country

(%) (%) (%) (%) (%) (%) (%)

20 20 20 A ghanistan23 20 20 10 10 Albania

35 35 35 35 35 35 35 Angola35 35 35 35 35 35 35 Argentina20 20 20 20 20 20 20 Armenia

35 35 28 28 28 Aruba30 30 30 30 30 30 30 Australia34 34 25 25 25 25 25 Austria0 0 0 0 0 0 0 Bahamas0 0 0 0 0 0 0 Bahrain30 30 30 30 30 30 27.5 Bangladesh

36 33 30 25 25 25 25 Barbados24 24 24 Belarus

33.99 33.99 33.99 33.99 33.99 33.99 33.99 Belgium0 Bermuda

25 25 25 25 25 25 25 Bolivia30 10 10 Bosnia and Herzegovina

25 25 25 25 25 25 25 Botswana34 34 34 34 34 34 34 Brazil

15 15 10 10 10 Bulgaria36.6 36.1 36.1 36.1 36.1 33.5 33 Canada

0 0 0 0 0 0 0 Cayman Islands16.5 17 17 17 17 17 17 Chile33 33 33 33 33 25 25 China35 35 35 35 34 33 33 Colombia36 30 30 30 30 30 30 Costa Rica20 20 20 20 20 20 20 Croatia15 15 10 10 10 10 10 Cyprus31 28 26 24 24 21 20 Czech Republic30 30 28 28 28 25 25 Denmark25 25 25 30 25 25 25 Dominican Republic25 25 25 25 25 25 25 Ecuador

20 20 20 20 Egypt24 23 22 21 21 Estonia

32 31 31 31 31 31 29 Fiji29 29 26 26 26 26 26 Finland

34.33 34.33 33.83 33.33 33.33 33.33 33.33 France39.58 38.29 38.31 38.34 38.36 29.51 29.44 Germany

35 33 27 Gibraltar35 35 32 29 25 25 25 Greece

31 31 31 31 31 31 31 Guatemala0 Guernsey

25 25 30 30 30 30 30 Honduras16 17.5 17.5 17.5 17.5 16.5 16.5 Hong Kong18 16 16 16 16 16 16 Hungary18 18 18 18 18 15 15 Iceland

36.75 35.875 36.5925 33.66 33.99 33.99 33.99 India30 30 30 30 30 30 28 Indonesia25 25 25 25 25 25 25 Iran

12.5 12.5 12.5 12.5 12.5 12.5 12.5 Ireland0 Isle o Man

36 36 34 31 29 27 26 Israel38.25 37.25 37.25 37.25 37.25 31.4 31.4 Italy33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 Jamaica

42 42 40.69 40.69 40.69 40.69 40.69 Japan25 25 25 25 25 25 25 Jordan30 30 30 30 30 30 20 Kazakhstan

29.7 29.7 27.5 27.5 27.5 27.5 24.2 Korea, Republic o


Source or all rates:KPMG member frms

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Source or all rates:KPMG member frms

The 2009 rate is estimated

OECD EuropeanUnion

Asia -Paci c

LatinAmerica

Country 1 Jan 99(%)

1 Jan 00(%)

1 Jan 01(%)

1 Jan 02(%)

Kuwait 55 55 55 55n Latvia 25 25 25 22

Libyan Lithuania

n n Luxembourg 37.45 37.45 37.45 30.38n Macau

Macedonia 15 15 15 15n Malaysia 28 28 28 28

n MaltaMauritius 35 35 25 25

n n Mexico 35 35 35 35MontenegroMozambique 50 35 35 35

n n Netherlands 35 35 35 34.5n Netherlands Antilles

n n New Zealand 33 33 33 33Nigeria 30 30 30 30

n Norway 28 28 28 28Oman 12 12 12 12

n Pakistan 33 34.65 34.65 35Palestine

n Panama 37 37 37 37n Papua New Guinea 25 25 25 25

n Paraguay 30 30 30 30n Peru 30 30 30 30

n Philippines 33 32 32 32n n Poland 34 30 28 28n n Portugal 37.4 37.4 35.2 33

Qatar 35 35 35 35n Romania 25 25

Russia 43 24Saudi Arabia 45 45 30 30Serbia 20

n Singapore 26 26 25.5 24.5n n Slovak Republic 40 29 29 25

n Slovenia 25 25 25 25South A rica 42.22 37.8 37.8 37.8

n n Spain 35 35 35 35n Sri Lanka 35 35 35 42

Sudann n Sweden 28 28 28 28n Switzerland 25.1 25.1 24.7 24.5

Syria 45 45 45 45n Taiwan 25 25 25 25

Tanzanian Thailand 30 30 30 30

Tunisian Turkey 33 33 33 33

Ukraine 30 30United Arab Emirates

n n United Kingdom 31 30 30 30n United States 40 40 40 40

n Uruguay 30 30 30 30n Venezuela 34 34 34 34

n Vietnam 35 32.5 32 32YemenZambia 35 35 35 35Zimbabwe 30.9 30.9

Average 32.69 32.36 31.49 30.72

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Source or all rates: KPMG member frms

Corporate Tax Rates 1999 - 20091 Jan 03 1 Jan 04 1 Jan 05 1 Jan 06 1 Jan 07 1 April 08 1 Jan 09 Country

(%) (%) (%) (%) (%) (%) (%)

55 55 55 55 55 15 15 Kuwait19 15 15 15 15 15 15 Latvia

40 40 40 Libya15 15 15 15 20 Lithuania

30.38 30.38 30.38 29.63 29.63 29.63 28.59 Luxembourg12 12 12 12 12 Macau

15 15 15 15 12 10 10 Macedonia25 28 28 28 27 26 25 Malaysia34 35 35 35 35 35 Malta25 25 25 25 22.5 15 15 Mauritius34 33 30 29 28 28 28 Mexico

9 9 9 9 9 Montenegro32 32 32 32 32 32 32 Mozambique

34.5 34.5 31.5 29.6 25.5 25.5 25.5 Netherlands28 34.5 34.5 34.5 34.5 34.5 Netherlands Antilles33 33 33 33 33 30 30 New Zealand30 30 30 30 30 30 30 Nigeria28 28 28 28 28 28 28 Norway12 12 12 12 12 12 12 Oman35 35 35 35 35 35 35 Pakistan

16 16 16 Palestine30 30 30 30 30 30 30 Panama27 30 30 30 30 30 30 Papua New Guinea30 30 20 10 10 10 10 Paraguay27 30 30 30 30 30 30 Peru

32 32 32 35 35 35 30 Philippines27 19 19 19 19 19 19 Poland33 27.5 27.5 27.5 25 25 25 Portugal35 35 35 35 35 35 35 Qatar25 25 16 16 16 16 16 Romania24 24 24 24 24 24 20 Russia30 30 30 20 20 20 20 Saudi Arabia14 12.33 10 10 10 10 10 Serbia22 22 20 20 20 18 18 Singapore25 19 19 19 19 19 19 Slovak Republic25 25 25 25 23 22 21 Slovenia

37.8 37.8 37.8 36.9 36.9 34.55 34.55 South A rica35 35 35 35 32.5 30 30 Spain

32.5 35 32.5 32.5 35 35 35 Sri Lanka24.1 35 35 35 Sudan28 28 28 28 28 28 26.3 Sweden25 24.1 21.3 21.3 21.32 21.17 21.17 Switzerland35 35 35 35 28 28 28 Syria25 25 25 25 25 25 25 Taiwan

30 Tanzania30 30 30 30 30 30 30 Thailand30 33 35 35 30 30 30 Tunisia33 33 30 20 20 20 20 Turkey30 30 25 25 25 25 25 Ukraine34 40 55 55 55 55 55 United Arab Emirates30 30 30 30 30 28 28 United Kingdom40 40 40 40 40 40 40 United States35 30 30 30 30 25 25 Uruguay34 34 34 34 34 34 34 Venezuela

32 28 28 28 28 28 25 Vietnam35 35 35 Yemen

35 35 35 35 35 35 35 Zambia30.9 30.9 30.9 30.9 30.9 30.9 30.9 Zimbabwe

29.53 28.75 28.01 27.47 27.12 25.84 25.51



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Source or all graph in ormation:KPMG member frms

Corporate Tax Rates 1999 - 2009


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A ghanistan (2009 rate = 20%)

Generally, two types o taxes are payable by corporations.The corporate income tax rate is 20 percent and is applied totaxable income, whereas business receipt tax (ranging rom 2percent to 10 percent) is applied to gross revenue. Quali yingextractive industries (mines and hydrocarbons) are exempt

rom business receipt tax. Taxable income is determinedby deducting all business-related tax deductible expenses

rom gross revenue. Tax deductible expenses includedividends paid by the corporation and business receipt tax.

Expenses which are subject to withholding tax are not taxdeductible i the taxpayer ails to withhold the tax and to pay itto the tax authorities. Under a tax incentive scheme, so-calledapproved enterprises (that is, enterprises registered with theA ghanistan Investment Support Agency according to theInvestment Law) are eligible or accelerated depreciation( our years or buildings and two years or other assets).

Albania (2009 rate = 10%)

The corporate income tax rate is applied to the taxable pro tor the scal year (1 January to 31 December). Taxable pro t

is de ned as gross income generated minus related tax

deductible expenses. There are certain non-tax deductibleexpenses, or instance, business expenses unsupportedby a regular invoice, interest accrued up to a certain limit,interest paid on loans and pre-payments which exceed

our times the amount o owned equity during the period,representation expenses over a certain limit, cost o ringebene ts, voluntary pension contributions. Setting up reservesdoes not lead to tax deductible expenses, except or banksand insurance companies. Dividends rom an Albanianresident entity which is subject to corporate income tax,paid to Albanian resident taxpayers who own more than25 percent o the capital o such entity, are tax exempt.

Angola (2009 rate = 35%)

Corporate taxpayers may all under Group A, Group B,or Group C. Group A is taxed at 35 percent on taxableincome, Group B is taxed at 25 percent on turnover,and Group C is taxed at 35 percent on speci ed amounts.Group A generally includes state companies, nancial andcredit institutions, insurance companies, oreign exchangehouses, and all properly registered companies and permanentestablishments. Group B comprises taxpayers that do not

all under Groups A or C, as well as those who carry out aone-o activity o a commercial or industrial nature. Group Ccomprises any individual that cumulatively ul ls the ollowingconditions: works or himsel /hersel and does not have morethan three employees; does not keep a set o accounts; does

not make use o more than two vehicles; and whose annualgross turnover is below 13 UCFs (UCF=infation adjustmentunit currently at 1UCF=53Kz). E ectively all taxpayers allinto Group A.

Argentina (2009 rate = 35%)

A minimum income tax at a rate o 1 percent is applied tothe tax value o the companys assets (liabilities cannot bededucted). Some assets, such as stocks, shares in otherentities subject to taxation, and assets o mining companies,are exempt rom minimum income tax. The acquisition onew goods, except or automobiles, as well as investment innewly constructed or re urbished buildings ( or the rst twoyears) are also excluded rom minimum income tax. Minimumincome tax only applies to the extent it exceeds the (regular)income tax calculated as a percentage o the taxable income.Minimum income tax paid in any given year reduces the(regular) income tax o subsequent years (maximumcarry- orward o 10 years).

Armenia (2009 rate = 20%)

The standard rate o pro ts tax (shahutahark) is 20 percent.Taxable pro t is the positive di erence between gross incomeand the deductions speci ed by law. For taxation purposes,only necessary expenses supported by documentation andrelated to the receipt o income are allowed. Also, onlyoccasional losses (resulting rom orce-majeure) and wasteand spoilage losses (in amounts established by the Armeniangovernment) are allowed as deductions rom gross income.The deduction o some types o expenses, or examplebusiness trip expenses, representative expenses and interestpayments, is limited. The legislation allows carrying orwardo any tax loss or ve years rom the year o origination.

Aruba (2009 rate = 28%)

Companies operating in the Free Zone are taxed at a rate o2 percent. An imputation payment company (IPC) is subjectto an e ective corporate tax rate o 2 percent; an IPC pays 28percent corporate income tax while the shareholder is entitledto an imputation payment o 26 percent rom the Arubangovernment upon distribution o a dividend by the IPC

Australia (2009 rate = 30%)

The corporate income tax rate applies to both resident andnon-resident companies. A resident company is liable tocorporate income tax on its worldwide income and capitalgains. A non-resident company is liable to corporate incometax on its Australian-source income only, and on capital gains

rom the disposal o an asset that is taxable Australian realproperty (TARP). Broadly, TARP will include Australian real


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Corporate Tax Rates Footnotesproperty and an indirect interest in Australian real property.The Australian tax system provides taxation relie againstinternational double taxation by granting oreign tax creditsin some circumstances and in others, by exempting the

oreign income rom Australian tax. The corporate incometax rate applies to income earned during the period rom1 July to 30 June o the ollowing year. I a company hasapproval to use a di erent year-end or tax purposes, theapproved period must still relate to a 30 June year-end (thatis, year ended 31 December 2009 in lieu o 30 June 2008).

For the year 1 July 2001 to 30 June 2002 and later taxableyears, the corporate income tax rate has been 30 percent.

Austria (2009 rate = 25%)

There are no trade income or net worth taxes. Austriancorporations may bene t rom the liberal internationalparticipation exemption and group taxation (includingcross-border loss utilization and goodwill depreciation

or the acquisition o quali ying Austrian subsidiaries).

Bahamas (2009 rate = 0%)

No taxes based on corporate earnings are assessedin the Bahamas.

Bahrain (2009 rate = 0%)

Bahrain is an income tax- ree country; there is no corporateor personal income taxes in Bahrain (except or oil relatedactivities). Accordingly, all pro ts, dividends, or any otherincome are tax ree. Bahrain taxes oil and gas companiesin the drilling and exploration sector at a rate o 46 percent.There are no exchange control regulations and accordinglythere is no restriction on repatriation o capital, pro ts,royalties, or wages. Free movement o oreignexchange is permitted.

Bangladesh (2009 rate = 27.5%)The corporate income tax rate is 27.5 percent or corporations(except banks and other nancial institutions) listed on a stockexchange. I a listed corporation pays a dividend that exceeds20 percent o the paid-up capital or a taxable year, it receivesa 10 percent rebate on the tax payable. I the dividend islower than 10 percent o the paid-up capital, the corporateincome tax rate is increased to 37.5 percent. Should thedividend amount be less than 15 percent in spite o havingsu cient distributable pro ts, the company is subject to anadditional 5 percent tax on the undistributed pro ts. Banks,insurance companies, leasing companies, and other nancialinstitutions, and mobile phone operators are taxed at 45percent. All other companies including branches o oreigncompanies are taxed at 37.5 percent. However i a mobile

phone operator company converts itsel into a publicly tradedcompany by o ering a minimum o 10 percent o its shareson the stock exchange through initial public o er, then theapplicable tax rate or this organization will be 35 percent.A rebate in the amount o 50 percent o the income derived

rom export business will be granted to companies registeredin Bangladesh. Textile/jute industries are subject to 15 percenttax but these industries will not quali y or an export rebate.Tax at 0.25 percent deducted by a bank rom export proceedsreceived by export-oriented knitwear and woven garment

industries is treated as nal tax. I the pro t earned bya bank exceeds 50 percent o its capital and reserves,the bank is subject to a 15 percent excess pro ts taxon the additional pro t.

Barbados (2009 rate = 25%)

The corporate income tax rate may be reduced, on asliding scale, to 1.75 percent, by a oreign currency tax creditgranted or quali ying oreign currency generating activities.For small business, manu acturing, or certain insuranceconcessions special rates apply. An international nancialservice center tax regime provides or exemption or certain

insurance companies, a 1.75 percent rate or quali yinginsurance companies and a variable rate o 1 percent to 2.5percent or other quali ying international business activities.Recent changes to note in domestic legislation includean exemption rom tax in Barbados or certain dividendsreceived by companies resident in Barbados romnon-resident companies, as well as an exemption romwithholding tax in Barbados on certain dividends paid bycompanies resident in Barbados out o oreign-sourceincome to non-resident shareholders. These changesare applicable rom the taxable year 2007 onwards.

Belarus (2009 rate = 24%)For special zones the corporate income tax rate may bereduced to 12 percent (50 percent o standard tax rate).

Belgium (2009 rate = 33.99%)

A lower tax rate applies to companies that are more than50 percent owned by individuals. All companies subject toresident or non-resident corporate tax bene t rom the riskcapital or notional interest deduction that is computed ontheir adjusted equity capital (including retained earnings).The deduction equals 4.473 percent (4.973 percent orsmall companies) or scal year 2010 (taxable years starting

1 January 2009 or later). The notional interest deductionreduces the e ective tax rate to an average range rom 24percent to 27 percent (or lower depending on the equitycapital calculation).


8/8/2019 KPMG's Tax 2009


Bermuda (2009 rate = 0%)

There are no notes or 2009.

Bolivia (2009 rate = 25%)

The corporate income tax rate is 25 percent (annual pro ttax IUE). Payments o this tax are considered an on-accountpayment or any subsequent years 3-percent transactionstax. Certain oreign companies` activities per ormed in Boliviathrough branches or agencies are subject to di erent taxrules. Such activities include transportation, internationalnews agencies, oreign insurance companies, and distributiono movies and videotapes. An e ective rate o 5.5 percent isapplied to gross income arising rom these activities. Up to 4percent o this tax is considered an on-account payment orany subsequent years 3-percent transactions tax

Bosnia and Herzegovina (2009 rate = 10%)

Bosnia and Herzegovina consists o two separatelyadministered territorial entities: the Federation o Bosniaand Herzegovina (FBiH) and the Republic o Srpska (RS)with di erent corporate pro t tax regulations. The tax ratein both the FBiH and RS corporate income tax regulations is10 percent. New corporate income tax legislation has beenrecently adopted in the FBiH and became applicable as o1 January 2008. Tax incentives envisaged in the FBiH includeallowing or a tax holiday or the year in which more than30 percent o a taxpayers total income is realized throughexport as well as tax incentives related to investment.

Botswana (2009 rate = 25%)

The corporate income tax rate is split into a 15 percentcompany tax and a 10 percent additional company tax (ACT).The ACT can be used to o set any withholding tax payable ondividend distributions. ACT unused a ter a period o ve yearswill be lost. This arrangement can limit the overall corporateincome tax levied on both the company and the shareholderto 25 percent. Lower company tax rates are available ormanu acturing entities (5 percent). An approved InternationalFinancial Service Center entity is only liable or companytax and not or ACT. Mining entities (with the exceptiono diamond mining) are taxed at a rate between 15percent and 45 percent (excluding ACT). Diamondmining taxation is negotiated with the government.

Brazil (2009 rate = 34%)

The corporate income tax rate is 25 percent. In addition,social contribution on net pro ts at a rate o 9 percent arelevied, leading to an overall rate o 34 percent. Please notethat the social contribution on net pro ts tax rate has beenincreased rom the current 9 percent to 15 percent or

nancial institutions, private insurance, and capitalizationcompanies starting 1 May 2008. The 25 percent corporateincome tax rate comprises a 15 percent basic rate and 10percent surtax on income over BRL 240,000 per year.The tax base or corporate income tax is the adjustednet pro ts. Depending on the type o income and urtherconditions a social contribution on net pro ts tax credit (bnusde adimplncia scal) may be granted to certain corporateincome tax payers. A tax de erral o our years o socialcontribution on net pro ts tax may be available or companies

that purchase certain industrial assets between 1 October2004 and 31 December 2010 (MP 428/08). De erral isequivalent to 25 percent o the depreciation o these assets.Reduced e ective corporate tax rates may be applicable orcompanies quali ying or the election o the presumed pro tsystem (such as those with gross revenues lower than BRL48 million on the year preceding the election).

Bulgaria (2009 rate = 10%)

The corporate income tax rate is 10 percent o taxablepro t. Taxable pro t is determined by adjusting nancialresults using IFRS or Bulgarian National Accounting

Standards. Corporate income tax returns should beled and corresponding liabilities settled by 31 March

o the ollowing year.

Canada (2009 rate = 33%)

The 2009 corporate income tax rate o 33 percent includesederal tax o 19 percent plus provincial tax. Depending on

the province, the total e ective general corporate incometax rate or 2009 ranges rom 29 percent to 35 percent (24percent to 35 percent or manu acturers). Lower rates areavailable to Canadian-controlled private corporations (CCPC)on their rst CAD 400,000 to CAD 500,000 o taxable active

business income. A representative tax rate or 2009 or aCCPC on its rst CAD 500,000 o eligible taxable income isapproximately 16.5 percent (11 percent ederal tax plus 5.5percent provincial tax). Depending on the province, the totale ective tax rate or 2009 or a CCPC on its eligible incomeranges rom 12 percent to 19 percent.

Cayman Islands (2009 rate = 0%)


Chile (2009 rate = 17%)

Chilean corporate income tax (called rst category tax)applies to all types o taxable income realized by a taxpayer,individual, or legal entity, regardless o nationality, residence,or domicile, with the exception o income rom dependentemployees and independent personal services. The tax base


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23/56

Corporate Tax Rates Footnotes

is the accrued net taxable income a ter allowable deductions

and expenses. First category tax paid can be credited against

fnal taxes, which are global complementary tax in the case o

Chilean resident individuals and withholding tax in the case o

non-residents.

China (2009 rate = 25%/20%/15%)

As o 1 January 2008, a new corporate income tax applies

to resident enterprises and non-resident enterprises with

establishments in China or having China-sourced income.

The corporate income tax rate is 25 percent. The reduced

rate applicable to small-scale enterprises with low proftability

is 20 percent and to hi-tech enterprises eligible or key

support rom the state is 15 percent.

Colombia (2009 rate = 33%)

The corporate income tax rate is 33 percent rom 2008

onwards and, unlike previous years, no surcharge is levied

(there was a surcharge o 10 percent until 2008). Colombian

companies and oreign branches quali ying as industrial users

established in Colombian Free Trade Zones are subject to a

reduced corporate income tax rate o 15 percent rom 2007

onwards. In addition to the corporate income tax, there is

a regional industry and commerce tax levied on industrial,

commercial, and service activities carried out within a

municipality. The rate depends on the municipality and

ranges between 4.14 and 13.8 per thousand. For corporate

income tax purposes, industry and commerce tax as well

as advertisement tax and real estate tax are 100 percent

deductible when paid. Further, 25 percent o the fnancial

transactions tax paid is deductible or corporate income

tax purposes.

Costa Rica (2009 rate = 30%)

Reduced rates are available or smaller companies. Corporate

entities with a gross income under CRC 38.891 million are

subject to a 10 percent corporate income tax rate; corporate

entities with gross income o more than CRC 38.891 million

but less than CRC 78.231 million are subject to a 20 percent

corporate income tax rate. Corporate entities with gross

income exceeding CRC 78.231 million are subject to the

ordinary 30 percent rate.

Croatia (2009 rate = 20%)

Taxable income is determined by adjusting accounting proft

in accordance with the provisions o the Corporate Income

Tax Law. Dividends received are not subject to corporate

income tax. A company can reduce its tax base i it qualifes

under the Investment Promotion Law, Special State Care

Areas Law, Hill and Mountain Areas Law, Free Trade Zones

Law, Law on Renewal and Development o the City o

Vukovar, Law on Scientifc Activities in Higher Training

and Education, and Training and Education Incentives Law.

The tourist tax, orestry tax, monumental protection ee,

and Croatian Chamber o Commerce ee are taxes based

on turnover.

Cyprus (2009 rate = 10%/25%)

The corporate income tax is 10 percent applicable on

business income whereas dividends received are tax exempt.

Income deriving rom the sale o securities is also tax exempt.

In ascertaining a companys taxable income all outgoings and

expenses wholly and exclusively incurred in the production

o the income are deductable. The corporate income tax rate

or public corporate bodies (meaning legal persons o public

law or any other public corporate body established by law

or the public interest) is 25 percent plus 3 percent special

contribution or the de ense o the republic.

Czech Republic (2009 rate = 20%)

A special rate o 5 percent applies to the profts o

investment, mutual, and pension unds. Dividend income is

taxed at 15 percent or at zero percent i received by a parent

company rom a subsidiary (currently defned as a company

in which the parent has held at least 10 percent or at least

12 months and which is resident in the Czech Republic, EU,

Switzerland, or a country with which the Czech Republic has

signed a double tax treaty, as long as the corporate tax rate

in that country is at least 12 percent). Income tax relie or

up to fve years is available under special investment

incentive schemes.

Denmark (2009 rate = 25%)

Two prepayments o corporate income tax during the

taxable year are mandatory. I the fnal tax liability exceeds

the prepayments a surcharge o 6.1 percent (2009) o the

outstanding tax liability is payable. There are no local taxes

on corporate income.

Dominican Republic (2009 rate = 25%)

In July 2007, the tax rate reduction (Law 172-07) entered into

orce which reduces the corporate tax rate to 25 percent rom

2007 onwards

Ecuador (2009 rate = 25%)

A corporate income tax rate o 15 percent applies i the

taxpayer decides to reinvest profts. This reinvestment

is intended to cover the acquisition o new machineryor equipment (loans to the productive sector in the case

o fnancial institutions). The companys capital must be

increased by the reinvested amount.



8/8/2019 KPMG's Tax 2009


Egypt (2009 rate = 20%)

The corporate income tax rate is applicable or active incomewhereas dividends received are tax exempt. Income deriving

rom the sale o securities registered in the Egyptian stockmarket is also tax exempt. In ascertaining a companystaxable income all outgoings and expenses wholly andexclusively incurred in the production o the incomeare deducted as long as they are supported by externaldocuments and related to business.

Estonia (2009 rate = 21%)

Only pro t distributions are subject to taxation. Pro ts thatare not distributed but are retained in the company and/ or reinvested are not subject to taxation. A 21 percent taxapplies to pro t distributions including dividend paymentsand other orms o pro t trans ers (trans er pricing items,non-business costs, payments to low-tax territories,

ringe bene ts, gi ts, and donations etc.).

Fiji (2009 rate = 29%)

The corporate income tax rate applies to companiesincorporated in Fiji and branches o non-resident companies.Dividend distribution out o ull corporate tax paid retainedearnings is not subject to any urther income tax. With e ect

rom 1 January 2008, an additional 15 percent normal taxis charged on remittance o branch pro ts on which ullcorporate income tax has not been paid.

Finland (2009 rate = 26%)


France (2009 rate = 33 1/3%)

For scal years ending a ter 1 January 2007, the corporatetax rate is 33.33 percent. A 3.3 percent social contribution isapplicable to the portion o corporate income tax exceeding

EUR 763,000 resulting in an overall tax rate o 34.43 percent( or this portion). Companies which have a turnover o upto EUR 7.63 million and where individuals hold at least75 percent o the share capital (or which are owned bycompanies meeting the same conditions) are subject to acorporate income tax rate o 15 percent. This applies to thepart o the taxable pro t up to EUR 38,120. These companiesare exempted rom the 3.3 percent contribution.

Germany (2009 rate = 29.44%)

The overall income tax rate or corporations includescorporate income tax at a rate o 15 percent, solidarity

surcharge at a rate o 0.825 percent (5.5 percent o thecorporate income tax), and local trade tax. The local trade taxgenerally is in a range between 7 percent and 17.15 percent,assuming a municipality multiplier (Hebesatz) ranging normally

rom 200 percent to 490 percent. (The average multiplieror 2007 was 389 percent. The minimum trade tax multiplier

is 200 percent.) The local trade tax is not deductible as abusiness expense rom 2008 onwards.

Gibraltar (2009 rate = 27%)

Small companies (those with taxable pro ts less than GBP35,000 and whose income is at least 80 percent derived romtrading) are taxed at 20 percent. With e ect rom 2010, thegovernment o Gibraltar has announced that the corporatetax rate will be reduced to 10 percent. Companies pay taxon income that is accrued and derived in Gibraltar. I it canbe shown that income is not accrued and derived in Gibraltar,that company can apply to the Commissioner o IncomeTax to have that income exempt rom tax in Gibraltar.This is subject to certain conditions and restrictions.

Greece (2009 rate = 20%/25%)

The 25 percent rate applies to listed AE companies(corporations) and to EPE entities (limited liability companies).The same rate applies to domestic unlisted AE companies,banks, and credit institutions operating as co-operativesand branches o oreign entities. General partnerships (OE)and limited partnerships (EE) are considered legal entities inGreece and are subject to a corporate tax rate o 20 percent

or scal year 2009. A 3 percent surcharge applies to grossrental income, but the surcharge may not exceed the primarycorporate tax.

Guatemala (2009 rate = 31% or 5%)

The Guatemalan corporate income tax system is based on theterritoriality principle; all Guatemalan-source income is taxed.As o 1 July 2004, the taxpayer can choose either to be taxedat 5 percent on gross income (the general system) or at 31percent rate on taxable income (the optional system).Under the 31 percent on taxable income system,corporate income tax is paid annually but advanced inquarterly instalments. Under the 5 percent on grossincome system, corporate income tax is paid monthly.

Guernsey (2009 rate = 0%)

Banks are taxed at a corporate income tax rate o 10 percentand utility companies and companies with income romGuernsey real estate are taxed at 20 percent.

Honduras (2009 rate = 30%)

The overall income tax rate or corporations comprises

a 25 percent corporate income tax rate and a temporary5 percent solidarity surcharge that applies i the taxableincome exceeds HNL 1 million. In addition, there is anet assets tax o 1 percent o the value o the assets


8/8/2019 KPMG's Tax 2009


Corporate Tax Rates Footnoteso the company less allowances or certain accounts andaccumulated tax depreciation. Net assets tax is payableonly to the extent it exceeds the corporate income tax.

Hong Kong (2009 rate = 16.5%)

Hong Kong SAR is a special administrative region o thePeoples Republic o China. The 16.5 percent rate (with e ect

rom the assessment year 2008/09) applies to Hong Kongsourced pro ts that are derived rom a business carried onin Hong Kong. O shore pro ts, capital gains, dividends, andmost Hong Kong bank deposit interest income are exempt

rom tax. Pro ts derived rom certain securities or typeso business (such as quali ying debt instruments or pro tsderived rom the business o reinsurance o o shore risksby a pro essional re-insurer) are either exempt rom tax orsubject to a concessional rate o 8.25 percent (hal o the16.5 percent standard rate).

Hungary (2009 rate = 16% plus 4%)

The corporate income tax rate is 16 percent, which canbe reduced to 10 percent on the rst HUF 50 million(approximately USD 250,000) o taxable income i thecompany meets certain requirements. (The excess is subjectto tax at 16 percent). E ective rom 1 September 2006, aso-called solidarity tax o 4 percent was introduced or allcompanies. This is based on pretax pro t modi ed by certainitems. An additional local business tax o up to 2 percentis applicable based on the total trading turnover (two timesthe local business tax is deductible or corporate income taxpurposes). In addition e ective rom 1 July 2007, a minimumtax (AMT) was also introduced. The AMT base is calculatedas 2 percent o total incomes less cost o goods sold (COGS)and value o mediated services, plus other adjustments.I it exceeds the greater o pro t be ore tax or the normal

corporate income tax base, then either a declaration needsto be attached to the tax return or tax needs to be paid onthe minimum tax base.

Iceland (2009 rate = 15%)

The corporate income tax rate or resident limited liabilitycompanies is 15 percent. The income tax rate or otherresident legal entities, such as limited partnerships,associations, private nonpro t institutions, trusts unds,estates o deceased persons, and bankrupt estates is23.5 percent. Tax is imposed on net income, a ter allowabledeductions. The tax rate and deduction regime or non-

resident entities depends on the type o income and theentitys residence. Interest derived by non-residents romIcelandic sources is not subject to corporate income taxin Iceland.

India (2009 rate = 33.99%)

Domestic companies are taxed at the rate o 30 percent;however pro ts rom li e insurance business in India aretaxed at a rate o 12.5 percent. Foreign companies are taxedat a rate o 40 percent. A minimum alternate tax (MAT) islevied at 10 percent o the adjusted pro ts o companieswhere the tax payable is less than 10 percent o their bookpro ts. Fringe bene t tax is levied at the rate o 30 percenton taxable ringe bene ts. Dividend distribution tax (DDT) islevied at 15 percent on dividends distributed by a domestic

company. Surcharge and education cess is applicable on theabove taxes. A 10 percent surcharge is applicable in case odomestic companies i total income is in excess o INR 10million and a 2.5 percent surcharge is applicable in case o

oreign companies i the total income is in excess o INR 10million. Education cess o 3 percent is applicable on incometax plus surcharge, i any. Wealth tax is imposed at a rate o1 percent on the value o speci ed assets held by thetaxpayer in excess o the basic exemption o INR 1.5 million.Securities transaction tax (STT) is levied on the value otaxable securities transactions in equity shares and unitso equity oriented unds.

Indonesia (2009 rate = 28%)

Certain income received by non-residents is taxed at 20percent. An additional 20 percent branch pro t tax is imposedon the a ter-tax pro ts o a permanent establishment (subjectto income tax treaty relie ).

Iran (2009 rate = 25%)

The corporate tax rate is a fat 25 percent. There are no otherdirect taxes imposed on the pro t or the dividend distributionsor reserves. All corporate entities engaged in any kind ocommercial activity in the Free Trade and Industrial Zones

are exempt rom payment o corporate income tax or 15years rom the date o commencement o operations in thezones. There is no legislation regarding capital gains or losses.Except or the trans er o reehold property and stocks/sharesin corporate entities which are subject to tax at xed rateson trans er, gains/losses are aggregated with other corporateresults. Trans er o reehold property is subject to tax at a rateo 5 percent o the taxable value. Trans er o shares and theirright in the listed companies on the Tehran Stock Exchangeis subject to tax at 0.5 percent o the sales price. Trans er oshares in other corporate entities is taxedat the rate o 4 percent o the par value.


8/8/2019 KPMG's Tax 2009


Ireland (2009 rate = 12.5%)

The corporate income tax rate is 12.5 percent oractive income o new operations. A corporate incometax rate o 25 percent applies to passive income and income

rom certain land dealing activities, mining, and petroleumactivities. A corporate income tax rate o 20 percent appliesto dealing in undeveloped residential land in Ireland. A specialcorporate income tax rate o 10 percent applies to activetrading income earned by certain existing manu acturingcompanies. This special corporate income tax rate will

expire in 2010 and will be replaced by the standardcorporate income tax rate o 12.5 percent. Capital gainsare taxed at 22 percent with a participation exemption

or gains on disposals o shareholdings o 5 percentor more o companies resident in EU or income taxtreaty states.

Isle o Man (2009 rate = 0%)

A rate o 10 percent applies to certain pro ts o licensedbanks and to pro ts derived rom Isle o Man land or property.A distributable pro ts charge (DPC) applies to the pro tso companies that are not considered to be distributing

companies to the extent that they are owned by Isle o Manresident individuals. Distributing companies include those thatare wholly owned by non-Manx resident individuals, are listedon a recognized stock exchange, and distribute a prescribedproportion o their distributable pro ts. The DPC does notapply to accounting periods commencing on or a ter6 April 2008.

Israel (2009 rate = 26%)

The corporate income tax rate will be reduced to 25 percentrom 2010. Financial institutions are subject to a pro t tax

and a payroll tax at a 15.5 percent rate; both o which are

deductible or corporate income tax purposes. Companieswith a bene cial enterprise are taxed at a reduced tax ratethat varies depending on the national priority zone in whichthe company is located, the type o incentive scheme, andthe level o oreign ownership in the company. Capital gainsare subject to 25 percent tax although special terms apply toassets purchased prior to 31 December 2002. Dividends rom

oreign sources are subject to a 25 percent tax with a creditor oreign withholding tax, or in certain circumstances, the

corporate income tax rate with an underlying tax credit or taxpaid by the distributing company. According to a temporaryprovision which applies to 2009 only, dividends received in2009 rom oreign sources may be subject to 5 percent taxwith a credit or oreign withholding tax.

Italy (2009 rate = 31.4%)

The overall income tax rate o 31.4 percent or corporationsconsists o a 27.5 percent corporate income tax (the IRES)and a basic 3.9 percent regional tax (the IRAP). The taxablebasis di ers as certain expenses are allowed or IRESpurposes but not or IRAP. Italian regions have the right tovary the basic IRAP rate up to 1 percent. Starting rom the taxyear in progress as o 31 December 2008, it will be possibleto deduct or IRES purposes an amount equal to 10 percento the IRAP paid. This amount should in principle correspond

to IRAP on interest and personnel expenses (usuallydisallowed items or IRAP purposes).

Jamaica (2009 rate = 33 1/3%)

Companies must declare their income and make prepaymentso corporate tax in our instalments (15 March, 15 June, 15September, and 15 December) during the taxable year. I the

nal tax exceeds the prepayments, the balance is payable bythe due date o ling the income tax return (15 March o theyear ollowing the year o assessment).

Japan (2009 rate = 40.69%)

Japanese corporate income taxes consist o corporationtax (national tax), special local corporate tax (national tax),business tax (local tax), and pre ectural and municipalinhabitant taxes (local tax). The corporation tax rate is 30percent (22 percent on the rst JPY 8 million or companieswith paid-in capital o JPY 100 million or less). Local tax ratesvary depending, or instance, on the local government policyand the amount o paid-in capital o the company. The taxrate shown is the illustrative e ective tax rate or a companyin Tokyo with paid-in capital o more than JPY 100 milliona ter taking into account a deduction or business tax.Since size-based business tax is also levied on a company

with paid-in capital o more than JPY 100 million, in additionto the income-based business tax, the overall tax rate or suchcompanies can be higher than 40.69 percent. The size-basedbusiness tax rates in Tokyo are 0.504 percent on the added-value component tax base (total o labor costs, net interestpayments, net rent payments, and income/loss o the currentyear) and 0.21 percent on the capital component tax base(total paid-in capital and capital surplus). For companieswith paid-in capital o JPY 100 million or less, the e ectivetax rate in Tokyo is 42.05 percent with no size-basedbusiness tax imposed.

Jordan (2009 rate = 15%/25%/35%)The corporate income tax rate o 15 percent applies toindustry, hotels, hospitals, transportation, contracting,and other sectors approved by the Council o Ministers.The corporate income tax rate o 35 percent applies to banks,


8/8/2019 KPMG's Tax 2009


Corporate Tax Rates Footnotesnancial and nance companies, exchange companies, and

brokerage companies. The corporate income tax rate o 25percent applies to all other companies.

Kazakhstan (2009 rate = 20%)

Branches o oreign companies operating in Kazakhstan aresubject to an additional branch pro ts tax o 15 percent otheir a ter-tax income, resulting in an overall tax rate o 32percent or branch o ces. Income tax treaties may reducethe branch pro ts tax.

Korea, Republic o (2009 rate = 24.2%)The corporate income tax rate is 24.2 percent (includingresident surtax) i taxable income exceeds KRW 200 million.For taxable income below KRW 200 million a corporateincome tax rate o 12.1 percent (including residentsurtax) applies.

Kuwait (2009 rate = 15%)

A fat rate o 15 percent has been introduced e ective oryears commencing a ter 3 February 2008. Prior to this datethe tax rate ranged rom 0 percent to a maximum o 55percent based on bands o taxable pro t.

Latvia (2009 rate = 15%)

There are our regions in Latvia called Special EconomicZones (SEZ). Companies operating in these zones are subjectto a corporate income tax rate o 25 percent, but are grantedan 80 percent corporate income tax relie .

Libya (2009 rate = 40%)

The annual corporate income tax rates are on a progressiverate structure as ollows: the rst LYD 200,000 at 15 percent;the ollowing LYD 300,000 at 20 percent; the ollowing LYD500,000 at 25 percent; the ollowing LYD 500,000 at 30percent; the ollowing LYD 500,000 at 35 percent; andmore than LYD 2 million at 40 percent.

Lithuania (2009 rate = 20%/13%)

The general corporate income tax rate is 20 percent,however a rate o 13 percent applies i the average numbero employees o an entity does not exceed 10 and theincome does not exceed LTL 500,000 (EUR 144,810)(additional conditions have to be satis ed). Currently,corporate income tax relie s are available or agriculturalcompanies, ree economic zone companies, manu acturingcompanies employing people with disabilities, socialcompanies, and cooperatives. Furthermore, companiesimplementing investment projects can apply or corporateincome tax relie . All relie s are applied only i certainconditions are satis ed and their impact on corporateincome tax varies with regard to the particular situation.

Additionally, the income o investment companies withvariable capital and insurance companies income rominvestments (except or dividends) are exempt romcorporate income tax.

Luxembourg (2009 rate = 28.59%)

A corporate income tax rate o 21.84 percent includesa 4 percent employment und contribution. The municipalbusiness tax rate varies; or example the rate or the cityo Luxembourg is 6.75 percent.

Macau (2009 rate = 12%)An exemption on taxable income up to MOP 200,000 hasbeen announced by the government in 2009 and wasintroduced retrospectively or 2008. Income between MOP200,000 and MOP 300,000 is taxable at 9 percent; 12 percentis applicable to the portion o income over MOP 300,000.

Macedonia (2009 rate = 10%)

A resident company is liable or tax on its worldwide income.No tax is due on undistributed pro ts. Tax becomes due atthe moment o payment or dividends or other distributions

rom pro ts. At the end o the year, a separate tax payment

is due on unrecognized expenses. There are no local taxeson corporate income. There is a 10 year pro ts tax holidaycovering investments in technological industrial zones

Malaysia (2009 rate = 25%)

Resident companies with paid up capital o MYR 2.5 millionand below at the beginning o the basis period or a Yearo Assessment (YA) are subject to a corporate income taxrate o 20 percent on the rst MYR 500,000 o chargeableincome. For chargeable income in excess o MYR 500,000,the corporate income tax rate is 25 percent. Leasingincome ( rom moveable property) derived by a permanent

establishment in Malaysia is taxed at a rate o 25 percentwhereas a non-resident corporation with no Malaysianpermanent establishment is taxed at a rate o 10 percent.A special 5 percent rate applies to corporations whichconduct an inward reinsurance business or an o shoreinsurance business. Income generated by a li e und o aninsurance company is taxed at a rate o 8 percent. A non-resident corporation with shipping or air transport incomeis taxed at a rate o 25 percent either on 5 percent o itsgross shipping or air transport income derived rom Malaysiaor on that part o the Malaysian gross income computedas a proportion o worldwide pro ts to worldwide grossincome. Income o resident corporations derived rom thetransportation o passengers or cargo on Malaysian ships isexempt. Companies engaged in petroleum operations aresubject to a rate o 38 percent.


8/8/2019 KPMG's Tax 2009


Malta (2009 rate = 35%)

Malta operates a ull imputation system o taxation or bothresidents and non-residents, which ensures the ull relieo economic double taxation upon the distribution o taxedpro ts by companies resident in Malta. On the distribution otaxed pro ts, the shareholders may opt to claim a partial/ ullre und o tax paid by the distributing company. As a generalrule, the tax re und amounts to six-sevenths o tax paid.The re und will be reduced to two-thirds i the shareholderclaims double-taxation relie and ve-sevenths in those cases

where the distributed pro ts are derived rom passive interestor royalty income being subject to oreign tax at less than 5percent. Dividends and capital gains derived rom participationholdings will quali y or a ull re und. The Malta tax su eredon distributed pro ts hence ranges between 0 percent and10 percent. Tax paid on pro ts derived, directly or indirectly,

rom immovable property situated in Malta is not availableor re und.

Mauritius (2009 rate = 15%)


Mexico (2009 rate = 28%)

E ective 1 January 2008, a new business fat tax (IETU) is inorce. This fat tax is paid at the rate o 17 percent or 2009 on

a cash fow basis. The IETU applies to income rom the saleo goods, rendering o independent services, and temporaryuse or enjoyment o goods, with certain expenses being taxdeductible. The IETU is a minimum tax in respect to incometax (IT), but with a wider taxable base as some tax deductionsauthorized or IT are not permissible or IETU. Both taxesmust be computed and the excess IETU over IT is payable.

Montenegro (2009 rate = 9%)

Taxable pro t is calculated by adjusting the companyspro t or loss declared in the P&L account according to theprovisions o the Corporate Income Tax Law. Adjustmentsinclude certain disallowed costs, as well as depreciation.Operating losses stated in the tax balance may be carried

orward or ve years and o set against operating pro tdeclared in the tax balance. Capital losses can be carried

orward and o set against capital gains or up to ve years.

Mozambique (2009 rate = 32%)

Contrary to the general rate, income o agricultural companiesor organizations is taxed at 10 percent until 31 December2010. Agricultural, cultural, and artisan cooperatives bene t

rom a 50 percent reduction in the tax rate, resulting in ane ective tax rate o broadly 16 percent. Generally, certaininvestment projects approved by the government o

Mozambique prior to 1 January 2003 are subject tolower tax rates, applicable until the end o the project.Those investment projects approved as o 1 January 2003are, in general, subject to the standard tax rate o 32 percentbut receive a tax credit o 5 percent o the investmentmade in the rst ve years o a project.

Netherlands (2009 rates = 20%/25.5%)

It has been proposed that 2009 taxable pro ts o up to EUR200,000 will be taxed at 20 percent and pro ts over EUR200,000 will be taxed at 25.5 percent. For 2008 the rateswere changed retroactively so that taxable pro ts o upto EUR 275,000 are taxed at 20 percent and pro ts overEUR 275,000 are taxed at 25.5 percent. The rates originallyapplicable or 2008 were 20 percent on pro ts up to EUR40,000, 23 percent on pro ts between EUR 40,000 and EUR200,000, and 25.5 percent on pro ts over EUR 200,000.

Netherlands Antilles (2009 rate = 34.5%)

The corporate income tax rate o 34.5 percent includes a 15percent surcharge although or certain activities, tax holidaysare available which generally lower the corporate income taxrate to 2 percent. Companies operating in special economiczones are also taxed at a rate o 2 percent. The incomeo quali ed limited liability companies engaged in certain

nancial activities is exempt.

New Zealand (2009 rate = 30%)

Ten percent o general insurance premiums and lm hirepayments, paid to non-residents, are deemed to have aNew Zealand source and are there ore taxable. The NewZealand government has introduced the large budgetscreen production grant scheme which, provided certainrequirements are met, allows or a rebate o 15 percent oquali ying New Zealand production expenditure on lm andtelevision production companies. A lm or television companyis eligible or the grant i it is a resident company or a oreigncorporation operating with a permanent establishment inNew Zealand.

Nigeria (2009 rate = 30%)

Nigerian companies are also required to pay education taxat 2 percent o their assessable pro ts or each tax year.Please note that this requirement is not applicable to nonresident companies with a taxable presence in Nigeria.

Norway (2009 rate = 28%)

There are no notes or 2009.Oman (2009 rate = 12%)

The corporate income tax rate is 12 percent on taxable pro ts


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Corporate Tax Rates Footnotesexceeding OMR 30,000 and applies to allcompanies incorporated in Oman and branches andpermanent establishments in Oman o companiesincorporated in the other Gul Co-operation Council (GCC)countries (Bahrain, Kuwait, Qatar, Saudi Arabia, and UnitedArab Emirates). In the case o branches and permanentestablishments in Oman o non-GCC companies, the taxrates range rom 0 percent to 30 percent depending uponthe amount o taxable pro ts.

Pakistan (2009 rate = 35%)

From tax year 2007 onwards, a standard tax rate o 35percent is applicable to all companies except small companiesthat were taxed at the rate o 20 percent up to tax year 2008and at the rate o 20 percent to 35 percent, or tax year 2009,depending on their turnover. The rates mentioned in the tableup to tax year 2006 were applicable to public companies.During the years 1999 to 2006, private companies paid ratesranging between 37 percent and 45.15 percent, and bankingcompanies paid rates ranging between 38 percent and58 percent.

Palestine (Estimated 2009 rate = 16%)


Panama (2009 rate = 30%)

Corporate income tax due is the higher o 30 percent onet taxable income or 1.4 percent o Panamanian-sourcegross income (alternative minimum tax). Under certaincircumstances, corporations may request a holiday romthe application o alternative minimum tax. I there is nodistribution o the a ter tax pro t, or i the distributed amountis less than 40 percent o net earnings, a complementary taxo 4 percent is due as an advanced dividend tax.

Papua New Guinea (2009 rate = 30%)For mining and gas companies, the corporate income tax rateis 30 percent. Existing petroleum projects are subject to a50 percent tax rate while new petroleum projects are taxedat either 45 percent or 30 percent depending on when thelicense is issued. Non-resident mining companies pay tax at40 percent. In case o other businesses, a branch o a oreigncompany is taxed at 48 percent. Non-residents are taxed ona deemed pro t basis (shipping at 5 percent - an e ective taxrate o 2.4 percent o gross income; insurance at 10 percent -an e ective tax rate o 4.8 percent o gross income).Foreign contractors can elect to be taxed on a deemedpro t basis o 25 percent (an e ective tax rate o 12percent o gross income).

Paraguay (2009 rate = 10%)

I a company distributes dividends to shareholders domiciledin Paraguay, a 5 percent tax will be applied to the distributeddividends, resulting an e ective rate o 14.5 percent.To dividends distributed to shareholders not domiciled inParaguay, a 15 percent rate will be applied resulting in ane ective rate o 27.33 percent. There are di erential e ectiverates or the ollowing services provided by non-domiciledentities: 3 percent or insurance premiums; 3 percent orpeople transportation ares/ reight o goods; 3 percent or

communications (phone, internet, and similar); 4.5 percent ornews agencies; 12 percent or distributors o movies, cinema/ television, and similar; and 4.5 percent or trans er o the useo containers. For nance received rom external banks, thecurrent e ective rate is 6 percent. Corporate income earnedby individuals/ oreign entities or their activities carried outin Paraguay (independently o their branches, agencies, orpermanent establishment) is currently taxed at an e ectiverate o 15 percent.

Peru (2009 rate = 30%)

Branches o oreign entities are subject to a 4.1 percent

tax rate. A tax on net assets has been introduced withe ect rom 2005. For 2009 the rate is 0.4 percent and itwill applied to corporate taxpayers with assets up to PEN 1million (approximately USD 300,000). The tax is based on thenet assets o domiciled corporate taxpayers a ter deductingcertain balance sheet items speci ed in the legislation.This tax can be applied as a tax credit against corporateincome tax.

Philippines (2009 rate = 30%)

Corporations and resident oreign corporations aresubject to the 2 percent minimum corporate income tax

(MCIT) starting in their ourth year o operation. The MCITis based on gross income and is paid in lieu o the 30 percentcorporate tax on net income whenever it is greater thanthe latter. A 10 percent improperly accumulated earningstax (IAET) is imposed on undistributed earnings o closely-held corporations. Branches o oreign corporations, as wellas Philippine Economic Zone Authority (PEZA) registeredcorporations that are paying the special tax on gross incomeearned in lieu o all taxes, are exempt rom the IAET.

Poland (2009 rate = 19%)

The corporate income tax rate is 19 percent, with no other

taxes on corporate income. However, a 50 percent penaltyrate applies or trans er pricing adjustments i a taxpayeris unable to provide, within seven days o a request by thetax authorities, trans er pricing documentation (as required


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under statute) in respect o transactions with related parties.Companies located in the special economic zones maybene t rom tax exemptions.

Portugal (2009 rate = 25%)

There is a reduced corporate income tax rate o 12.5percent applicable to the rst EUR 12,500 o taxable income.The remaining income will be taxed at the general rate o 25percent. These rates are increased by a municipal surcharge(Derrama) varying rom 0 percent to 1.5 percent to be leviedon taxable pro t.

Qatar (2009 rate = 35%)

The 35 percent rate is the maximum rate in a progressiverate structure and is applicable to income in excess o QAR5 million. However, tax is only imposed on oreign companiesoperating in Qatar or Qatari companies with oreignshareholders. Companies which are wholly owned byQatari shareholders or GCC nationals are exempt.Certain companies established pursuant to an emireedecree may be subject to a speci c fat tax rate ratherthan the standard progressive rates.

Romania (2009 rate = 16%)Pro ts earned rom nightclubs, casinos, discotheques, andsport-betting organizers are subject to tax at the general rateo 16 percent, although the tax payable cannot be lower than5 percent o the taxpayers quali ying gross revenue earnings.A special relie is available or small companies.

Russia (2009 rate = 20%)

Federal tax authorities determine the applicable tax rates,however, tax payments are split into ederal taxes (2 percent)and regional taxes (18 percent with the right to reduce to 13.5percent). Interest income on state securities is taxed at 15

percent or 0 percent.Saudi Arabia (2009 rate = 20%)

Corporate income tax is payable by non-Saudi shareholdersonly. Zakat (a religious tax) at 2.5 percent is levied on Saudiand the Gul Cooperation Council (GCC) shareholders, theGCC countries consisting o Saudi Arabia, Kuwait, United ArabEmirates, Bahrain, Qatar, and Oman. In addition, withholdingtax o 5 percent is payable on dividends distributed to non-resident shareholders.

Serbia (2009 rate = 10%)

Taxable pro t is calculated by adjusting the companyspro t or loss declared in the P&L account according to theprovisions o the Corporate Income Tax Law. Adjustmentsinclude certain disallowed costs, as well as depreciation.

Singapore (2009 rate = 18%)

The corporate income tax rate or 2009 re ers to the Yearo Assessment (YA) 2009 and applies to income derived inthe nancial year ended 2008. It was proposed in Budget2009 that with e ect rom YA 2010 ( or income derived romthe nancial year ending 2009), the corporate tax rate bereduced to 17 percent. A partial tax exemption is grantedon 75 percent o the rst SGD 10,000 o regular incomeand 50 percent on the next SGD 290,000. For the rst threeassessment years or new companies, ull tax exemption o

regular income up to SGD 100,000 can be claimed providedcertain conditions are met and a partial tax exemption o50 percent on the next SGD 200,000 o regular income.A concessionary tax rate o 10 percent or lower applies toentities engaged in certain prescribed activities or grantedtax incentives.

Slovak Republic (2009 rate = 19%)


Slovenia (2009 rate = 21%)

The corporate income tax rate will be reduced to 20 percentin 2010. Taxable persons per orming non-pro t activities areexempt. There is also a special rate o 0 percent which undercertain conditions applies to investment unds, pension unds,insurance undertakings or pension plans, and venture capitalcompanies (only or activities based on venture capital).

South A rica (2009 rate = 34.55%)

The corporate income tax rate is 28 percent. However, SouthA rica imposes an additional secondary tax on companies(STC) at 10 percent on any net dividends declared bythem. There ore, i a company distributes 100 percent oits a ter-tax earnings as a dividend, an e ective tax rate o34.55 percent will apply. This does not apply to gold miningcompanies (which are taxed on a ormula basis) or to SouthA rican branches o oreign entities which are taxed at a rateo 33 percent. It is proposed that STC will be replaced by awithholding tax rom second hal o 2010.

Spain (2009 rate = 30%)

Companies with tax years starting rom 1 January 2008 aresubject to tax at 30 percent. Where a companys turnover(alone or combined with other group companies) in theimmediately preceding tax period is less than EUR 8 million,it is taxed on the rst EUR 120,202 o taxable income at 25percent with the balance o its taxable income being subjectto tax at 30 percent. Entities taxed at 25 percent are generalmutual insurance companies; social wel are institutions andquali ed social security mutual entities or accidents at work


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Corporate Tax Rates Footnotesand occupational diseases; mutual guarantee entities andguarantee underwriting companies regulated by Law 1/1994o 11 March on the Legal Regime or Mutual GuaranteeSocieties Registered with the Bank o Spain; and credit andrural credit co-operatives. Tax protected co-operatives will betaxed at 20 percent, except in respect o results not related totheir corporate purpose, which will be taxed at thegeneral rate.

Sri Lanka (2009 rate = 35%)

For the assessment year 2009/10 (1 April 2009 to 31 March2010), the corporate income tax rate is 35 percent. However,small companies (with taxable income not exceedingLKR 5 million and not being a holding, subsidiary, or anyassociate company o a group o companies) are taxed at15 percent and companies in the rst ve years o listingare taxed at 33.33 percent. Certain identi ed sectors alsoenjoy concessionary rates, such as exports (other thantraditional products), tourism, agriculture, and constructionat 15 percent and venture capital companies/specializedhousing banks at 20 percent. Dividends or the repatriation opro ts by a non-resident company are taxed at 10 percent.

An economic service charge (ESC) is 1 percent o turnover(although lower rates are applicable where companies bene t

rom tax holidays or concessionary rates) but can be set-oagainst corporate tax liability. The social responsibility levyis 1.5 percent on income tax or year 2009/2010. A deemeddividend tax at 15 percent is applicable or non-declarationo dividends.

Sudan (2009 rate = 10%/15%/30%/35%)

Industrial companies are subject to corporate income tax at10 percent; trading, real estate, and banks service companiesare subject to corporate income tax at 15 percent; tobacco

companies are subject to corporate income tax o 30 percent

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