Corporate and Indirect Tax Survey 2007 (KPMG 2007)

KPM GsCorporateand
IndirectTaxRateSurvey2007
TAX
Commentary
Corporate Tax Rates
CorporateTaxRates1993-2007 4
CorporateTaxRates-ComparisonCharts 9
CorporateTaxRatesFootnotes 11
Contents
Indirect Tax Rates
I ndirectTaxRates2007 24
I ndirectTaxRatesComparisonCharts 27
I ndirectTaxRatesFootnotes 29
2007KPM GI nternational.KPM GI nternationalprovidesnoclientservicesandisaSwisscooperativewithwhichtheindependentmemberfirmsoftheKPM Gnetworkareaffiliated.
1
1 KPM GsCorporateandI ndirectTaxRateSurvey2007
KPM GsCorporateand
I ndirectTaxRateSurvey
2007Commentary
Followingtheworldwideinterestinourlongtermcorporatetaxratesurvey, publishedin
Novemberlastyear, whichtrackedtrendsincorporatetaxratesfrom1993throughto
2006, wehavemadesomechangestotheinformationwepresentinthisannualsurvey.
Ratherthangivingasimplesnapshotoftaxratesin2007, wehaveaddedthe2007
ratestoourlongtermseriestoprovidea15yearrecord.Wehavealso, forthefirst
time, includedindirecttaxrates, thatisValueAddedTax(VAT)orGoodsandServices
Tax(GST).
Wehavedonethisbecauseoftheincreasingimportancethatindirecttaxesseemtobe
playingintherevenue-gatheringstrategiesofmanycountriesaroundtheworld.I tistoo
earlytocallthisaworldwidetrend.Butthereisacleartendencyamongnationsin
competitiontoattractandkeepinwardinvestment, toreducetheircorporatetaxrates
andseektomakeuptheshortfallwithincreasesinindirecttaxes.Thisisratherthan
relyingsolelyongrowthbroughtaboutbycorporateinvestmenttoexpandthetaxbase.
Thesetacticssuggestthataswellasattractingnewinvestment, retainingcurrent
investmentsisasuccessinitself.
AnexpositionofthispolicywasmadeinaspeechinNovemberlastyearbySingapores
PrimeM inister, M r.LeeHsienLoong.SpeakingtotheSingaporeParliament, hesaid: I f
wehavetobringourcorporatetaxdown, everypercentagepointwebringitdownwill
costus$400millionayear.I tisbigmoney.Therefore, weneedtoconsiderraising
indirecttaxes, inotherwords, theGoodsandServicesTax(GST).I tisnowfivepercent;
I thinkweneedtopushituptosevenpercent.Evensevenpercentwillstillbelower
thannearlyallothercountrieswhichhaveGSTorVAT.Butifweraiseitfromfive
percenttosevenpercent, itwillgiveuspreciousextraresourcestoimplement
socialprogrammes.
ThisisexactlywhattheSingaporeGovernmentdidinits2007Budget, announcinga2
percentcutincorporatetaxratesto18percentfromnextyear, andanincreaseinGST
to7percent.
Despitethisincrease, asM r.Leesaid, SingaporeretainsoneofthelowestVAT/GST
ratesKPM Gfirmshaverecordedforthissurvey.Leavingasidethosecountrieswhere
VAT/GSTortheirequivalentareleviedbystatesorprovincesratherthanthefederal
authority, thelowestratewehavefoundisAruba, whichchargesjust3percent.The
highestratewefoundis25percent, chargedbySweden, DenmarkandNorway.
O nthelevelofregionsandeconomicalliances, ourresearchhasshownthatthe
averageVATrateintheEUishigherat19.5percentthantheaverageintheO ECD
countries(17.7percent), intheAsiaPacificcountries(10.8percent)ortheLatinAmerican
countries(14.2percent).I tisdifficulttodrawanyspecificconclusionsfromthisbecause
ofthehugenumberofspecialratesandexceptionswhichmanycountriesapplyto
theirindirecttaxregimes.Butoverall, indirecttaxesdoseemtobetakingon
moresignificance.
KPM G s Corporate and I ndirect Tax Rate Survey 2007 2
AcrosstheO ECDcountries, forexample, theaverageVAT/GSTratehasheldsteady
overthepastsixyearswhiletheaveragecorporateincometaxratehasfallenbymore
thanatenth, from31.4percentto27.8percent.Sowithoutchangingrates, VAT/GSTand
VAT/GSTtypetaxeshavebecomesteadilymoreimportantassourcesofrevenue.
I n2003(thelastyearforwhichfiguresareavailable)theaveragecontributionof
VAT/GSTtypetaxestogovernmentrevenuesacrosstheO ECDroseto32.1percent,
havingstayedbetween31.2and31.7percentforeachofthepreviousfiveyears.I n
someO ECDcountries, M exicoandTurkeyinparticular, VAT/GSTalreadycontributes
around50percentofgovernmentrevenues.
Thisseemstobeatrend, butacautiousone, andsomecommentatorshaveaskedwhy
governmentsdon trelyevenmoreheavilyonindirecttaxrevenues.O neansweristhat
higherindirecttaxesarepoliticallydifficulttointroduce.Thelinkbetweenhigherindirect
taxesandhigherpricesisobvioustoanyonewhobuysgoodsandservices, butthelink
betweenlowercorporatetaxratesandincreasedinwardinvestment, withtheincreased
employmentandinfrastructuredevelopmentitcanbring, islesswellunderstood.
Thispresentsgovernmentswithadifficulttaskincommunicatingthebenefitsofalow
corporatetaxstrategy, especiallyifitiscombinedwithhigherindirecttaxes.I tmaywell
beinthelongterminterestsofacountrytofollowthispath, butvotersmayneed
persuadingofthebenefitsofpayingtodayforabettereconomytomorrow.
I nrecognitionofthisEUgovernmentshavefocusedinsteadonmodernizingtheirVAT
systemtobetterreflectcurrentbusinessenvironment.Forexample, thereviewofthe
VATrulesforthefinanceandinsurancesectorsisintendedtocreateclearerlegislation
whichiseasiertoadministerandcomplywith.FromthisitflowsthatVATrevenues
fromthesesectorswillbemorestableandtaxleakagewillbeminimized.
Workisalsounderwaytoreformthebasicstructureofthetaxincertainareas, suchas
thosefordeterminingwhichEUjurisdictionisentitledtotheVATbeingcollectedat
present.M uchofthelegislativedebatehasbeenfocusedonhowtoalterthesystemto
betterreflecttaxationwhereconsumptionactuallyoccurs, principallyforservicesthat
canbesuppliedatadistance(e.g., e-commerce, telecommunications, etc.).The
outcomeofanynewlegislationinthisarea, whichcouldcomeintoeffectasearlyas
2010, willseeashiftofVATrevenuefromonecountrytoanother, principallyfromlow-
ratecountriestohighratecountries.
AndnomentionofEUVATmodernizationissueswouldbecompletewithouta
referencetotheneedtotacklethecarousel/missingtraderfraudissuewhichiscosting
EUgovernmentsverylargesumsinlostrevenue.Thisisdrivingurgentlegislative
changeacrosstheEU.
3 KPM G s Corporate and I ndirect Tax Rate Survey 2007
Forcompanies, thisworldwiderefocusingontoindirecttaxationhasimmediate
consequences.O neoftheadvantagesforgovernmentsofindirecttaxesovercorporate
profitstaxisthattheysupplyasteadyflowoffundsthroughouttheyear, ratherthan
lumpsumsatwidelyspacedintervals.Todeliverthisbenefit, companies, intheir
capacityastaxcollectors, havetohaveaccountingsystemsthatcanprovideaccurate,
realtimeinformationontransactionsandtheassociatedtaxliability.
Keepingsystemsuptodatewithtaxauthorities informationrequirementsisamajor
costandresourceissueforthebusinesssector.Asindirecttaxesbecomemore
importanttogovernments, soregulatorsareintensifyingtheirscrutinyofcompanies tax
systemstosatisfythemselvesthattaxrevenuesarenotatrisk.Wehavealreadyseen
thisprocessatworkintheemphasisthatgovernmentsareputtingontransferpricing
regulationsanddocumentation.I twillprobablybeafocusoftaxauthorityactivityforthe
foreseeablefuture, anditisimportantthatcorporatesrecognizetheimplicationsofthis
shift, andseektoensurethattheirsystemsandprocessesarerobust.
Wewillcontinuetomonitorandreportonthechangingrelationshipbetweencorporate
andindirecttaxratesinourfuturesurveys.Butfornow, thefocusremainsonheadline
corporatetaxrates.
O ursurveythisyearshowsthatcorporatetaxratesworldwidecontinuetofall, butthere
aresignsthattherateofdeclineisslowing, orhasatleastpaused.Globally, average
rateshavemoveddownfrom27.2percentlastyearto26.8percenttoday.Thisis
significantlylessthanthemajoryear-on-yearreductionsthatwesawinthelate1990s
andearly2000s.
O fthe92countrieswhichparticipatedinthecorporatetaxratesurveythisyear, 18
loweredtheirrateandtwoincreased.Thefactthattheoverallglobaldecreasewasso
slightsuggeststhatmostofthesecutswererelativelyminoradjustments.Themajor
exceptionwasTurkey, whichreporteda10percentcutto20percent.
SeveralsignificantreductionswereintheEU, where7ofthe27statesreportedacut,
thelargestbeingBulgariawhichcutratesby5percenttostandat10percent.Thistook
theEUaverageratetojustover24percent, 1.6percentlowerthanlastyear.By
comparisontheO ECD' saverageratehasfallenbylessthanonepercentto27.8
percent.I ntheAsiaPacificregion, followingI ndia' sratedecreasein2006, M alaysiahas
reduceditscorporateincometaxratebyonepercentwhereasSriLankahasincreased
itsrateby2.5percent.Thisleavestheregion' saverageratebroadlyunchangedatjust
over30percent, althoughthisislikelytochangenextyearwhenthefullimpactof
Chinasplannedtaxreductionsisfelt.
DespiteamaterialratereductioninArubaofsevenpercentandsmallerdecreasesin
ColumbiaandtheDominicanRepublic, theaveragerateforLatinAmericahasonlyfallen
by0.5percentto28percent.
I twouldbeinterestingtoconcludethatcorporatetaxrateshavereachedtheirnatural
lowpoint, andthatcountriesarenowturningtomoresophisticatedmethodsof
attractingandkeepinginwardinvestment.Thatmaybetrueinsomepartsoftheworld,
butitisclearthatcorporatetaxratesinEuropearestillbeingdrivendown, evenas
indirecttaxesremainhigh.Thereshouldbesomesignificantfurtherreductionsinthe
pipeline, fromtheU.K., Germany, Spain, SingaporeandChinatonamebutfive, thatwill
bereflectedinnextyearsreport.I tlooksasifinternationaltaxcompetitionhassome
waytogoyet.
LoughlinHickey
GlobalM anagingPartner, Tax
KPM GintheUnitedKingdom
CorporateTaxRates
1993-2007
OECD
European
Union
Asia -
Pacific
Latin
America
Country
1 J an 93
(%)
1 J an 94
(%)
1 J an 95
(%)
1 J an 96
(%)
1 J an 97
(%)
Albania
Argentina 33
Aruba
Australia 33 33 36 36 36
Austria 39 34 34 34 34
Bahrain
Bangladesh 40
Barbados
Belgium 40.17 40.17 40.17 40.17 40.17
Belize 35
Bolivia 25
BosniaandHerzegovina
Botswana
Brazil 25
Bulgaria
Canada 44.3 44.3 44.6 44.6 44.6
CaymanI slands
Chile 15
China 33
Colombia 35
CostaRica 30
Croatia
Cyprus
CzechRepublic 41 39 25
Denmark 34 34 34 34 34
DominicanRepublic 25
Ecuador 32
Egypt
ElSalvador 25
Estonia
Fiji 35
Finland 25 25 25 28 28
France 33.33 33.33 36.66 36.66 36.66
Germany 59.67 55.64 59 59 57.5
Greece 35 35 35 35 40
Guatemala 30
Honduras 40.25
HongKong 16.5
Hungary 18
I celand 33 33 33 33 33
I ndia 35
I ndonesia 30
I reland 40 40 38 38 36
I srael
I taly 52.2 52.2 53.2 53.2 53.2
Jamaica
Japan 52.4 52.4 51.6 51.6 51.6
Kazakhstan
Korea, Republicof 30.8
Kuwait
KPM GsCorporateandI ndirectTaxRateSurvey2007 6
1 J an 98 1 J an 99 1 J an 00 1 J an 01 1 J an 02 1 J an 03 1 J an 04 1 J an 05 1 J an 06 1 J an 07
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
23 20 20
33 35 35 35 35 35 35 35 35 35
35 35 28
36 36 36 34 30 30 30 30 30 30
34 34 34 34 34 34 34 25 25 25
0 0
40 35 35 35 35 30 30* 30 30 30
30 25 25
40.17 40.17 40.17 40.17 40.17 33.99 33.99 33.99 33.99 33.99
35 25 25
25 25 25 25 25 25 25 25 25 25
25 25 25
25 33 37 34 34 34 34 34 34 34
15 15 10
44.6 44.6 44.6 42.1 38.6 36.6 36.1 36.1 36.1 36.1
0 0
15 15 15 15 16 16.5 17 17 17 17
33 33 33 33 33 33 33 33 33 33
35 35 35 35 35 35 35 35 35 34
30 36 30 30 30 30
20 20 20.32 20.32 20.32 20.32 20
28 28 15.00 15.00 10 10 10
25 35 31 31 31 31 28 26 24 24
34 32 32 30 30 30 30 28 28 28
25 25 25 25 25 25 25 25 30 29
36.25 15 25 36.25 36.25 36.25 36.25 25 25 25
20 20
25 25 25 25 25 25 25
24 23 22
35 35 35 34 32 32 31 31 31 31
28 28 29 29 29 29 29 26 26 26
41.66 40 36.66 35.33 34.33 34.33 34.33 33.83 33.33 33.33
56.6 52.3 51.6 38.36 38.36 39.58 38.29 38.31 38.34 38.36
40 40 40 37.5 35 35 35 32 29 25
25 27.5 25 31 31 31 31
40.25 25 25 25 25 25 25 30 30 30
16.5 16 16 16 16 16 17.5 17.5 17.5 17.5
18 18 18 18 18 18 16 16 16 16
33 30 30 30 18 18 18 18 18 18
35 35 38.5 39.55 35.7 36.75 35.875 36.5925 33.66 33.99
30 30 30 30 39 30 30 30 30 30
32 28 24 20 16 12.5 12.5 12.5 12.5 12.5
36 36 36 36 36 36 34 31 29
41.25 41.25 41.25 40.25 40.25 38.25 37.25 37.25 37.25 37.25
33.33 33.33 33.33
51.6 48 42 42 42 42 42 40.69 40.69 40.69
30 30 30
30.8 30.8 30.8 30.8 29.7 29.7 29.7 27.5 27.5 27.4
55
European
OECD
Union
Asia - Latin
Pacific America
Country
1 J an 93
(%)
1 J an 94
(%)
1 J an 95
(%)
1 J an 96
(%)
1 J an 97
(%)
Latvia
Lithuania
Luxembourg 39.39 39.39 40.29 40.29 30.34
M acau
M alaysia 30
M alta
M auritius
M exico 34 34
M ontenegro
M ozambique
Netherlands 35 35 35 35 35
NetherlandsAntilles
NewZealand 33 33 33 33 33
Norway 28 28 28 28 28
O man
Pakistan 30
Panama 37
PapuaNewGuinea 25
Paraguay 30
Peru 30
Philippines 35
Poland 38
Portugal 39.6 39.6 39.6 39.6 39.6
Q atar
Romania
Russia
SaudiArabia
Serbia
Singapore 26
SlovakRepublic
Slovenia
SouthAfrica
Spain 35 35 35 35 35
SriLanka 35
Sweden 30 28 28 28 28
Switzerland 28.5 28.5 28.5 28.5 28.5
Taiwan
Thailand 30
Tunisia
Turkey 49.22 42.8 44 44 44
Ukraine
UnitedArabEmirates
UnitedKingdom 33 33 33 33 31
UnitedStates 40 40 40 40 40
Uruguay
Venezuela
Vietnam 35
Zambia
AverageCorporatetaxrate 38.0 37.3 37.7 37.7 33.2
1 J an 98 1 J an 99 1 J an 00 1 J an 01 1 J an 02 1 J an 03 1 J an 04 1 J an 05 1 J an 06 1 J an 07
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
15 15 15
15 15 15
37.45 37.45 37.45 37.45 30.38 30.38 30.38 30.38 29.63 29.63
12 12 12
28 28 28 28 28 28 28 28 28 27
35 35 35
25 25 22.5
35 35 35 35 34 33 30 29 28
32 32 32
35 35 35 35 34.5 34.5 34.5 31.5 29.6 25.5
34.5 34.5 34.5
33 33 33 33 33 33 33 33 33 33
28 28 28 28 28 28 28 28 28 28
12 12 12
30 35 43 34.65 35 35 35 35 35 35
37 37 37 37 37 30 30 30 30 30
25 25 25 25 25 30 30 30 30 30
30 30 30 30 30 30 30 10
30 30 30 30 30 27 30 30 30 30
34 33 32 32 32 32 32 32 35 35
36 34 30 28 28 27 19 19 19 19
37.4 37.4 37.4 35.2 33 33 27.5 27.5 27.5 25
35
25 25 25 25 16 16 16
43 24 24 24 24 24 24
20 20
26 26 26 25.5 24.5 22 22 20 20 20
29 25 25 19 19 19 19
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37.8 37.8 37.8 37.8 37.8 36.9 36.9
35 35 35 35 35 35 35 35 35 32.5
35 35 35 35 42 35 35 32.5 32.5 35
28 28 28 28 28 28 28 28 28 28
27.5 25.1 25.1 24.7 24.5 24.1 24.1 21.3 21.3 21.3
25 25 25 25 25 25 25 25 25
30 30 30 30 30 30 30 30 30 30
33 33 35 35 30
44 33 33 33 33 30 25 30 30 20
30 30 30 30 25 25 25
40 40 55 55 55
31 31 30 30 30 30 30 30 30 30
40 40 40 40 40 34 34 40 40 40
30 30 32 28 30 30 30
34 34 34 34 34 34 34 34 34
35 35 32.5 32 32 32 28 28 28 28
35 35 35
32.9 32.1 32.0 31.4 30.7 30.0 28.9 28.2 27.2 26.8
CorporateTaxRates
AllCountries1993-2007
40
38
37.7 37.7
37.3
35
33.2
32.9
P
e
r
c
e
n
t
a
g
e
32.1 32
31.4
30.7
30
30
28.9
27.2 27.1
26.9
25
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
P
e
r
c
e
n
t
a
g
e
CorporateTaxRates
ASPAC1997-2007
32.6
33 32.4
31.8 31.9
32
31.3
31.5
30.6
31
30 30 30 30.1
30
29
28
27
26
25
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
P
e
r
c
e
n
t
a
g
e
CorporateTaxRates
O ECD1993-2007
39 38
37.7 37.7
37.3
37 36
35.7
34.8
35
34.1
32.8
33
31.4
30.6
31
29.5
28.8
28.5
29
27.8
27
25
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
CorporateTaxRates
EU1993-2007
P
e
r
c
e
n
t
a
g
e
32
30.9 32
29.7
30
28.3
28
26.1
25.8
26
24.2
24
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
40
38 37.9 38
37.3
38
35.5
35.1
34.8 36
33.9
34
CorporateTaxRates
comparisonbyglobalregion1997-2007
40
35.5
36
35
All
24.2
28.0 27.8
26.8
30.1
AsPAC EU LAT OECD
33.2
32.6
29.8
97Avg.Rate
07Avg.Rate
30
25
20
CorporateTaxRates
LatinAmerica1995-2007
36
34
32
34 34
29.8
30.1
29.8
28.8
30.5 30.6
30.3
29.8
28.6 28.5
28
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
P
e
r
c
e
n
t
a
g
e
30
28
26
24
Sourceforallgraphinformation, KPM Gmemberfirms.
CorporateTaxRates
Footnotes
1Albania(2007rate= 20% )
Thecorporatetaxrateisappliedon
taxableprofitearnedduringafiscal
year(January1toDecember31).
Taxableprofitisdefinedasgrossincome
generatedminusrelatedexpenses.
Therearecertainnon-deductible
expensesoutlinedinthelawsuchas
expensesunsupportedwitharegular
invoice, interestaccrueduptoacertain
limit, interestpaidonloansand
prepaymentswhichexceedfourtimes
theamountofownedequityduringthe
period, representationexpensesover
acertainlimit, costoffringebenefits,
voluntarypensioncontributionsetc.
Reservesarenotallowabledeductions
fortaxpurposes, exceptwhen
constitutedbybanksandinsurance
companies.Noreducedratesapply.
Tourismactivitiesbenefitfromcertain
taxincentives.Dividenddistributedis
subjecttotaxwithheldatthesource
at10percent.Partoftheprofittobe
capitalized, carriedforwardorusedfor
creationofreserves, isnotconsidered
dividend.Shareholdersarerequiredto
decidetheamountofprofittobe
distributed, ifany, withinsixmonths
afteryear-end.Lossesmaybecarried
forwardforthreeyears;however, this
doesnotapplywhentherearechanges
ofmorethan25percentinownership
titles.
2Argentina(2007rate= 35% )
Aonepercenttaxonthecompanys
assets(liabilitiescannotbededucted)
ispayableasaminimumincometax.
Someassets, suchasstocks, shares
ofotherentitiessubjecttotaxation,
andassetsofminingcompanies, are
exemptfromminimumincometax.
Theacquisitionofnewgoods-except
forautomobiles-aswellasthe
investmentinconstructionofnew
buildingsorrefurbishing(forthefirsttwo
years)arealsoexcludedfromminimum
tax.Theminimumincometaxsystem
onlyappliestotheextentitexceeds
the(regular)incometaxcalculatedas
apercentageofthetaxableincome.
M inimumincometaxpaidinanygiven
yearreducesthe(regular)incometax
ofsubsequentyears(maximumcarry
forwardoftenyears).
3Aruba(2007rate= 28% )
Arateof28percenthasbeen
announcedbythegovernmentandwill
beintroducedretroactively.I ngeneral,
Arubancompaniesaresubjecttoa
corporateincometaxrateof28percent.
Companiesoperatinginthefreezone
aretaxedatarateoftwopercent.
Aso-calledI mputationPayment
Company(I PC)issubjecttoaneffective
corporatetaxrateoftwopercent;an
I PCpays28percentcorporateincome
taxwhiletheshareholderisentitledto
animputationpaymentof26percent
fromtheArubangovernmentupon
distributionofadividendbytheI PC.
4Australia(2007rate= 30% )
Thecorporateincometaxrateisset
ataflatrateof30percent, andapplies
tobothresidentandnon-resident
companies.Aresidentcompanyis
liabletoincometaxonworldwide
incomeandcapitalgains.Anon-
residentcompanyisliabletoincome
taxonAustralian-sourceincomeonly,
andoncapitalgainsfromthedisposal
ofanassetthatistaxableAustralian
property( TARP ).BroadlyTARPwill
includeAustralianrealpropertyand
anindirectinterestinAustralianreal
property.TheAustraliantaxsystem
providestaxationreliefagainst
internationaldoubletaxationby
grantingforeigntaxcreditsinsome
circumstancesandinothers, by
exemptingtheforeignincomefrom
Australiantax.Thecorporateincome
taxrateappliestoincomeearned
duringtheperiodfromJuly1toJune30
ofthefollowingyear.I facompanyhas
approvaltouseadifferentyear-endfor
taxpurposes, theapprovedperiod
muststillrelatetoaJune30year-end
(i.e.yearendedDecember31, 2006
willgenerallyrelatetotheyearof
incomeinwhichtheaccountingperiod
endsi.e.June30, 2007).Fortheyear
July1, 2001toJune30, 2002andlater
incomeyears, thecorporatetaxrate
hasbeen30percent.
5Austria(2007rate= 25% )
Thecorporateincometaxrateis
25percent; therearenotrade
incomeornetworthtaxes.Austrian
corporationsmaybenefitfromthe
liberalinternationalparticipation
exemptionandthegrouptaxation
(includingcrossborderlossutilization
andgood-willdepreciationforthe
acquisitionofqualifyingAustrian
subsidiaries).
6Bahrain(2007rate= 0% )
Bahrainisataxfreecountry, andthere
isnocorporateorpersonalincometax
inBahrain.Accordingly, allprofits,
dividendsoranyotherincomeistax-
free.Theonlyexceptionisfor
companiesengagedinpetroleum
extractionandrefining.Thereareno
exchangecontrolregulationsand
accordinglythereisnorestrictionon
repatriationofcapital, profits, royalties
orwagesandfreemovementifforeign
exchangeispermitted.
7Bangladesh(2007rate= 30% )
Theincomeofpubliclytraded
companies, i.e., listedcompanies, other
thanbanksandfinancialinstitutions,
istaxedat30percent.I fapublicly
tradedcompany, otherthanabankor
financialinstitution, paysadividend
thatexceeds20percentofthepaid-up
capitalforanincomeyear, itreceivesa
10percentrebateonthetaxpayable.
I fthecompanypaysadividendthatis
lowerthan10percentofthepaid-up
capital, thecompanyistaxedata
40percentrate.Allothercompanies
includingbranchesofforeign
companiesaretaxedat40percent.
Banks, insurancecompanies, leasing
companiesandotherfinancial
institutionsaretaxedat45percent.
Arebateintheamountof50percent
oftheincomederivedfromexport
businesswillbegrantedtocompanies
registeredinBangladesh.Garment
industriesaresubjectto10percent
corporateincometaxandtextile/jute
industriesto15percentbutthese
industrieswillnotqualifyforanexport
rebate.I falistedcompanyotherthan
abank, insuranceorleasingcompany
paysadividendoflessthan15percent
inspiteofhavingsufficientdistributable
profits, thecompanyissubjecttoan
additionalfivepercenttaxonthe
undistributedprofits.I ftheprofit
earnedbyabankexceeds50percent
ofitscapitalandreserves, thebankis
subjecttoa15percent"excessprofits
tax"ontheadditionalprofit.
Theaforesaidrateswillremainvalid
forcompanieswhoseaccountingyear
endsonanydatesbefore30June2007.
8Barbados(2007rate= 0to2.5% /25% )
The25percentcorporateincometax
rateappliestoallcorporateentities
withrespecttoincomenotqualifying
forinternationalbusinessconcessions.
Thedomesticcorporatetaxrateof
25percentmaybereduced, ona
slidingscale, to1.75percent, bya
foreigncurrencytaxcreditgrantedfor
qualifyingforeigncurrencygenerating
activities.Aninternationalfinancial
servicecentretaxregimeprovides
forexemptionforqualifyinginsurance
companiesandavariablerateofone
to2.5percentforotherqualifying
internationalbusinessactivities.
9Belgium(2007rate= 33.99% )
Alowertaxrateappliestocompanies
thatareownedmorethan50percent
byindividuals.Thetaxrateincorporates
a crisis levyofthreepercent.Asof
fiscalyear2007(incomeyearsstarting
January1, 2006orlater)Belgian
companiesandforeigncompanies
thathaveanestablishmentinBelgium
benefitfromariskcapitaldeduction
(alsocallednotionalinterestdeduction)
i.e.adeductionequaltoapercentage-
basedonthereturnofa10-year
governmentbond- ofthecompanies
adjusted equitycapital(including
retainedearnings).Thedeductionis
3.442percentforfiscalyear2007and
3.781percentforfiscalyear2008
(incomeyearsstartingJanuary1, 2007
orlater).Forsmallandmediumsized
companiestherateofthenotional
interestdeductionis0.5percent
higher:3.942percentforfiscalyear
2007and4.281percentforfiscalyear
2008.Thenotionalinterestdeduction
isexpectedtoreducetheeffectivetax
ratetoanaverageof25to27percent
(orevenlowerdependingontheequity
capitalofthecompany).
10 Bolivia(2007rate= 25% )
Thecorporatetaxleviedbythecentral
governmentisthe25percentannual
profittax(I UE).Paymentsofthistax
areconsideredanon-accountpayment
foranysubsequentyearsthreepercent
TransactionsTax.Certainforeign
companies` activitiesperformedin
Boliviathroughbranchesoragencies
aresubjecttodifferenttaxrules.
Suchactivitiesincludetransportation,
internationalnewsagencies, foreign
insurancecompaniesanddistribution
ofmoviesandvideotapes.Aneffective
rateof5.5percentisappliedtogross
incomearisingfromtheseactivities.
Uptofourpercentofthistaxis
consideredanon-accountpaymentfor
anysubsequentyearsthreepercent
TransactionsTax.
11 Botswana(2007rate= 25% )
25percent.I tissplitintoa15percent
CompanyTaxanda10percent
AdditionalCompanyTax(ACT).TheACT
canbeusedtooffsetanywithholding
taxpayableondividenddistributions.
ACTunusedafteraperiodoffiveyears
willbelost.Thisarrangementcanlimit
theoverallcorporatetaxleviedonboth
thecompanyandtheshareholderto
25percent.LowerCompanyTaxrates
areavailableformanufacturingentities
(fivepercent).AnapprovedI nternational
FinancialServiceCentreentityisonly
liableforCompanyTaxandnotforACT.
M iningentities(withtheexceptionof
Diamondmining)aretaxedatarate
between15and45percent(excluding
ACT).Diamondminingtaxationis
negotiatedwiththeGovernment.
12 Brazil(2007rate= 34% )
The34percentrateincludesCorporate
I ncomeTax(25percent)andSocial
ContributiononNetProfits(nine
percent).The25percentcorporate
incometaxcomprisesa15percent
basicrateand10percentsurtaxon
incomeoverBRL240, 000/year.The
taxableincomeisdeterminedin
accordancewiththeBrazilianCorporate
I ncomeTaxCode.Theninepercent
SocialContributiononcorporatetaxable
incomeisimposedinaccordancewith
BrazilianSocialContributiononNet
Profitstaxlegislation.Dependingon
thetypeofincomeandfurther
conditionsaSocialContributionon
NetProfitstaxcredit(bonusde
adimplnciafiscal)maybegranted
tocertaincorporatetaxpayers.
AtaxdeferralofSocialContribution
onNetProfitstaxmaybeavailable
forcompaniesthatpurchasecertain
industrialassets(therearealistof
assetsforthistaxbenefit)between
O ctober1, 2004andDecember31,
2008.Eachyear, forfouryears, the
qualifyingtaxpayercandeductthe
amountequivalentto25percentof
thedepreciationoftheseassetsof
theSocialContributiononNetProfits
taxdue.Attheendofthefour-year
periodtheSocialContributiontax
deferredmustbepaid.(I tsatax
deferral- notataxdeduction).
Additionalconditionsmustbemet
tobeeligibleforthistaxincentive.
13 Bulgaria(2007rate= 10% )
Asof1January2007Bulgariaisan
EUM emberState.The2007Corporate
I ncomeTaxrateis10percent.Thetax
yeariscalendaryearandtheannualtax
returnmustbefiledbyM arch31ofthe
followingyear.Theannualfinancial
statementsofthetaxliablepersonsare
submittedtogetherwiththeannualtax
return.Annualcorporateincometax
liabilitiesmustbesettledwithinthe
sameterm(afterdeductionofthe
advancecorporateincometax
instalmentspaidinthecourseofthe
taxyear).O thertaxesoncorporate
income:Taxonexpensesattherate
of10percentisleviedonthe
followingexpenses:
(i)representation/entertainment
expensesrelatedtothebusiness
activityofthetaxliableperson;
(ii)expensesforin-kindsocialbenefits
(fringebenefitsprovidedintheformof
food, transportationofstafftoworking
place, holidayandrecreationalfacilities,
contributionsforvoluntaryinsurance
undercertainconditions, vouchersfor
food);
(iii)expensesrelatedtomaintenance
andrepairofautomobilesusedfor
managementactivitiesofthetax
liableperson.
Expensesfordonationand
sponsorshipsarenolongersubjectto
taxonexpenses.Theexpensesfor
donationswherethebeneficiariesare
notincludedinthelistofeligible
persons(aslistedintheCorporate
I ncomeTaxAct)arenotdeductible
expensesfortaxpurposes.Withholding
taxattherateofsevenpercentis
leviedondividendsandliquidation
quotadistributedbylocallegalentities
toforeignresidentswithnopermanent
establishmentinBulgaria, aswellasto
municipalauthoritiesandtolocallegal
personsthatarenottraders.Relief
fromthewithholdingtaxondividends
inBulgariaisprovidedforbythe
CorporateI ncomeTaxActifthe
dividendsaredistributedtoparent
companiesresidentinEUM ember
States.Thereliefisgrantedthrough
transpositionoftheprovisionsofthe
Parent-SubsidiaryDirective(Directive
90/435/EC)intheBulgarianCorporate
I ncomeTaxAct.M inimumshareholding
andminimumshareholdingperiodis
requiredinordertoapplytheabove
relieffromwithholdingtax.Withholding
taxattherateof10percentislevied
alsoonincomeaccruedbyBulgarian
taxableentitiestoforeignresidentsfor
specifictypesofincome, providedthat
theincomeisnotderivedthrougha
permanentestablishmentoftheforeign
personinBulgaria.Theincomesubject
towithholdingtaxincludes:interest
payments, includinginterestunder
financialleasecontracts;rental
payments;royalties;feesfortechnical
services, franchisingandfactoringfees;
managementfees;capitalgainsfrom
saleoffinancialassets;incomes
generatedfromtheuseofimmovable
property;capitalgainsfrom
transactionswithrealestate.
Areductionorrelieffromthe
withholdingtaxinBulgariacouldbe
soughtundertheprovisionsofan
effectiveDoubleTaxTreatybetween
Bulgariaandthecountrywherethe
beneficialowneroftheincomeis
resident(ifany).Theapplicationofthe
DoubleTaxTreatiessignedbyBulgaria
isnotautomaticandapprovalfromthe
Bulgarianrevenueauthoritiesshouldbe
soughtunderaseparateprocedure.
14 Canada(2007rate= 36.1% )
I ncludesfederaltaxof22.1percent
(includingsurtax)for2007plus
provincialtax.Dependingonthe
province, thetotaleffectivegeneral
corporateincometaxratefor2007
rangesfrom32.0percentto
38.1percent(27.1percentto
38.1percentformanufacturers).
LowerratesareavailabletoCanadian-
controlledprivatecorporations(CCPC)
ontheirfirst$400, 000to$500, 000of
taxableactivebusinessincome.
Arepresentativetaxratefor2007
foraCCPConitsfirst$400, 000of
eligibletaxableincomeisapproximately
18.6percent(13.1percentfederaltax
plus5.5percentprovincialtax).
Dependingontheprovince, the
totaleffectivetaxrateforaCCPC
onitseligibleincomerangesfrom
14.1percentto18.6percent.
Therepresentativefederal, provincial
andcombinedfederal/provincial
corporatetaxratescitedforCanadaare
compiledfromtheI ncomeTaxAct
(Canada), RSC1985, c.1(5thSupp.)as
amended;andtheO ntarioCorporations
TaxAct, RSO 1990, c.40, asamended.
15 CaymanIslands(2007rate= 0% )
Therearenonotesfor2007.
16 Chile(2007rate= 17% )
ChileanCorporateTax(named First
CategoryTax )appliestoalltypesof
taxableincomerealizedbyataxpayer,
individualorlegalentity, regardlessof
itsnationality, residenceordomicile,
withtheexceptionofincomefrom
dependentemployeesandindependent
personalservices.Taxbaseisthe
accruednettaxableincomeafter
allowabledeductionsandexpenses.
FirstCategoryTaxpaidcanbecredited
againstfinaltaxes, whichareGlobal
ComplementaryTaxincaseofChilean
residentindividualsandWithholdingTax
incaseofnonresidents.
17 China(2007rate= 33% )
ThetaxrateisapplicabletoForeign
I nvestmentEnterprises(FI E)and
includesboththestatetaxrateof
30percentandalocaltaxofthree
percent.Domesticenterprisesare
subjecttoadifferentsetoftaxlaws
andregulations.Thestatetaxrate
of30percentmaybereducedto
15percentor24percentiftheFI E
islocatedinoneofthespecially
designatedzonesinthePeoples
RepublicofChina(PRC)and/or
engagedinassociatedoperations
orprojects.I naddition, qualifiedFI E
maybeentitledtoataxexemptionor
reductionduringataxholidayperiod.
Thelocaltaxofthreepercentmay
bewaivedorreducedbythelocal
government.Ataxreformisbeing
carriedoutinChina.Thenewunified
CorporateI ncomeTaxLawiseffective
from1January2008.Forfurther
informationpleasegoto
http://www.KPM G.com.cn.
18 Colombia(2007rate= 34% )
Ataxreformwasapprovedandthe
newcorporateincometaxrateis
34percent(35percentinprevious
years).Thesurchargeofthe10percent
whichappliedwaseliminated.The
Colombiancompaniesandtheforeign
branchesthatqualifyas industrial
users establishedinColombianDuty
FreeZonesaretaxedata15percent
rateforcorporateincometaxfrom
2007onwards.Thesevenpercent
incometaxratethatappliedto
dividendsandparticipationstransferred
abroadwaseliminatedandreplacedby
azeropercentrate.I naddition, thereis
aregionaltaxcalledI ndustryand
CommerceTaxleviedonindustrial,
commercialandserviceactivities
carriedoutwithinamunicipality.
Theratedependsonthemunicipality
andrangesbetween4.14and13.8per
thousand.100percentoftheI ndustry
andCommerceTaxandoftheproperty
taxisdeductibleforcorporatetax
purposes.Also25percentofthe
financialtransactionstaxeffectively
paidisdeductibleforcorporatetax
purposes.
19 CostaRica(2007rate= 30% )
30percent.Reducedratesareavailable
forsmallercompanies.Corporate
entitieswithagrossincomeunder
CRC31, 043, 000.00aresubjecttoa
10percentcorporateincometaxrate;
corporateentitieswithgrossincomeof
morethanCRC31, 043, 000.00butless
thanCRC62, 444, 000.00aresubjectto
a20percentcorporateincometaxrate.
Corporateentitieswithgrossincome
exceedingCRC62, 444, 000.00are
subjecttotheordinary30percentrate.
20Croatia(2007rate= 20% )
Theaccountingprofitadjustedin
accordancewiththeprovisionsofthe
CorporateProfitTaxLawistaxedata
20percentrate.Acompanycanreduce
itstaxbaseifitqualifiesunderthe
I nvestmentPromotionLaw, Special
StateCareAreasLaw, Hilland
M ountainAreasLaw, FreeTrade
ZonesLaw, LawonRenewaland
DevelopmentoftheCityofVukovar.
Touristtax, forestrytaxand
monumentalprotectionfeeare
taxesbasedonturnover.
21Cyprus(2007rate= 10% )
Thecorporateincometaxforcorporate
bodiesisaflat10percentapplicableon
activeincomewhereasdividendsare
exemptfromincometax.I ncome
derivingfromthesaleofsecurities
isalsoexempt.I nascertaininga
companystaxableincomealloutgoings
andexpenseswhollyandexclusively
incurredintheproductionofthe
incomearededucted.
22CzechRepublic(2007rate= 24% )
Aspecialrateoffivepercentapplies
toprofitsofinvestment, mutual, and
pensionfunds.Dividendincomeis
taxedat15percentorifreceivedby
aparentcompanyfromitssubsidiary
(currentlydefinedasacompany
residentintheCzechRepublic,
SwitzerlandortheEUinwhichthe
parenthasheldatleast10percent
foratleast12months)- zeropercent.
Subjecttocertainconditions
manufacturingcompaniescanbenefit
fromacorporateincometaxrelieffor
tenyears(however, furtherlimitse.g.
acceptablestateaidintensityare
implemented).
23Denmark(2007rate= 28% )
Twoprepaymentsofcorporateincome
taxduringthetaxableyearare
mandatory.I fthefinaltaxliability
exceedstheprepaymentsasurcharge
of5.8percent(2007)ofthe
outstandingtaxliabilityispayable.
Therearenolocaltaxesoncorporate
income.January2007theDanish
Governmentproposedthatthetax
rateoncorporateincomeisloweredto
22percent.Atthesametimetheright
todeductinterestpaymentswillbe
reduced, depreciationsforcertain
assetswillbetightenedandthe
currentCFCrulesextended.I naddition
aspecialpatenttaxationregimemay
beintroduced(taxrateof12percent).
24DominicanRepublic
(2007rate= 29% )
The2005TaxReformActincreased
thecorporateincometaxand
withholdingratesfrom25percentto
30percent.Theserateswilldecrease
to29percentin2007, 27percentin
2008and25percentin2009.
25Ecuador(2007rate= 25% /15% )
The15percentapplieswhenthe
taxpayerdecidestoreinvestitsprofits.
Thisreinvestmentmeansanincrease
inthecompanyscapital.
26Egypt(2007rate= 20% )
Thecorporateincometaxforcorporate
bodiesisaflat20percentrate
applicableonactiveincomewhereas
dividendsareexemptfromincometax.
I ncomederivingfromthesaleof
securitiesisalsoexempt.Inascertaining
acompanystaxableincomeall
outgoingsandexpenseswhollyand
exclusivelyincurredintheproductionof
theincomearededucted.
27Estonia(2007rate= 0% and22%
ondistributedprofits)
O nlyprofitdistributionsaresubjectto
taxation.Soazeropercenttaxapplies
toprofitsthatarenotdistributedbut
retainedinthecompanyand/or
reinvested;a22percenttaxapplies
toprofitdistributionsincludingdividend
paymentsandotherformsofprofit
transfers(transferpricingitems, non-
businesscosts, paymentstolow-tax
territories).Thecurrenttaxsystemwill
bechangedfrom2009incompliance
withtheEUparent-subsidiarydirective
28Fiji(2007rate= 31% )
I n2004thecorporatetaxratewas
reducedfrom32percentto31percent
forcompaniesincorporatedinFijiand
alsocompaniesoperatingasbranches
ofnon-residentcompanies.
29Finland(2007rate= 26% )
I n2004, theFinnishgovernment
proposedtolowerthecorporationtax
rateto26percent.Aftertheproposal
wasapprovedbytheParliamentthetax
ratebecameeffectiveasof1January
2005andgenerallyappliestoallFinnish
corporations.
30France(2007rate= 33
1
/
3% )
ForfiscalyearsendingafterJanuary
1st2007, thecorporatetaxrateis
33.33percent.A3.3percentsocial
contributionofthecorporateincome
taxisapplicabletotheportionof
corporateincometaxexceedingEUR
763, 000resultinginanoveralltaxrate
of34.43percent(forthisportion).
Companies(i)whichhaveaturnover
ofuptoEUR7, 630, 000and(ii)ofwhich
individualsholdatleast75percentof
thesharecapital(orwhichareowned
bycompaniesmeetingthesame
conditions)aresubjecttoacorporate
taxrateof15percent.Thisappliesto
thepartofthetaxableprofituptoEUR
38, 120.Thesecompaniesareexempted
fromthe3.3percentcontribution.
31Germany(2007rate= 38.36% )
Thisrateappliestobothretained
profitsanddistributedprofits.Therate
includescorporatetaxat25percent
(plusa5.5percentsolidaritysurcharge
hereon)andtradetaxonincome.
Thetradetaxvariesfrom13.04percent
to20percent, assumingamunicipality
multiplier(Hebesatz)rangingfrom
300percentto500percent(The
averagemultiplierfor2005was
389percent.Since2004legislation
hasimposedaminimumtradetax
multiplierof200percenttoeliminate
tradetaxhavens).Sincethetradetax
isadeductibleitemwhencalculating
thecorporateincometax, thecorporate
taxrateisbasedontheoperatingprofit
reducedbythetradetaxof
16.28percentassumingtheaverage
multiplierof389percentisapplied.
WitheffectfromJanuary1, 2008itis
intendedtoreducetheoveralltax
burdenontheincomeofacorporation
toapproximately30percent(planned
businesstaxreform).
32Greece(2007rate= 20% /25% )
The25percentrateappliestolisted
A.E.companies(corporations)and
toE.P.E.entities(limitedliability
companies).Thesamerateapplies
todomesticunlistedA.E.companies,
banksandcreditinstitutionsoperating
asco-operativesandbranchesof
foreignentities.GeneralPartnerships
(O E)andLimitedPartnerships(EE)are
consideredlegalentitiesinGreeceand
aresubjecttothecorporatetaxrateof
20percentforfiscalyear2007.Athree
percentsurchargeappliestogross
rentalincome, butthesurchargemay
notexceedtheprimarycorporatetax.
33Honduras(2007rate= 30% )
Theoverallratecomprisesa25percent
corporateincometaxrateanda
temporaryfivepercentsolidarity
surchargethatappliesifthetaxable
incomeexceedsL.1, 000, 000.
I naddition, thereisanetassetstaxof
onepercentofthevalueoftheassets
ofthecompanylessallowancesfor
doubtfulaccountsandaccumulatedtax
depreciation.Netassetstaxispayable
onlytotheextentitexceedsthe
corporateincometax.
34HongKong(2007rate= 17.5% )
HongKongSARisaSpecial
AdministrativeRegionofthePeoples
RepublicofChina.The17.5percentrate
(witheffectfromfinancialyear2003/04)
appliestoHongKongsourcedprofits
thatarederivedfromabusinesscarried
oninHongKong.O ffshoreprofits,
capitalgains, dividendsandmostbank
depositinterestincomeareexempt
fromtax.Profitsderivedfromcertain
securitiesortypesofbusiness
(e.g.qualifyingdebtinstrumentsor
profitsderivedfromthebusinessof
reinsuranceofoffshorerisksbya
professionalre-insurer)areeither
exemptfromtaxorsubjecttoa
concessionalrateof8.75percent
(halfofthe17.5percentstandardrate).
35Hungary(2007rate= 16% )
Thestatutorycorporateincometaxrate
is16percentin2006.FromJanuary1,
2006thetaxratecanbereducedto
10percentonthefirstHUFfivemillion
(approx.EUR20, 000)positivetax
baseifthecompanymeetscertain
requirements.Thepartofthetaxbase
thatexceedsHUFfivemillionremains
subjectto16percent.FromJanuary1,
2006alocalbusinesstaxofupto
2percentofthetotaltradingturnover
isdeductiblereducingthetaxable
incometwice(i.e., twotimesthelocal
businesstaxisdeductible).
Effectivefrom1September2006, an
additionaltaxoffourpercent(socalled
solidaritytax )wasintroducedforall
companies.Thebasisofsolidaritytaxis
pretaxprofitmodifiedbycertainitems.
I naddition, effectivefromJanuary1,
2007, ifthecompanystaxablebase
islessthantwopercentofitstotal
revenueslesscostsofgoodssoldand
theincomeofaforeignPE(andcertain
othermodifyingitems), thetaxbase
shouldbethathigheramount
( minimumtax ).
36Iceland(2007rate= 18% )
18percentforlimitedliability
companiesand26percentforother
legalentities, suchaslimited
partnerships, associations, privatenon-
profitinstitutions, trustsfunds, estates
ofdeceasedpersonsandbankrupt
estates.Non-residentcompaniesare
subjecttoincometaxontheirincome
fromI celandicsources.Taxisimposed
ontheirnetincome, afterallowable
deductions, atthesameratethatis
leviedonresidentcompanies.I nterest
derivedbynon-residentcompanies
fromI celandicsourcesisnotsubject
toincometax.
37India(2007rate= 33.99% /30.90% )
ForthefiscalyearendingM arch31,
2008thebasiccorporatetaxratefor
domesticcompaniesis30percent, and
thesurchargeis10percentifincomeis
inexcessofI NR1crore.Theeffective
taxratefordomesticcompanieshaving
incomeofmorethanI NR1croreis
33.99percent(30percent, plus
surchargeof10percentofthetax, plus
educationcessofthreepercentontax
andsurcharge).Theeffectivetaxrate
fordomesticcompanieshavingincome
lessthanI NR1croreis30.90percent
(30percentpluseducationcessof
threepercentontax).Aminimum
alternatetax(M AT)isleviedat
10percentoftheadjustedprofitsof
companieswherethetaxpayableis
lessthan10percentoftheirbook
profits.I nthecaseofcompanies
havingincomeofmorethanINR1crore,
theeffectiveratewouldbe11.33/10.558
percent(10percentplusasurcharge
of10/2.5percentofthetax, plusan
educationcessofthreepercentonthe
taxplussurcharge).Theeffectivetax
rateforforeigncompanieshaving
incomeofmorethanI NR1croreis
surchargeof2.5percentofthetax,
pluseducationcessofthreepercent
ontaxandsurcharge).Theeffective
taxrateforforeigncompanieshaving
incomelessthanI NR1croreis
41.2percent(40percentpluseducation
cessofthreepercentontax).I ncome
ofdomesticshippingcompaniescan
becomputedunderthetonnagetax
scheme.Non-residentsandforeign
companiesengagedinshipping,
aviation, oil/gasandturnkeypower
projectsaretaxedonadeemedprofit
basisof7.5percent, fivepercentand
10percentrespectively, plussurcharge
andeducationcess.Dividend
DistributionTax(DDT)isleviedat
educationcessofthreepercentoftax
andsurcharge)ondividendsdistributed
byadomesticcompany.DDTislevied
at28.33percent(25percent, plus
educationcessofthreepercentontax
andsurcharge)ontheincome
distributedbymoneymarketmutual
fundorliquidfundtounitholders.
DDTisleviedat14.163percent
(12.5percent, plussurchargeof
10percentofthetax, pluseducation
cessof3percentontaxandsurcharge)
ontheincomedistributedbyanon-
equityorientedmutualfundotherthan
moneymarketmutualfundorliquid
fundtoindividualsorHUFunitholders.
DDTisleviedat22.66percent
(20percent, plussurchargeof
10percentofthetax, pluseducation
cessofthreepercentontaxand
surcharge)ontheincomedistributedby
anon-equityorientedmutualfundother
thanmoneymarketmutualfundor
liquidfundtounitholdersotherthan
individualandHUF.Securities
TransactionTax(STT)isleviedatvarying
ratesonthevalueofspecifiedtaxable
securitiestransactionsthrougha
recognizedstockexchange, oronthe
saleofunitsofequity-orientedmutual
fundstothemutualfund.Fringe
BenefitTax(FBT)isleviedoncertain
fringebenefitsprovidedtoemployees
at33.99percentfordomestic
companieshavingincomeinexcess
ofI NR1croreand31.673percentfor
foreigncompanieshavingincomein
excessofI NR1croreand30.90
percentforcompanieshavingincome
lessthanI NR1crore(30percentplus
educationcessofthreepercenton
tax).Theratesoftaxspecifiedabove
areaspertheFinanceBill, 2007
(subjecttoenactment)applicablefor
thefiscalyearending31M arch2008.
38Indonesia(2007rate= 30% )
Thisrateappliestoaresident
corporationsincomeoverI DR100
million.I ncomebetweenI DR050
millionistaxedat10percentand
incomebetweenI DR50100million
istaxedat15percent.Certainincome
receivedbynon-residentsistaxedat
20percent.Anadditional20percent
branchprofittaxisimposedonthe
after-taxprofitsofapermanent
establishment(subjecttotreatyrelief).
39Ireland(2007rate= 12.5% )
Thecurrentcorporatetaxrateonthe
activeincomeofnewoperationsis
12.5percent.A25percentrateapplies
topassiveincomeandincomefrom
certainlanddealingactivities, mining
andpetroleumactivities.A20percent
taxrateappliestodealingin
undevelopedresidentiallandinI reland.
Aspecial10percentrateappliesto
activetradingincomeearnedbycertain
existingmanufacturingcompanies.
Thisspecialratewillexpirein2010
andwillbereplacedbythestandard
12.5percentrate.Capitalgainsare
taxedat20percent, butthedisposalof
asubstantialinterestincertainoffshore
fundsattractstaxat40percent.
40Israel(2007rate= 29% )
Thecorporateratewillbegradually
reduced:29percentin2007, 27percent
in2008, 26percentin2009and
25percentin2010.Financialinstitutions
aresubjecttoaprofittaxandapayroll
taxata15.5percentrate;bothof
whicharedeductibleforincometax
purposes.Theeffectivetaxrateof
financialinstitutionsis38.53percent
(fortheyear2007).Companieswith
an approvedenterprise aretaxedat
areducedratethatvariesdepending
onthenationalpriorityzoneinwhich
thecompanyislocated, thetypeof
incentiveschemeappliedforandthe
levelofforeignownershipinthe
company.I tshouldbenotedthat
significantchangeswereenactedin
thisareain2005.Capitalgainsare
subjectto25percenttax.Special
termsapplytoassetspurchasedprior
toDecember31, 2002.Dividends
fromforeignsourcesaresubjectto
a25percenttax, withacreditfor
foreignwithholdingtax, or, incertain
circumstances, thecorporatetaxrate
withanunderlyingtaxcreditfortax
paidbythedistributingcompany.
41Italy(2007rate= 37.25% )
Thisrateconsistsofa33percent
corporateincometax(theso-called
I RES)andabasic4.25(5.25forbanks
andfinanceinstitutions)percent
regionaltax(I RAP).Thetaxablebasis
differsascertainexpensesareallowed
forI RESpurposesbutnotforI RAP,
forinstance, interestandalmostall
laborcosts.I talianregionshavethe
righttoincreasethebasic4.25percent
I RAPrate.
42J amaica(2007rate= 33
1
/
3% )
Companiesmustdeclaretheirincome
andmakeprepaymentsofthe
corporatetaxinfourinstalments
(M arch15, June15, September15
andDecember15)duringthetaxable
year.I fthefinaltaxexceedsthe
prepayments, thebalanceispayable
bytheduedateoffilingtheincome
taxreturn(M arch15oftheyear
followingtheyearofassessment).
43J apan(2007rate= 40.69% )
Japanesecorporateincometaxes
consistofcorporationtax(nationaltax),
businesstax(localtax)andprefectural
andmunicipalinhabitanttaxes(local
tax).Thecorporationtaxrateis
30percent(22percentonthefirst
eightmillionyen(JPY)forsmalland
medium-sizedcompanieswithpaid-in
capitalofJPY100millionorless).
Localtaxratesvarydependingonlocal
governmentandtheamountofpaid-in
capitalofthecompany, etc.Thetaxrate
shownistheillustrativeeffectivetax
rateforacompanyinTokyowithpaid-in
capitalofmorethanJPY100million
aftertakingintoaccountadeduction
forbusinesstax(businesstaxitself
beingtaxdeductible).Size-based
businesstaxisalsoleviedona
companywithpaid-incapitalofmore
thanJPY100million, inadditiontothe
income-basedbusinesstax.Sothe
overalltaxrateforsuchcompaniescan
behigherthan40.69percent.Thesize-
basedbusinesstaxratesinTokyoare
0.504percentonthe addedvalue
component taxbase(totaloflabor
costs, netinterestpayments, netrent
paymentsandincome/lossofthe
currentyear)and0.21percentonthe
capitalcomponent taxbase(total
paid-incapitalandcapitalsurplus).
Forsmallandmedium-sizedcompanies
withpaid-incapitalofJPY100million
orless, theeffectivetaxrateinTokyo
is42.05percentwithnosize-based
businesstaximposed.
44Kazakhstan(2007rate= 30% )
Theregularcorporateincometaxrate
is30percent.Branchesofforeign
companiesoperatinginKazakhstan
aresubjecttoanadditionalbranch
profitstaxof15percentoftheirafter-
taxincomeresultinginanoveralltax
rateof40.5percentforbranchoffices.
I ncometaxtreatiesmayreducethe
branchprofitstax.
45Korea,Republicof
(2007rate= 27.5% )
EffectiveJanuary1, 2005, the
corporateincometaxratewasreduced
bytwopercentaspartoftheKorean
governmentsmeasurestostimulate
corporateinvestmentinKorea.
Therefore, wheretaxableincome
exceedsKRW100millionataxrateof
27.5percent(previously29.7percent)
applies(includingresidentsurtax).
Forlowertaxableincomeataxrateof
14.3percent(previously16.5percent)
applies(includingresidentsurtax).
46Kuwait(2007rate= 5% /55% )
2007corporatetaxratesrangefrom
5percentto55percentonthenet
profitearnedfromcarryingonatrade
orbusinessinKuwait.Corporate
incometaxisonlyleviedfromforeign
companiesoperatinginKuwait.
I ncometaxinKuwaitisimposedand
administeredunderAmiriDecree
No.3of1955, asamended.Theterm
carryingontradeorbusinessin
Kuwait hasbeendefinedunderArticle
2(i)oftheDecreetoinclude:
thepurchasingandsellinginKuwait
ofproperty, goods, orrightsthereto
andmaintainingapermanentoffice
inKuwaitwherethecontractsof
purchaseandsaleareexecuted;
theoperatingofanyother
manufacturing, industrial, or
commercialenterpriseinKuwait;
thelettingofanypropertylocated
inKuwait;and
therenderingofservicesinKuwait;
butdonotincludethemere
purchasinginKuwaitofproperty,
goods, orrightsthereto.
Theterm carryingontradeor
businessinKuwait isinterpreted
inthewidestpossiblesensebythe
DepartmentofI ncomeTaxes(DIT)in
KuwaittoimposetaxonallKuwait
basedsourcesofrevenue.
I nthecaseofforeigncorporatebodies
owningsharesincompaniesregistered
inKuwaitorGulfCo-operationCouncil
(GCC)countries O wnedbyKuwaitisor
GCCcitizens andcarryingonbusiness
ortradeinKuwait, incometaxis
imposedontheforeigntaxableprofit
oftheKuwaitiorGCCcompanies
attributabletotheforeigncorporate
bodies.
Kuwaitadoptstheterritorialconcept
initstaxlegislation;thedistinctionis
madebetween tradingwith thestate
i.e., thesupplyofgoodstotheKuwaiti
port;and tradingin, whichinvolves
activityinthestate.I nbroadterms,
thelatteractivityistaxablewhilstthe
formerisnot.
I ncasesofcontractsinvolving
performanceinsideandoutsideKuwait,
theentirerevenuefromthecontracts,
includingtherevenuerelatingtothe
performanceoutsideKuwait, isrequired
tobereportedfortaxinKuwait.Foreign
entitieshavetheoptiontocarryout
businessinKuwaitinoneofthe
followingways:
1.underthesponsorshipofaregistered
Kuwaitimerchant(Kuwaitiagent);
2. throughajointventure;
3. throughaWithLimitedCompany
(W.L.L.)orKuwaitiShareholding
Company(K.S.C.);and
4. underForeignDirectI nvestment
LawNo.8of2001.
47Latvia(2007rate= 15% )
Thetaxrateoncorporateincomeis
15percent.Therearefourregionsin
LatviacalledSpecialEconomicZones
(SEZ).Companiesoperatinginthese
zonespaya25percentcorporate
incometax, butaregranted80percent
corporateincometaxrelief.
48Lithuania(2007rate= 15/13% )
Thestandardcorporatetaxrateis
15percent.Arateof13percentapplies
iftheaveragenumberofemployeesof
anentitydoesnotexceed10andthe
incomedoesnotexceedLTL500, 000
(app.EUR144, 800)(certainexemptions
apply).I fanentity' saveragenumberof
employeesdoesnotexceed10andthe
incomedoesnotexceedLTL1, 000, 000
(app.EUR289, 600), theincomeminus
LTL25, 000(caEUR7, 240)istaxedata
15percentrate.Currently, thefollowing
specialprofittaxrelievesareinforce:
(1)Freeeconomiczonecompaniesin
whichcapitalinvestmentreachesat
leastonemillionEURsuch
companiesareexemptfromprofittax
forsixtaxableperiods, startingwiththe
taxableperiodinwhichtheinvestment
reachedonemillionEUR.Forthe
subsequent10taxableperiodsa
50percentreducedprofittaxrate
applies.Atleast75percentofthe
companys incomemustbefrom
theproduction, treatment, processing,
etc.ofgoodsinafreeeconomiczone.
(2)M anufacturingcompanieswhich
derivemorethanhalfoftheirincome
fromtheirownproductionactivitiesand
whichemploypeoplewithdisabilities.
Theprofittaxisreducedby20percent
ormore.
(3)Taxreliefsforcreditunionsand
agriculturalcompanies.
FromJanuary12006toDecember31
2007Lithuanianandforeigntaxable
unitsaresubjecttosocialtax.The
socialtaxratesareasfollows:four
percentonataxableprofitofaLithuanian
taxableunitin2006;threepercentona
taxableprofitofaLithuaniantaxable
unitin2007.Byitsnature, the
provisionalsocialtaxissimilartoa
corporateincometax.Sothetaxable
profitissubjecttoanoveralltaxrateof
19percent(for2006)and18percent
(for2007).
49Luxembourg(2007rate= 29.63% )
Acorporatetaxrateof22.88includes
afourpercentemploymentfund
contribution.Themunicipalbusiness
taxratevaries, e.g., therateforthe
cityofLuxembourgis6.75percent.
50Macau(2007rate= 12% )
Progressivetaxratesapplyfrom
threepercenttoamaximumrateof
12percentfortaxableincomeover
M O P300, 000.
51Malaysia(2007rate= 27% )
Aresidentcompanywithpaidupshare
capitalofuptoRM 2, 500, 000(atthe
startofabasisperiod)istaxedat
20percentonitsfirstRM 500, 000of
chargeableincome, withthebalance
taxedat27percent.Leasingincome
(frommoveableproperty)derivedbya
permanentestablishmentinM alaysia
istaxedat27percentwhereasanon-
residentcorporationwithnoM alaysian
permanentestablishmentistaxedat
10percent.Aspecialfivepercenttax
rateappliestocorporationswhich
conductaninwardreinsurance
businessoranoffshoreinsurance
business.I ncomegeneratedbyalife
fundofaninsurancecompanyistaxed
ateightpercent.Anon-resident
corporationwithshippingorair
transportincomeistaxedat27percent
eitheronfivepercentofitsgross
shippingorairtransportincomederived
inM alaysiaoronthatpartofthe
M alaysiangrossincomecomputedas
aproportionofworld-wideprofitsto
world-widegrossincome.I ncomeof
residentcorporationsderivedfromthe
transportationofpassengersor
cargoonM alaysianshipsisexempt.
Finally, companiesengagedin
petroleumoperationsaresubject
totaxat38percent.
52Malta(2007rate= 35% )
Companiesaresubjecttocorporate
incometaxatarateof35percent.
Thistaxisleviedontaxableprofits,
whetherdistributedorotherwiseand
oncapitalgainsrealizeduponthe
transferofcertainassets.M alta
operatesafullimputationsystemof
taxationforbothresidentsandnon-
residents, whichensuresthefullrelief
ofeconomicdoubletaxationupon
thedistributionoftaxedprofitsby
companiesresidentinM alta.O nthe
distributionoftaxedprofitsthe
shareholdersmayopttoclaima
partial/fullrefundofthetaxpaidbythe
distributingcompany.Asageneralrule
thetaxrefundamountstosixsevenths
ofthetaxpaidbythecompany.
Therefundwillbereducedtotwo
thirdswhentheshareholderclaims
doubletaxationreliefandfivesevenths
inthosecaseswherethedistributed
profitsarederivedfrompassiveinterest
orroyaltieswhichhavebeensubjectto
foreigntaxatlessthan5percent.
Dividendsandcapitalgainsderived
fromparticipationholdingswillqualify
forafullrefund.Thetaxpaidonprofits
derived, directlyorindirectly, from
immovablepropertysituatedinM alta
willnotbeavailableforrefund.
Residentshareholderswillbetaxed
onthedividendandtaxrefundat
35percentwhilenon-residentswill
notbetaxed.
53Mauritius(2007rate= 22.5/15% )
Thecorporateincometaxrateis22.5
percent.A15percentcorporateincome
taxrateappliestocompaniesqualifying
forataxincentive.
54Mexico(2007rate= 28% )
Therearenonotesfor2007.
55Mozambique(2007rate= 32% )
I ncomeofagriculturalcompaniesor
organizationsistaxedat10percent
untilDecember31, 2010.Agricultural,
culturalandartisancooperativesbenefit
froma50percentreductioninthetax
rate, resultinginaneffectivetaxrate
ofbroadly16percent.Generally, certain
investmentprojectsapprovedbythe
GovernmentofM ozambiquepriorto
January1, 2003aresubjecttovarious
lowertaxrates, applicableuntilthe
endoftheproject.Thoseinvestment
projectsapprovedasofJanuary1,
2003are, ingeneral, subjecttothe
standardtaxrateof32percentbut
receiveataxcreditoffivepercentof
theinvestmentmadeinthefirstfive
yearsofaproject.
56Netherlands
(2007rate= 20% /23.5% /25.5% )
TaxableprofitsofuptoEUR25, 000are
taxedat20percent, profitsbetween
EUR25, 000andEUR60, 000aretaxed
at23.5percentandprofitsoverEUR
60, 000aretaxedat25.5percent.
57NetherlandsAntilles
(2007rate= 34.5% )
Thecorporateincometaxrateof
34.5percentincludesa15percent
surchargealthough, forcertain
activities, taxholidaysareavailable
whichgenerallylowerthetaxrateto
twopercent.Companiesoperatingin
economiczonesarealsotaxedatarate
oftwopercent.Theincomeofqualified
limitedliabilitycompaniesengagedin
certainfinancialactivitiesisexempt.
58NewZealand(2007rate= 33% )
33percent.Aflattaxof3.3percent
appliestogeneralinsurancepremiums
andfilmhiretaxespaidtonon-
residents.TheNewZealand
Governmenthasintroducedthelarge
budgetscreenproductiongrant
schemewhich, providedcertain
requirementsaremet, allowsfora
rebateof12.5percentofthequalifying
NewZealandproductionexpenditure
onfilmandtelevisionproduction
companies.Afilmortelevision
companyiseligibleforthegrantif
itisaresidentcompanyoraforeign
corporationoperatingwithapermanent
establishmentinNewZealand.
59Norway(2007rate= 28% )
Thecorporateincometaxratefor
2007is28percent.
60Oman(2007rate= 12% )
12percentontaxableprofitsexceeding
RO 30, 000appliesto(1)allcompanies
incorporatedinO manand(2)branches
andpermanentestablishmentsin
O manofcompaniesincorporatedinthe
otherGulfCo-operationCouncil(GCC)
countries(Bahrain, Kuwait, Q atar,
SaudiArabiaandUnitedArabEmirates).
I nthecaseofbranchesandpermanent
establishmentsinO manofnon-GCC
companiesthetaxratesrangefrom
zeropercentto30percentdepending
uponamountoftaxableprofits.Forthis
category, therateoncedeterminedwill
beappliedtothetaxableprofitsintotal.
61Pakistan(2007rate= 35% )
35percentappliestoallbanking,
publicandprivatelimitedcompanies.
However, subjecttocertainconditions
beingmet, smallcompaniesaretaxed
at20percent.
62Panama(2007rate= 30% )
Taxdueisthehigherof30percent
ofnettaxableincomeand1.4percent
ofPanamaniansourcegrossincome
(alternativeminimumtax).Corporations
withlossesmayrequestathreeyear
holidayfromtheapplicationof
alternativeminimumtax.I fthereisno
distribution, orifthedistributedamount
islessthan40percentofnetearnings,
a complementarytax offourpercent
isdueasanadvanceddividendtax.
63Paraguay(2007rate= 10% )
CorporateI ncometaxgeneralrateis
10percentsince2006;ifthecompany
distributesutilitiestoshareholders
domiciledinParaguay, afivepercent
ratewillbeappliedtodistributed
utilities, resultinganeffectiverate(ER)
of14.50percent;toutilitiesdistributed
toshareholdersnotdomiciledin
Paraguaya15percentratewillbe
applied, resultinganERof27.33percent.
Therearedifferentialeffectiveratesfor
thefollowingtaxedactscarriedoutby
nondomiciledentities:I nsurance
premiumthatcoversrisks
ofpeople/goodsinthecountry:
threepercent;Peopletransportation
fares/Freightofgoods:threepercent;
Communications(phone, internetand
similar):threepercent;NewsAgencies:
4.5percent;Distributorsofmovies,
cinema/televisionandsimilar:12percent;
Transferoftheuseofcontainers:
4.5percent.Forfinancereceived
fromexternalbanks, currentERis
sixpercent.Corporateincomeearned
byindividuals/foreignentitiesfortheir
activitiescarriedoutinParaguay
(independentlyoftheirbranches,
agenciesorpermanentestablishment)
iscurrentlyatanERof15percent.
64PapuaNewGuinea
(2007rate= 30% )
Forminingandgascompaniesthetax
rateis30percent.ExistingPetroleum
projectsaresubjecttoa50percenttax
ratewhilstnewpetroleumprojects
aretaxedateither45percentor
30percentdependingonwhenthe
licenseisissued.Non-residentmining
companiespaytaxat40percent.I n
caseofotherbusinesses, abranchofa
foreigncompanyistaxedat48percent.
Non-residentsaretaxedonadeemed
profitbasis(shipping:fivepercent, i.e.,
aneffectivetaxrateof2.4percentof
grossincome;insurance:10percent,
i.e., aneffectivetaxrateof4.8percent
ofgrossincome).Foreigncontractors
canelecttobetaxedonadeemed
profitbasisof25percent(i.e., an
effectivetaxrateof12percentof
grossincome).
65Peru(2007rate= 30% )
Domesticcorporationsaresubject
toacorporateincometaxrateof
30percent.Branchesofforeign
companiesarealsosubjecttotaxat
30percentonPeruviansourceincome.
Additionally, dividendsaresubjectto
therateof4.1percentwhenpaidby
adomiciledcorporationtoindividuals
(domiciledornot)ortoforeignentities.
Branchesofforeignentitiesarealso
subjecttothe4.1percenttaxrate.Atax
onnetassetshasbeenintroducedwith
effectfrom2005.Amarginalratesystem
isappliedtodeterminethistax(therate
variesfromzeropercentto0.5percent
dependingontheamountoftaxablenet
assets).Thetaxisbasedonthenet
assetsofdomiciledcorporatetaxpayers
afterdeductingcertainbalancesheet
itemsspecifiedinthelegislation.
Thistaxcanbeappliedasataxcredit
againstcorporateincometax.
66Philippines(2007rate= 35% )
Afterafouryearstart-upphase,
domesticcorporationsandresident
foreigncorporationsaresubjectto
atwopercentminimumcorporate
incometax(M CIT).Thistaxiscalculated
basedongrossincomeandisdueifthe
M CITisgreaterthanthecorporations
corporateincometaxliability,
determinedbyapplyingthe35percent
taxratetonetincome.A10percent
improperlyaccumulatedearnings tax
(IAET), subjecttocertainexceptions, is
alsoimposedonundistributedearnings
ofclosely-heldcorporations.Theseare
corporationsinwhichatleast50percent
ofthevalueofoutstandingcapitalstock
oratleast50percentofthetotal
combinedvotingpowerofallclassesof
stockentitledtovoteisowneddirectly
orindirectlyby20individualsorless.
Philippinebranchesofforeign
corporationsareexemptfromthe
10percentIAET.Foreigncorporations
withPhilippinebranchespay15percent
branchprofitsremittancetax.Philippine
economiczoneauthority(PEZA)
registeredcorporationsareexempt
unlesstheapplicabletaxtreatyprovides
otherwise(i.e., 10percent).Thereare
alsoseveralotherspecialtaxregimes
forcertaintypesofactivity.
67Poland(2007rate= 19% )
Thestandardcorporateincometax
rateis19percent, withnoothertaxes
oncorporateincome.However, a
50percentpenaltyrateappliesfor
transferpricingadjustmentsifa
taxpayerisunabletoprovide, within
sevendaysofarequestbythetax
authorities, transferpricing
documentation(asrequiredunder
statute)inrespectoftransactionswith
relatedparties.Companieslocatedin
SpecialEconomicZonesmaybenefit
fromtaxexemptions.Dividendincome
istaxedat19percent;undercertain
conditionsexemptionsareavailablefor
dividendsreceivedfromsubsidiaries
residentinPoland, Switzerland,
memberstatesoftheEuropeanUnion
andtheEuropeanEconomicArea.
68Portugal(2007rate= 25% )
Thisrateistobeincreasedbya
M unicipalSurchargeofupto
1.5percent, whichistobeleviedover
thecompanystaxableprofit.The
25percentrateisleviedonthetaxable
income, netoftaxlossescarryforward.
69Qatar(2007rate= 35% )
35percentisthemaximumratein
aprogressiveratestructureandis
applicabletoincomeinexcessof
Q R5, 000, 000.However, taxisonly
imposedonforeigncompanies
operatinginQ atarorQ ataricompanies
withforeignshareholders.Companies
whicharewhollyownedbyQ atari
shareholdersorGCCnationalsare
exempt.Certaincompaniesestablished
pursuanttoan' EmireeDecree' maybe
subjecttoaspecificflattaxraterather
thanthestandardprogressiverates.
70Romania(2007rate= 16% )
ProfitsearnedfromoperationsinFree
TradeZonesaresubjecttothestandard
corporateincometaxrateof16percent.
UntilDecember31, 2006aspecialtax
exemptionappliedtocertaincompanies
carryingoutmanufacturingactivities;
whichhadbeenpre-investedinthe
FreeTradeZonepriortoJuly1, 2002.
Profitsearnedfromnightclubs, casinos,
discothequesandsportbetting
organizersaresubjecttotaxat
16percent, althoughthetaxpayable
cannotbelowerthanfivepercentof
thetaxpayersqualifyinggrossrevenue
earnings.Aspecialreliefisavailablefor
smallcompanies.
71Russia(2007rate= 24% )
The2007rateis24percent.Thiscan
bereducedbytheregionsforspecific
activitiesto20percent.
72SaudiArabia(2007rate= 20% )
Corporatetaxispayablebynon-Saudi
shareholdersonly.Zakat(areligioustax)
at2.5percentisleviedonSaudiand
GCCshareholders.I naddition,
withholdingtaxoffivepercentis
payableondividendsdistributedto
non-residentshareholders.
73Singapore(2007rate= 20% )
I nthe2007Budgetannouncedon
February15, 2007, thecorporatetax
rateisproposedtobereducedto
18percentwitheffectfromtheYear
ofAssessment(YA)2008i.e.on
incomederivedin2007.FromtheYear
ofAssessment(YA)2002onwards, a
partialtaxexemptionisgrantedonthe
firstS$100, 000ofincomeasfollows:
75percentuptothefirstS$10, 000of
incomeand50percentonthenext
S$90, 000areexemptfromcorporate
incometax.I nthe2007Budget, itwas
proposedthatthepartialtaxexemption
thresholdbeincreasedtoS$300, 000
ofchargeableincomeasfollows:
75percentuptothefirstS$10, 000
ofchargeableincomeand50percent
onthenextS$290, 000.Fornew
companieswhosefirstthree
assessmentyearsfallwithinYA2005
to2009, fulltaxexemptionofregular
income(excludingSingaporefranked
dividends)uptoS$100, 000canbe
claimedprovidedcertainconditionsare
met.I nthe2007Budget, itwas
proposedthattheYA2009expirydate
beremovedandqualifyingcompanies
canclaimthefulltaxexemptionfor
eachofthefirstthreeconsecutiveYAs.
Aconcessionarytaxrateof10percent
orlowerappliestoentitiesengagedin
certainprescribedactivitiesorgranted
taxincentives.Suchactivitiesor
incentivesincludethefinancialsector
incentivescheme, offshoreleasing,
offshoreinsuranceandreinsurance,
captiveinsurance, offshoreglobal
trading, financeandtreasurycenters,
internationalheadquarters, wealth
management, maritimefinancing
incentiveandshippingenterprises.
Forcertainactivities, approvalneeds
tobesoughtbeforetaxexemptionor
theconcessionarytaxratecanapply.
74 SlovakRepublic(2007rate= 19% )
19percent.
75Slovenia(2007rate= 23% )
AccordingtotheCorporateI ncomeTax
Actthecorporateincometaxratewill
be22percentin2008and21percent
in2009.However, taxablepersons
performingnon-profitactivities
areexempt.
76 SouthAfrica(2007rate= 36.89% )
currently29percent.However, South
Africaimposesanadditional' secondary
tax oncompaniesat12.5percenton
anynetdividendsdeclaredbythem.
Therefore, ifacompanydistributes
100percentofitsafter-taxearnings
asadividend, aneffectivetaxrateof
36.89percentwillapply.Thisdoesnot
applytogoldminingcompanies(which
aretaxedonaformulabasis)orto
SouthAfricanbranchesofforeign
entitieswhicharetaxedatarate
of34percent.
77Spain(2007rate= 32.5% )
Companieswithtaxyearsstartingfrom
January1, 2007aresubjecttotaxat
32.5percent, whichreducesto30
percentfrom1January2008.Wherea
companysturnover(aloneorcombined
withothergroupcompanies)inthe
immediatelyprecedingtaxperiodis
lessthanEUR6, 000, 000, itistaxed
onthefirstEUR120, 202oftaxable
incomeat25percentwiththebalance
ofitstaxableincomebeingsubjectto
taxat30percent.Thefollowingentities
willbetaxedat25percent:
(a)GeneralM utualI nsurance
Companies, SocialWelfareI nstitutions
andqualifiedSocialSecurityM utual
EntitiesforAccidentsatWorkand
O ccupationalDiseases.
(b)M utualGuaranteeEntitiesand
GuaranteeUnderwritingCompanies
regulatedbyLaw1/1994of11M arch
ontheLegalRegimeforM utual
GuaranteeSocietiesregisteredwith
theBankofSpainand
(c)Creditandruralcreditco-operatives.
Taxprotectedco-operativeswillbe
taxedat20percent, exceptinrespect
ofresultsnotrelatedtotheircorporate
purpose, whichwillbetaxedatthe
generalrate.
78SriLanka(2007rate= 35% )
Fortheassessmentyear2006/07
(April1, 2006toM arch31, 2007)
thegeneralcorporatetaxrateis
35percent.However, small
companies(i.e.withtaxableincomenot
exceedingSLRS5, 000, 000)aretaxed
at15percentandcompaniesinthefirst
fiveyearsoflistingaretaxed
at331/3percent.Certainidentified
sectorsalsoenjoyconcessionaryrates,
suchasexports(otherthantraditional
products), tourism, agricultureand
constructionat15percentandventure
capitalfunds/specializedhousingbanks
at20percent.Dividendsorthe
repatriationofprofitsbyanon-resident
companyaretaxedat10percent.
Aneconomicservicecharge(ESC)
isonepercentofturnover(although
lowerratesareapplicablewhere
companiesbenefitfromtaxholidays
orconcessionaryrates)butcanbe
set-offagainstanycorporatetaxliability,
subjecttorestrictions.Thesocial
responsibilitylevyiscurrentlyone
percentonincometax.
79Sweden(2007rate= 28% )
Anoptionalprovisionforuntaxed
incomeisavailable.Theprovisionmust
notexceed25percentofthetaxbase
andmustbedissolvedwithinthe
followingsixyears.StartingJanuary1,
2005, ataxableinterestchargeislevied
onsuchprovisions.
80Switzerland(2007rate= 21.3% )
All26cantonsapplydifferenttaxrates
andinallexceptthreecantonsthe
statutorytaxrateneedstobe
multipliedwiththecommunaland/or
cantonalcoefficientsthatmayvary
fromtaxperiodtotaxperiod.Therate
shownabovecomprisesfederal,
cantonalandmunicipaltaxes.As
corporateincometaxesaredeductible
whencomputingthetaxbasis, the
effectivecorporateincometaxratesare
lowerthanthestatutoryratespublished
inthetaxcodes.I n2007, thecantonof
O bwaldenhasthelowestcorporate
incometaxrate(13.12percent)whilst
thecantonofBasel-Landandthecityof
Liestalhavethehighest(25.7percent).
During2006andatthebeginningof
2007, thecantonofGraubndenhad
thehighestapplicablecorporateincome
taxrate, butanongoingpartialrevision
ofthecantonaltaxlawwillmostlikely
leadtoataxratebelowthatofBasel-
Land(subjecttoreferendum).The
averagerateforthetencantonswith
thelowestratesis16.93percent
(O bwalden, Schwyz, Zug, Uri,
Appenzell-I .Rh., Nidwalden, Thurgau,
Appenzell-A.Rh., LuzernandGlarus).
Thetaxrateforcorporationsinthe
cantonofZurichandthecityofZurich
is21.3percent.Somecantonalincome
taxrates, suchasinZugand
Graubnden, areprogressiveand
usuallythetaxbasisisdetermined
basedontheratioofincometothe
companysequity.O thers, likeZurich,
haveaflatstatutoryrate.
81Taiwan(2007rate= 25% )
25percentisthemaximumratein
aprogressiveratestructure.Therate
isapplicabletoincomeinexcessof
TW$100, 000.
82Thailand(2007rate= 30% )
Thestandardcorporateincometaxrate
is30percentbutthismaybereduced
to20percentor25percentforcertain
Thaicompanieswhichhavelistedon
theStockExchangeofThailandprior
toDecember31, 2005.Ataxrateof
10percentappliestotheremittance
ofdividendsorbranchprofitsabroad.
Forsmallandmediumsizedenterprises
(SM E)withlessthanBaht5, 000, 000
paidupcapital, thecorporateincome
taxrateisreducedto15percenton
thefirstBaht1, 000, 000ofnettaxable
profitsand25percentonthenext
Baht2, 000, 000butnotexceeding
Baht3, 000, 000.Corporateincometax
exemptions(taxholidaysandcorporate
taxratereductions)aregrantedto
companiespromotedbytheBoardof
I nvestment(BO I ), assetmanagement
companies(AM Cs)andventurecapital
companiesinvestinginSM Essubject
tocertainconditions.Corporateincome
taxincentiveswereintroducedin
2002forThaiRegionalO perating
Headquarters(RO H).Thecorporate
incometaxrateisreducedto
10percentonqualifyingRO Hservice
income, royaltiesandinterestand
zeropercentondividendsreceived
fromassociatedenterprises.
Acorporatetaxrateofthreepercent
appliestogrossincomeofcompanies
engagedininternationaltransportation
(subjecttoanyfurthermitigationunder
relevantdoubletaxationtreaties).
Acorporateincometaxrateof
10percentappliestothenettaxable
profitsofcommercialbankswhichare
engagedinobtainingdepositsorloans
fromforeigncountriesandre-lending
suchloansoramountstoother, orthe
same, foreigncountries.Acorporate
incometaxrateof10percentalso
appliestothenettaxableprofitsof
commercialbanksderivedfrom
obtainingdepositsorloansfromforeign
countriesandre-lendingsuchloans
oramountsinThailand(whichwere
undertakenbeforeApril18, 2006)
andtogrossincome(reducedto
twopercentforcertaintypesof
income)offoundationsand
associationsengagedinbusiness
activities.Apetroleum(oil, gasand
derivatives)taxrateof50percent
appliestothenettaxableprofitsof
companieswithconcessionstoexplore
for, andproduce, petroleum.
83Tunisia(2007rate= 30% )
Thecorporateincometaxrate
appliestoresidentcompaniesand
topermanentestablishmentsofnon
residentcompanies.Butthereisa
minimumtaxpayableof0.1percent
leviedontheturnoverincludingtaxes
withaminimumofTDN250.Total
exportcompaniesaretaxableatthe
rateof10percentfromJanuary1,
2008.
Forregionaldevelopmentprojects,
thereisexonerationfor10yearsand
50percenttaxbasereductionfor
additional10years.Thebenefitsfrom
education, teaching, vocationaltraining
projectsandenvironmentprotection
projectsaredeductiblefromtaxbase
butthetaxtobepaidcan tbelower
thanalimitfixedbytheTaxationCode.
84Turkey (2007rate= 20% )
AsofJune, 212006, thecorporatetax
ratehasbeenreducedfrom30percent
to20percent, effectivefrom
January, 12006.
85Ukraine(2007rate= 25% )
Thebasiccorporateincometaxrateis
25percent.Specialtaxratesmayapply
dependingonthebusinessactivities
(forinstanceanilorthreepercent
corporateincometaxrateisappliedto
insuranceincomeearnedbyUkrainian
insurancecompanies).
86UnitedArabEmirates
(2007rate= 20% /55% )
TheUAEconsistsofsevenEmirates-
AbuDhabi, Dubai, Sharjah, Ajman,
UmmAlQ aiwain, FujairahandRasAl
Khaimah.Whilsttherearenocorporate
incometaxesatafederallevelsome
Emirateshaveissuedtheirownincome
taxdecrees.Althoughintheorythese
Emirateleveldecreesimposetaxon
theincomeofallcorporateentities, in
practicetaxiscurrentlyonlyenforced
onforeignoilcompaniesandbranches
offoreignbanks.However, thereisno
guaranteethatthiswillcontinuetobe
thecase.Foreignoilcompaniesare
companiestransactinginoiloroil
rights, includingcrudeoilorother
hydrocarbonmaterialsproducedin
theEmirates.Althoughthetaxrate
applicabletooilcompaniesisgenerally
55percentofoperatingprofits, the
amountoftaxactuallypaidbysuch
companiesisbasedonarateagreed
inindividualconcessionsbetweenthe
companyandtherespectiveEmirate.
Thisratecanrangebetween
55percentand85percent.Branchesof
foreignbanksaretaxedat20percent
oftheirtaxableincomeintheEmirates
ofAbuDhabi, Dubai, Sharjahand
Fujairah.Thebasisoftaxationdoesnot
differsignificantlybetweenthe
Emirates.Dubai, SharjahandFujairah
haveissuedspecifictaxlegislationfor
branchesofforeignbanks.AbuDhabi
doesnothaveaspecificdecreefor
banks.M unicipaltaxesarealsolevied
insomeoftheEmirates.I nDubai, a
10percentmunicipaltaxischargedon Theeffectiveratemayvarysignificantly 92Zambia(2007rate= 35% )
hotelrevenues(usuallypassedonto dependingonthelocalityinwhicha Thegeneralcorporateincometax
theconsumerasaservicecharge), a corporationconductsbusiness. rateis35percent.I ncomeearned
10percentmunicipalityfeeisleviedon TheUnitedStatesalsohasaparallel bybankinginstitutionsissubjectto
therentfromcommercialpropertyand alternativeminimumtax (AM T) 45percenttaxonprofitsinexcess
afivepercentfeeisleviedontherent system, whichisgenerallycharacterized ofK250, 000, 000.Profitsfromfarming,
ofresidentialproperty.AbuDhabidoes byalowertaxrate(20percent)buta chemicalfertilizerproductionandexport
notlevyamunicipalitytaxonrented broadertaxbase. ofnon-traditionalitemsaretaxedata
premises, butlandlordsarerequiredto rateof15percent.Companieswitha
paycertainannuallicensefees(which 89Uruguay(2007rate= 30% /25% ) turnoverofK200, 000, 000orlesspay
theymaypassontotenants). TheGovernmenthasapprovedatax aturnovertaxofthreepercent.
reformlaw, thatreducesthecorporate
87UnitedKingdom(2007rate= 30% ) incometaxratefrom30percentto
A19percentrateappliesto 25percentforfiscalyearsbeginning
companieswithtaxableprofitsofup onorafterJuly1, 2007.
toGBP300, 000withmarginalrelief
uptoGBP1, 500, 000.Companieswith 90Venezuela(2007rate= 34% )
profitsofGBP1, 500, 000ormorepay Corporationsengagedinthe
taxatthefullrateof30percent. exploitationofhydrocarbonsandrelated
PriortoApril1, 2006, anilrateapplied activitiesaregenerallysubjectto
tocompanieswithtaxableprofitsofup corporateincometaxat50percent
toGBP10, 000, withmarginalreliefup (alsoapplicabletoincomefromany
toGBP50, 000, whilecompanieswith othersources).Thisratedoesnot
profitsbetweenGBP50, 000and includemunicipalbusinesstaxeswhich
GBP300, 000paidtaxata19percent rangefrom0.3percentto9.4percent
rate, withmarginalreliefupto ofgrossincome, dependingonthe
GBP1, 500, 000.Alltheselimitsare districtandthebusinessactivity.
reducedforaccountingperiodsof
lessthan12monthsandifthere 91Vietnam(2007rate= 28% )
areassociatedcompanies. The28percentcorporateincometax
rateappliestoresidentcompanieswith
Bermuda, Gibraltar, Guernsey, I sleof foreigninvestors(including, joint
M anandJersey:Thesecountriesare ventures, 100percentforeign-owned
DependentTerritoriesorCrown companies, andbusinessco-operation
DependenciesoftheUnitedKingdom, contracts)licensedfromJanuary1,
whichhasformallyconfirmedthatthe 2004(25percentiflicensedbefore
O ECDConventionappliestothese January1, 2004)andVietnamese
countries.Thesecountriesarenot enterprises.However, incentive
includedwhencalculatingtheaverages corporateincometaxrates(10percent,
andrangesindicatedabove. 15percent, 20percent)willapplyfor
certainprojects.Corporateincometax
88UnitedStates(2007rate= 40% ) ratesfrom28to50percentapplyto
Themarginalfederalcorporateincome businessesconductingprospecting,
taxrateonthehighestincomebracket explorationandexploitationof
ofcorporations(for2007,US$18,333,333 petroleumandgasandotherrare
andabove)is35percent.Stateand andpreciousnaturalresources.
localgovernmentsmayalsoimpose
incometaxesrangingfromlessthan
onepercentto12percent.
Acorporationmaydeductitsstateand
localincometaxexpensewhen
computingitsfederaltaxableincome,
generallyresultinginaneteffective
rateofapproximately40percent.
I ndirectTaxRates2007
OECD
European
Union
Asia -
Pacific
Latin
America
Country
1 J an 07
(%)
Albania 20
Argentina 21
Aruba 3
Australia 10
Austria 20
Bangladesh 15
Barbados 15
Belgium 21
Bolivia 13
BosniaandHerzegovina 17
Botswana 10
Brazil seefootnote
Bulgaria 20
Canada 6
CaymanI slands n/a
Chile 19
China 17
Colombia 16
CostaRica 13
Croatia 22
Cyprus 15
CzechRepublic 19
Denmark 25
DominicanRepublic 16
Ecuador 12
Egypt 10
Estonia 18
Fiji 12.5
Finland 22
France 19.6
Germany 19
Greece 19
Guatemala 12
Honduras 12
HongKong n/a
Hungary 20
I celand 24.5
I ndia 12.5
I ndonesia 10
I reland 21
I srael 15.5
I taly 20
Jamaica 16.5
Japan 5
Kazakhstan 14
Korea, Republicof 10
Latvia 18
Lithuania 18
Average rate 15.63
OECD
European
Union
Asia -
Pacific
Latin
America
Country
1 J an 07
(%)
Luxembourg 15
M acau n/a
M alaysia 10
M alta 18
M auritius 15
M exico 15
M ontenegro 17
M ozambique 17
Netherlands 19
NetherlandsAntilles seefootnote
NewZealand 12.5
Norway 25
O man n/a
Pakistan 15
Panama 5
PapuaNewGuinea 10
Paraguay 10
Peru 17
Philippines 12
Poland 22
Portugal 21
Romania 19
Russia 18
SaudiArabia n/a
Serbia 18
Singapore 5
Slovakia 19
Slovenia 20
SouthAfrica 14
Spain 16
SriLanka 15
Sweden 25
Switzerland 7.6
Taiwan 5
Thailand 7
Tunisia 18
Turkey 18
Ukraine 20
UnitedArabEmirates n/a
UnitedKingdom 17.5
UnitedStates seefootnote
Uruguay 23
Venezuela 11
Vietnam 10
Zambia 17.5
Sourceforallrates, KPM Gmemberfirms.Ratesasat1Januaryeachyear.

VAT/GST
O ECD2007
Denmark 25
Sweden 25
Norway 25
Iceland 24.5
Poland 22
Finland 22
Ireland 21
Portugal 21
Belgium 21
Austria 20
Hungary 20
Italy 20
France 19.6
CzechRepublic 19
Germany 19
Greece 19
Netherlands 19
SlovakRepublic 19
Turkey 18
UnitedKingdom 17.5
Spain 16
Luxembourg 15
Mexico 15
NewZealand 12.5
Australia 10
Korea,Republicof 10
Switzerland 7.6
Canada 6
Japan 5
3 8 13 18 23 28
VAT/GST
LatinAmerica/Caribbean2007
Uruguay
Argentina
Chile
Peru
Jamaica
Columbia
DominicanRepublic
Mexico
Barbados
Bolivia
CostaRica
Ecuador
Honduras
Venezuela
Panama
Aruba 3
5
13
13
12
12
11
23
21
19
17
16.5
16
16
15
15
0
5 10 15 20 25

VAT/GST
EuropeanUnion2007
Denmark
Sweden
Poland
Finland
Belgium
Ireland
Portugal
Slovenia
Austria
Bulgaria
Hungary
Italy
France
CzechRepublic
Netherlands
Romania
SlovakRepublic
Germany
Greece
Estonia
Latvia
Lithuania
Malta
UnitedKingdom
Spain
Luxembourg 15
Cyprus 15
10 12 14 16
VAT/GST
Asia/Pacific2007
25
25
22
22
16
18
18
18
18
17.5
18
20
20
20
20
20
19.6
19
19
19
19
19
19
20
10
10
10
10
10
10
21
21
21
22
12.5
12.5
12.5
12
China
Bangladesh
Pakistan
SriLanka
India
Fiji
NewZealand
Philippines
Australia
Indonesia
Korea,Republicof
Malaysia
PapuaNewGuinea
Vietnam
Thailand
Singapore 5
Japan 5
Taiwan 5
24 26
17
15
15
15
7
0 2 4 6 8 10 12 14 16 18
Sourceforallgraphinformation, KPM Gmemberfirms.
I ndirectTaxRates
Footnotes
(i) Albania
Thestandardrateofvalueaddedtax
(tatimimbivlereneshtuar;TVSH)is
20percent.Thereisareducedrate
ofzeropercentapplicabletoexports
ofgoodsandservices(undercertain
conditions)andsuppliesrelatedto
internationaltransport.Suppliesof
certaingoodsandservicesareexempt
fromVAT, forexampleleaseandsale
ofland, saleofrealestates, financial
services, medicines, medical
equipmentandcertainsupplies
inconnectionwithoilexploration.
(ii) Argentina
(I mpuestoalValorAgregado;I VA)is
of10.5percentforcertaingoodsand
services, including:importsofcertain
capitalgoodsincludedinthetariffslist
oftheCommonNomenclatureof
M ercosur(SouthernConeCommon
M arket), productionanddistribution
ofprograms, films, andrecordsofany
typetobetransmittedbyradioor
television, specifiedsuppliesofbooks,
newspapersandperiodicals, medical
servicesinspecificcases, conferences
andtradeshowservices, concertsand
musicalshowtickets, commonbread,
bakeryproductsandwheatflour.
Thereisanincreasedrateof27percent
forcertainservices:telecommunication
services(exceptradiobroadcasting
andservicesrenderedbythenational
telecommunicationsagencyornews
agencies), thesupplyofgasor
electricalpower(exceptpublic
illumination), certainsuppliesofwater
andsewageservices.Exportsofgoods
andservicesarezero-rated.Exempt
suppliesinclude:importsandsalesof
books, retaildistributionofnewspapers
andperiodicals, shares, bondsand
securities, certainconstructionsforthe
transportationofpassengersorfreight
andshipsusedcommerciallyorfor
defence, specifiedmedicalservices,
transportationofpersonsandfreight,
includinginternationaltransportation,
certainfinancialservicessuchascash
depositswithfinancialinstitutionsand
loansmadebetweenfinancial
institutions, servicesofdirectors,
comptrollersandmembersofboards
ofstockcorporations, lettingofcertain
immovable, importsofcriticalproducts
fordiagnosisandhealthtreatment
(temporaryexemption).
(iii) Aruba
Thestandardrateofturnovertax
(BelastingopBedrijfsomzetten;BBO )
isthreepercent.Thereducedrateof
onepercentappliestogoodssold
andexporteddirectlybyseller.
(iv) Australia
ThestandardrateofGoodsand
ServicesTax(GST)is10percent.
Thereisareducedrateofzeropercent
whichappliesto, forexample, some
foodproducts, mostmedicalandhealth
services, drugsandmedicalaidsand
appliances, exportsofgoodsand
services, supplyofabusinessasa
goingconcern, eligibleeducation, some
religiousandcharitableactivities, water,
sewerageanddrainageservices.
Suppliesofcertaingoodsandservices
areexemptfromGST, forexample
financialservices, residentialrent,
residentialpremises(notnew)and
somefund-raisingeventsconducted
bycharitableinstitutions.
(v) Austria
(Umsatzsteuer;USt)is20percent.
Therearereducedratesof10percent
andzeropercentwhichapplyto, for
example, food, booksandnewspapers,
passengertransport, hotel
accommodation, lettingofresidential
propertyandculturalservices
(10percent), exportsofgoods, supply,
import, repairandmaintenanceof
certainshipsandaircraft, international
passengertransportbyairorsea(zero
percent).Thereisa specialrate under
the farmer' sflatratescheme ;arateof
12percentisapplicabletosuppliesof
typicalagriculturalgoodsandservices.
Certainsuppliesofgoodsandservices
areexemptfromVAT, forexample
financialservices, insuranceservices,
leasingorlettingofimmovableproperty
(withsomeexceptions), education,
healthandwelfare.
(vi) Bangladesh
(VAT)is15percent.Therearereduced
ratesofninepercent, fivepercent,
4.5percent, 2.25percent, 1.5percent
andzeropercentwhichapplyto,
forexample, certaincategoriesof
advertisement(ninepercent), the
supplyofelectricity(fivepercent),
engineeringservices, securityservices,
servicesrenderedbyconstruction
contractors, auditandaccountingfirms,
consultants, printingpress, architects,
interiorandgraphicdesigners
(4.5percent), suppliesofgoodsand
servicesthroughparticipationina
tender/quotationandforpathological
laboratorywork, suppliesofgoodsand
servicesbyhospitalsandpetroleum
carriers, maintenanceandcleaningof
buildingfloors/premises(2.25percent),
tradingservices, landdevelopmentand
constructionofapartments, retailsales
offurniture(1.5percent)andexports
ofgoodsandservices(zeropercent).
areexemptfromVAT, forexample,
certainfooditems(suchasmeat, fish,
potatoes, vegetableandfruits), juteand
jutegoodsandsocialwelfare, cultural,
training, rehabilitationservicesand
agriculturaldevelopment.
(vii) Barbados
(VAT)is15percent.Thereisa7.5
percentratewhichappliestothe
provisionofhotelandcondo-hotel
accommodation.Zero-ratedsupplies
include:exportsofgoodsandservices,
basicfooditems, printedmatter, certain
agriculturalmachineryandinternational
transportofpassengersandfreight.
Exemptsuppliesincludecertain
financialservices, healthand
educationalservicesandspecific
suppliesofrealproperty.
(ix) Bolivia
(I mpuestoalValorAgredado;I VA)is
13percentofthetotalpriceofthe
servicerenderedforaneffectiverate
of14.943percent.Exportsofgoods
andservicesarezero-rated.Exempt
servicesinclude:financialtransactions
suchasinsuranceandreinsurance,
interest, commissionsonfinancial
servicesandsalesandpurchases
ofshares.
(x) BosniaandHerzegovina
(Poreznadodanuvrijednost;PDV)is
17percent.Thereisareducedrateof
zeropercentwhichappliesto, for
example, exportsofgoodsandcertain
relatedservices.Suppliesofcertain
goodsandservicesareexemptfrom
VAT, forexamplefinancialservices,
insuranceandreinsuranceservices,
education, healthcare, rentof
residentialpropertyforaperiodlonger
than60days, certainsuppliesof
immovableproperty, dealinginshares,
managementofinvestmentfunds
andstamps.
(xi) Botswana
(VAT)is10percent.Thereisareduced
rateofzeropercentwhichappliesto,
forexample, exportsofgoodsand
services, internationaltransport
services, disposalofbusinessesas
goingconcerns, certainfoodproducts
notmixedwithotherproducts, some
pesticides, fertilizers, farmingtractors
andsuppliestotheHeadofState.
prescriptiondrugs, residential
accommodation, educationatapproved
institutions, publicmedicalfacilities
andservices, non-feebasedfinancial
servicesandpassengertransportation
(excludingthetransportationof
tourists).
(xii) Brazil
Therearetwotypesofvalue-added
taxinBrazil, aStateSalesTax(I mposto
sobreCirculaodeM ercadoriase
Servios;I CM S)andaFederalExcise
Tax(I mpostosobreProdutos
I ndustrializados;I PI ).Thereareother
taxesonsuppliesofgoodsorservices:
aServicesTax(I mpostoSobreServios;
I SS), aSocialContributionforSocial
SecurityFinancing(Contribuioparao
FinanciamentodaSeguridadeSocial;
CO FI NS)andanEmployees Profit
ParticipationProgram(Programade
I ntegraoSocial;PI S).
ThestandardrateofI CM Sis17percent
(inSoPaulo, M inasGeraisandParan
thestandardrateis18percentandin
RiodeJaneiroitis19percent).I PI is
normallychargedatanadvalorem
(value)rateaccordingtotheclassification
oftheproductbaseduponthe
internationalHarmonizedCommodity
DescriptionandCodingSystem,
administeredbytheWorldCustoms
O rganizationinBrussels.Ratesrange
fromzeropercenttoamaximumof
330percentandaverageabout
10percent.ThestandardrateofI SS
israngesfromtwotofivepercent.
ThestandardratesofPI SandCO FI NS
undertheso-called non-cumulative
regimeare1.65percentand7.6percent,
respectively.
Therearereducedratesofseven
percentand12percentI CM Swhich
applytointer-statesupplieswithin
Brazildependingontheregioninto
whichgoodsaresoldandtocertain
intra-statesupplies, forexample, to
dieseloilandhydratedethylalcohol
fuel, motorvehiclesandtransport
services(12percent), productsthat
arepartofthebasicfoodbasketand
productsfromtheelectronicdata
processingindustry(sevenpercent).
Certainsuppliesareexemptfrom
I CM S, forexamplesuppliesofbooks,
newspapers, periodicals, andthepaper
consumedintheprintingofsuch
products, saleoffixedassets, fruits,
vegetablesandfarmandgarden
produceandpreservatives.
ThereducedI PI rateofzeropercent
appliesto, forexample, liveanimals
andanimalproducts, plantproducts,
chemicalproducts, textileproducts
andshoes.Certainsuppliesareexempt
fromI PI , forexamplesuppliesof
vessels(exceptsportingorpleasure
boats), exports, books, newspapers,
periodicals, andpaperconsumedin
theprintingofsuchproducts, electric
energy, petroleumproducts, fueland
mineralsbelongingtothecountry.
TherearereducedratesofI SSwhich
varyfromonemunicipalitytoanother.
CertainsuppliesareexemptfromI SS,
forexampleexportsofservices,
amountsintermediatedinthebonds
andsecuritiesmarket, theamountof
bankdeposits, thecapital, interests
anddefaultinterestsregardingcredit
operationsperformedbyfinancial
institutions.
Reducedratesof0.65percentPI S
andthreepercentCO FI NSapplyunder
aso-called cumulative regime.Unlike
thenon-cumulativeregimethereisno
recognitionofanytaxcreditsunderthe
cumulativeregime.Certainsuppliesare
exemptfromPI SandCO FI NS, for
exampletheexportationofgoods, the
exportationofserviceswithpaymentin
convertiblecurrency, salesofproducts
toacommercialexportcompanyfor
exportpurposespecificallyandsales
offixedassets.
(xiii) Bulgaria
(DanakDobawenaStoinost;DDS)is
20percent.Therearereducedratesof
sevenpercentandzeropercentwhich
applyto, forexample, hotel
accommodationserviceswherepart
ofapackagetour(sevenpercent),
exportsandintracommunitysupplies
ofgoods, internationaltransportof
goodsandpassengers, transport
processingofgoodsandpassengers
whenpartofinternationaltransport,
suppliesofgoodsforfuellingand
provisioningofaircraftsandships
engagedininternationaltransportation,
construction, repair, modification,
maintenance, assembly, equipment,
transportationanddestructionof
aircraftandships(zeropercent).
health, social, educationandcultural
services, transferofpropertyrights
overlandandoldbuildingsunder
specialconditions, financial, insurance
andpostalservices.
(xiv) Canada
ServicesTax(GST)issixpercent
(decreasedfromsevenpercentasof
July1, 2006).Thereisareducedrate
ofzeropercentwhichappliesto, for
example, exportsofcertaingoods,
prescriptiondrugsandbasicgroceries.
somesuppliesofresidentialproperty,
financialandinsuranceservices,
educationalandhealthcareservices.
I naddition, allprovinces, exceptfor
Alberta, imposeaValueAddedTaxor
aRetailSalesTaxonthesalesof
taxablegoodsandservices.
TheprovincesofNewBrunswick,
NovaScotiaandNewfoundlandapply
aharmonizedvalueaddedtax, the
HarmonizedSalesTax(HST), ata
rateof14percent(decreasedfrom
15percentasofJuly1, 2006.TheHST
appliestothesamebaseofgoodsand
servicesastheGST.
TheprovinceofQ ubecappliesitsown
valueaddedtax, theQ ubecSalesTax
(Q ST), atarateof7.5percentorzero
percenttogenerallythesamebaseof
goodsandservicesastheGST, except
forfinancialserviceswhicharezero-
rated.TheQ STappliestotheGST-
includedpriceoftaxablesuppliesmade
inQ ubec.
TheprovincesofBritishColumbia,
Saskatchewan, M anitoba, O ntarioand
PrinceEdwardI slandlevyRetailSales
Taxesintheirrespectivejurisdictions.
Theratesvaryfromfivepercentto
10percent.
(xv) CaymanIslands
ThereisnoVATorGSTinCayman
I slands.
(xvi) Chile
19percent.Exportsofgoodsarezero-
rated.Exemptsuppliesinclude:capital
goodsimportedbyforeigninvestorsor
companiesreceivingforeigninvestment
thathavesubscribedaninvestment
agreementwithstateofChileunder
DecreeLaw600;incomefromtickets
tosportseventsandcertainartisticand
culturalevents;international
transportationofcargoorpeople;
certaintypesofinsurancepremiums;
remunerationforservicesprovidedby
personswhoareneitherdomiciled
non-residentinChileandwhoare
subjecttoincomewithholdingtax;
certainkindofinterestsonfinancial
andcredittransactionsand
instruments;servicesprovidedto
personsneitherdomicilednorresident
inChileandwhicharequalifiedas
exportservicesbytheNational
CustomsService;radiobroadcasters
andconcessionairesoftelevision
channels(exceptforadvertising
income);educationalestablishments
anduniversitiesoneducational
activitiesandpublichospitals.
(xvii) China
Therearethreetypesofindirecttaxes
inChina, ValueAddedTax, Consumption
TaxandBusinessTax.
ratesof13percentandzeropercent
whichapplyto, forexample, basic
necessities, agriculturalproductsand
utilityservices(13percent)andexports
ofgoods(zeropercent).Exportsof
variousgoodsarenotwhollyzero-rated
andalltheassociatedinputtaxisnot
refundableinfulltotheexporters.
Therearetwo specialrates under
the small-scaletaxpayers' flatrate
scheme ;arateofsixpercentfor
businessesengagedinproduction
andfourpercentforbusinesses
engagedinwholesaleorretail.
agriculturalproductsselfproduced
forthepurposeofsale, ancientand
antiquatedbooksandimported
equipmentforscientificresearch
andexperiment.
BusinessTaxratesare:threepercent,
fivepercentandarangeoffivepercent
to20.Forexample, servicesof
transportation, construction, postand
telecommunication, culturalactivities
andsports(threepercent), services
offinanceandinsurance, hotels,
restaurants, catering, tourist, rental,
leasing, advertising, thesaleof
intangibleassets, transferring
immovableproperty(fivepercent)
andentertainment(fivepercentto
20percent).
Thereare14categoriesofgoods
thataresubjecttoconsumptiontax,
includingtobacco, liquor, cosmetics,
jewelers, firecrackers, refinedoil,
motorvehicletires, motorcycles,
motorvehicles, golfballsandclubs,
luxurywatches, yachts, disposable
woodenchopsticks, andwoodenfloor
panels.Normallyconsumptiontaxis
chargedatanadvalorem(value)rate
thatrangesfromthreepercentto
45percent, whileexportsarezero-
rated.Somegoodssuchasrefinedoil
areleviedatquantum(unit/volume)
basis.Asfortobaccoandsometypes
ofliquor, compoundratecalculations,
atbothanadvaloremandquantum
rateareapplied.
(xviii) Colombia
Thestandardrateofvalueadded
tax(I mpuestoSobrelasVentas)is
16percent.Thereducedrateof
1.6percentappliestocertaincleaning
andsecurityservicesandcertain
servicesrenderedbythecooperatives
andpre-cooperativesofassociated
work.Thereducedrateof10percent
appliesto, amongothers:coffee,
cereals, chocolate;prepaidhealth
services;accommodationservicesin
hotels;andcommercialrealproperty
leasing, amongothers.Thereduced
rateof11percentappliestobeer.
Theincreasedrateof20percent
appliestomobiletelephoneservices
andcertainmotorvehiclesandships.
Theincreasedrates25and35percent
applytocertainmotorvehiclesand
motorcycles.Zero-ratedsupplies
(referredtoasexemptsuppliesin
Colombia)include:exportsofgoods,
certainfoodsitems, schoolnotebooks,
fuelalcoholdestinedtobemixedwith
gasoline, booksandmagazinesofa
scientificandculturalnature, services
thatarerenderedwithinthecountry
andusedexclusivelyabroadby
enterprisesorindividualswithout
businessoractivitiesinColombia
(exportsofservices).Exemptsupplies
(referredtoasnon-taxableorexcluded
suppliesinColombia)includebasic
fooditems;certainexportservices,
passengerpublictransportationto
somemunicipalitieswithinColombia,
cargotransportation, certainfinancial
transactions, publicservicesofenergy,
water, sewer, publiccleaning, garbage
collectionanddomesticgas;building
rentalserviceusedforresidential
purposes, certainagriculturalservices,
certainlife, healthandeducation
insurancesanditems, medicines,
chemicalandmineralfertilizers, crude
oilforitsrefining, naturalgas, butanes
andnaturalgasoline, wood, newspapers,
certainarmsofwar, purchaseofgoods
forhumanandanimalconsumption
fromspecificneighboringstates.
(xix) CostaRica
(I mpuestoGeneralSobrelasVentas;
I GV)is13percent.Therearetwo
reducedrates:Woodissubjectto
a10percentrateandresidential
electricityissubjecttoafivepercent
rate.Zero-ratedsuppliesinclude:basic
foodandotherbasicnecessities
( basicbasket or canastabsica )
andexports.Exemptgoodsaredefined
inArticle9oftheSalesTaxLaw
including:tiresforagricultural
equipment;veterinarysuppliesdefined
bytheM inistryofAgricultureand
theM inistryofFinance;medicines;
kerosene, dieselforfishingactivities
(othersthansportfishing);books,
musicalcompositions;paintings
createdwithinCostaRicabyCosta
Ricanornon-CostaRicanpainters;
coffins;themonthlyconsumption
ofelectricenergywhenitdoesnot
exceed250kW/h;there-importation
ofmerchandiseofCostaRicanorigin,
occurringwithinthethreeyears
followingtheirexportation.
(xx) Croatia
(Poreznadodanuvrijednost;PDV)is
22percent.Therearereducedrates
of10percentandzeropercentwhich
applyto, forexample, tourist
accommodation, fullorhalfboard
servicesandtouristagents
commissionwithregardstothose
services(10percent), exportsofgoods,
bread, milk, certainbooks, certain
medicines, medicalimplantsand
orthopedicdevicesandscientific
magazines(zeropercent)Certain
suppliesofgoodsandservicesare
exemptfromVAT, forexamplefinancial
transactions, insuranceandreinsurance
services, rentofresidentialproperty,
suppliesbymedicalpracticesand
institutions, suppliesbysocial, children
andyouthcareinstitutions, suppliesby
schoolsandothereducational
institutions, suppliesbyculturalpublic
institutions, transferofsecurities,
sharesandreceivables.
(xxi) Cyprus
(Forosprostithemenisaxias;FPA)is
ofeightpercent, fivepercentandzero
percent, whichapplyto, forexample,
certainpassengerstransportation
services, hotelaccommodation,
restaurantandsimilarcateringservices
excludingalcohol(eightpercent),
non-bottledwater, books, newspapers,
magazinesandsimilarpublications,
gas, aidtodisabledpersons, animal
feed, fertilizersandinsecticides, waste
treatment(fivepercent), exportsof
goods, drugsandmedicines, most
fooditemsforhumanconsumption
(zeropercent).Suppliesofcertain
VAT, forexamplefinancialservices,
postalservices, education, health
careandwelfareservices, cultural
servicesbypublicbodiesornon
profitorganizations.
(xxii) CzechRepublic
(dazpidanhodnoty;DPH)is
19percent.Thereisareducedrateof
fivepercentandzeropercentwhich
applyto, forexample, foodproducts,
books, brochures, newspapersand
magazines, publictransportservices,
residentialhousingconstruction,
transferofresidentialhousesunless
exempt(fivepercent), exportsand
intra-Communitysuppliesofgoods,
internationaltransportofgoodsrelating
toexportsorimportsofgoods(zero
percent).Certainsuppliesofgoodsand
servicesareexemptfromVAT, for
example, insuranceandfinancial
services, postalservices, education,
healthandwelfareservices, transfer
oflandincludingfinancialleasingof
land, transferandfinancialleasingof
immovablepropertyincertain
conditions, rentingoflandand
immovableproperty.
(xxiii) Denmark
(M ervrdiafgift;M O M S)is25percent.
whichappliesto, forexample, exports
ofgoods, newspapers, saleandleasing
ofshipsandaircrafts.Suppliesof
fromVAT, forexamplehealthand
welfareservices, education, certain
sportandculturalactivities, land,
financialandinsuranceservices, postal
servicesbyPostDenmark, passenger
transportservices(excludingtransport
oftouristsbybus)andtravelagency
services.
(xxiv) DominicanRepublic
(I mpuestosobreTransferenciade
BienesI ndustrializadosyServicios;
ITBI S)is16percent.Exportsofgoods
andservicesarezero-rated.
Exemptsuppliesinclude:basic
consumptionitems, educational
materials, medicines, servicesof
health, financial, utilities, andinland
transportofpersonsandcargo.
(xxv) Ecuador
12percent.Exportsarezero-rated, with
certainexceptions.Exemptsupplies
include:naturalfoodproducts, milkand
certainindustrializedfoodproductsfor
humanconsumption, medicinesand
drugsofhumanuse, seeds, bulbs,
plants, liveroots, fishflour, animalfeed,
fertilizers, insecticides, pesticides,
herbicidesandveterinarianproducts,
tractorswithtiresupto200HPand
otheragriculturalimplements, paper,
newspaper, magazinesandbooks,
fluvial, maritimeandterrestrial
transportationofpassengersand
cargoaswellasinternationalair
transportationofcargoandaircargo
transportationfromandtotheprovince
ofGalapagos, financialandinvestment
servicesforentitieslegallyauthorized
toprovidethem, thetransferof
securities, healthandeducation
services, publicservicesofelectricity,
water, sewerandtrashcollection,
leasingofresidentialproperty;book
printingandaerialfumigationservices,
andservicesprovidedbyartisansand
byprofessionalswithqualificationof
superiorinstructionuptoanamount
ofUSD400foreachcase.
(xxvi) Egypt
Thestandardrateofgeneralsalestax
(GST)is10percent.Thereareother
ratesthatvaryfromzeropercentto
45percent.Thereducedratesapplyto,
forexample, coffee, allproductsmade
offlour, soap, fertilizers, gypsum, and
ironbars(fivepercent)andexportsof
goods(zeropercent).Theincreased
ratesapplyto, forexample, national
andinternationaltelecommunication
servicesusingmobilephones, motor
vehiclesofacylindercapacityless
than1600cc(15percent), some
coloredtelevisions, refrigerators
ordeepfreezes, soundrecorders,
air-conditioningunits, cameras,
perfumery, cosmeticsortoilet
preparationsandproductsprepared
forthecareofhairandskin
(25percent), motorvehiclesof
acylindercapacityof1600ccupto
2000cc, motorvehiclesforthe
transportofgoodsandpersons,
jeepmotorvehicles, campingtrailers
(30percent), motorvehiclesofa
capacityofmorethan2000cc
andvehiclesfortripsandcamping
(45percent).GSTisimposedon
somecommoditiesaccordingto
theircollectionunit(ton, literorvalue)
forexample, tea, beetandcanesugar,
sodawater, petroleumproducts,
medicaments, andwatercement.
Certainsuppliesofcommoditiesare
exemptfromGST, forexample, dairy
products, vegetableoils(subsidized),
conserves, processedorprepared
meatandfishitems(withsome
exceptions), naturalandbutanegas,
newsprint, paperandmacaronimade
ofordinaryflour.
(xxvii) Estonia
(kibemaks)is18percent.Thereare
reducedratesoffivepercentandzero
percentwhichapplyto, forexample
booksandcertainperiodicals, drugs,
medicines, culturalperformances,
accommodationservices(fivepercent),
internationaltransportandpassenger
services, exportsofgoods, supplyof
aircraftoperatingoninternational
routes, thesupplyofsea-goingvessels
fornavigationonhighseas, goods
placedinfreezoneorfreewarehouse
orcertaingoodsplacedtoVAT
warehouse, provisionofserviceson
boardvesselsoraircraftsduringthe
internationaltransport(zeropercent).
certainimmovableproperty, certain
postalservices, educationandhealth
andwelfare.
(xxviii) Fiji
tax(VAT)is12.5percent.Thereisa
reducedrateofzeropercentwhich
appliesto, forexample, exportsof
goodsandcertainservices, prescribed
medication, somebasicfooditems
(suchasrice, flour, tea, edibleoil,
tinnedfishandpowderedmilk)and
kerosene.Suppliesofcertaingoods
andservicesareexemptfromVAT,
forexamplefinancialandinsurance
services, residentialaccommodation
andeducation.
(xxix) Finland
(Arvonlisvero;ALV)is22percent.
Therearereducedratesof17percent,
eightpercentandzeropercentwhich
applyto, forexample, foodandanimal
feed(17percent), accommodation,
books, pharmaceuticals, passenger
transportandculturalandsporting
services(eightpercent), newspaper
subscriptions, thesaleandhireof
certaintransportvesselsandexports
ofgoods(zeropercent).Suppliesof
fromVAT, forexampleimmovable
property(withsomemajorexceptions),
educationandhealthandwelfare.
(xxx) France
(Taxesurlavaleurajoute;TVA)is
19.6percent.Therearereducedrates
of5.5percent, 2.1percentandzero
percentwhichapplyto, forexample,
food, water, passengertransportation,
somepharmaceuticalproducts, books,
hotelaccommodation(5.5percent),
newspapersandmedicinesforhuman
healthwhenreimbursedbysocial
security(2.1percent), exportsofgoods
andintra-Communitysupplies(zero
percent).Certainsuppliesofgoods
forexamplecertainmedicalsupplies,
postalservices, education, certain
financialtransactionsandinsurance
services.
(xxxi) Germany
(Umsatzsteuer;USt)is19percent
(increasedfrom16percentasfrom
1January2007).Therearereduced
whichapplyto, forexample, foods,
plantsandanimals, booksand
newspapers, entrancefeestocultural
sitesandpassengertransport
(journeysofnotmorethan50km)
(sevenpercent), thesupply, import,
repairandmaintenanceofcertainships
andaircraft, cross-borderpassenger
transportbyair, financialtransactions
renderedtoarecipientresidentoutside
theEUandexportsofgoods(zero
percent).Therearetwo specialrates
underthe farmer' sflatratescheme ;
arateof5.5percent(increasedfrom
fivepercentasfrom1January2007)
applicabletosuppliesofforestry
productswhicharenottheproducts
ofsawmillsandarateof10.7percent
(increasedfromninepercentasfrom
1January2007)applicabletosupplies
oftypicalagriculturalgoodsand
servicesaswellastospecificsupplies
ofsawmillproducts.Certainsupplies
ofgoodsandservicesareexemptfrom
VAT, forexample, theservicesof
transportagenciesrenderedasaresult
ofstatutorycommandtotheGerman
FederalM ail, financialtransactions
renderedtorecipientresidentwithin
theEU, insuranceservices, supplies
fallingundertheRealEstateAcquisition
Law, land(limited), healthandwelfare
andeducation.
(xxxii) Greece
(ForosProstithemenisAxias;FPA)is
ofninepercent, 4.5percentandzero
freshfoodproducts, pharmaceuticals,
passengertransportservices,
electricity, naturalgasandcertain
professionalservicessuchasthose
whichareprovidedbyhotels,
restaurantsandcoffeeshops(nine
percent), newspapers, periodicals,
booksandtheatretickets(4.5percent),
exporttransactions, internationaltransit
ofgoodsandtransactionsinrelationto
shipping(zeropercent).VATratesare
furtherreducedby30percentifgoods
orservicesaresuppliedtoorby
taxpayersestablishedinthe
DodecaneseI slandsandotherAegean
I slands(i.e.13percent, sixpercentand
threepercent, respectively).Certain
exemptfromVAT, forexampleused
immovableproperty, medical,
educationalandculturalservicesand
insurance, financingandmostbanking
activitiesprovidedtoEUresidents.
(xxxiii) Guatemala
12percent.Exportsarezero-rated.
Exemptsuppliesinclude:certain
imports, certainmedicines, specified
financialservicesandspecified
suppliesofrealproperty.
(xxxiv) Honduras
ThestandardrateofSalesTax
(I mpuestoSobreVentas;I SV)is
12percent.Anincreasedrateof
15percentappliestoimportsand
nationalsuppliesofalcoholicbeverages
andtobaccoproducts.Thegoodsand
servicesexportedabroadaresubjectto
zeropercent.Exemptsuppliesinclude:
basicfooditemsforhuman
consumption, livestockandcertain
agriculturalgoodsandmachinery,
pharmaceuticalproductsforhumans
andanimals, books, magazines,
newspapersandschoolsupplies, most
financialservices, educationalservices,
thesupplyofwaterandelectricity,
professionalandsportsservicesand
terrestrialtransportationofpassengers.
(xxxv) HongKong
ThereisnoVATorGSTinHongKong.
(xxxvi) Hungary
(ltalnosforgalmiad;FA)is
offivepercentandzeropercent,
whichapplyto, forexample, books,
newspapers, medicines, somemedical
instruments(fivepercent)andexports
ofgoods(zeropercent).Therearetwo
specialrates underthe farmer' sflat
ratescheme ;arateof12percent
applicabletosuppliesofagricultural
productsandarateofsevenpercent
applicabletosuppliesofliveanimals
andanimalproducts.Suppliesof
fromVAT, forexamplesale, rentaland
leasingoflandparcelsotherthan
buildingland, rentalandsaleof
residentialproperty, rentalandleaseof
realproperty, postalservices, financial
services, certaineducationactivities,
humanhealthcareservices, social
servicesandrecreationalandamateur
sportsservices.
(xxxvii) Iceland
(Virdisaukaskattur;VSK)is24.5percent.
(reducedtosevenpercentasfrom
M arch1, 2007)andzeropercentwhich
applyto, forexample, accommodation,
booksandperiodicals, licensestouse
radioandtelevisionbroadcasting
services, certainfoodintendedfor
humanconsumption(14percent),
exportsofgoodsandservices,
internationaltransportation, fueland
equipmentdeliveredforuseinships
andaircraftengagedininternational
traffic, salesandrentalsofshipsand
aircraftandrepairsandmaintenance
servicesrenderedtoshipsandaircraft
(zeropercent).Certainsuppliesof
VAT, forexample, realestateand
parkingspaceleases, healthservices,
socialservices, educationalandsport
activities, passengertransport, postal
services, financialservices, services
oftravelagencies.
(xxxviii) India
I ndiahasafederalstructurewithboth
FederalandStatespecificindirecttax.
I ntra-Statesaleofgoodsissubjectto
aValueAddedTax(VAT)andsaleof
goodsoccasioningmovementacross
StatesissubjecttoaCentralSalesTax
(CST).I nadditionthereisanother
indirecttaxonsuppliesofservices,
ServiceTax.
ThestandardrateofVATis12.5percent.
Therearereducedratesoffour
percent, onepercentandzeropercent
whichapplyto, forexample,
ITproducts, intangiblegoods(suchas
patentsandcopyrights), capitalgoods,
chemicalfertilizers, cotton, drugsand
medicines, ironandsteel, industrial
inputs, sportsgoods, tractors(four
percent), gold, silver, preciousstones
(forexamplediamonds), articles
orornamentsmadeofthe
aforementioned(onepercent)and
exportsofgoods(zerorated).
Thereareincreasedratesof20percent
andabove, applicabletopetroleum
products(suchasdiesel, petrol,
lubricants, andaviationturbinefuel),
naturalandothergasesusedasfuel,
liquorandbeer.Certainsuppliesof
goodsareexemptfromVAT, for
examplebooks, periodicalsand
journals, electricenergy, milk, fresh
plants, flowers, vegetablesandfruits,
meat, fish, prawn, riceandwheat.
CSTonsaletoataxablepersonacross
Statesischargedattherateoffour
percentoralternativelyattheVATrate
applicableintheoriginatingStateor
10percent, whicheverishigher.
TheCSTrateoffourpercentis
proposedtobereducedtothree
percent, witheffectfrom1April2007.
ThestandardrateofServiceTax
is12.24percent, whichwillbe
increasedto12.36percentafter
enactmentoftheFinanceAct, 2007.
Currently96taxablecategoriesof
servicesaresubjecttoServicetax, for
exampleadvertisingservices, financial
andinsuranceservices, business
auxiliaryandsupportservices,
telecommunication, cargohandling,
intellectualpropertyservices,
maintenanceandrepairservices,
certainITservices, management
consultation, scientificandtechnical
consultancy.
(xxxix) Indonesia
Therearetwotypesofindirecttaxin
I ndonesia, aValueAddedTax(Pajak
PertambahanNilai;PPN)andaSales
TaxonLuxuryGoods(PajakPenjualan
AtasBarangM ewah;PPnBM ).
ThestandardrateofPPNis10percent.
TheratesofPPnBM rangefrom
10percentto75percent.Thereduced
PPNandPPnBM ratesofzeropercent
applytoexportsofgoods.Certain
exemptfromPPN, forexample,
unprocessedminerals, agricultural
products, basicnecessities, banking
andinsuranceservices, financeleasing,
hotelandrestaurantactivities,
employmentandmanpowerservices,
varioussocialservices, thesupplyof
electricpowerandpotablewater.
(xl) Ireland
ratesof13.5percent, 4.8percentand
zeropercentwhichapplyto, for
example, immovablegoods, building
services, hotelandholiday
accommodation, hotelandrestaurant
meals, newspapersandrepairand
maintenanceservices(13.5percent),
supplyoflivestock, livegreyhoundsand
hireofhorses(4.8percent)exportsof
goods, mostfoodanddrinksuitablefor
humanconsumption, oralmedicines
andmedicalequipmentandappliances
(zeropercent).Thereisalsoaspecial
farmers' flatrateadditionof5.2percent
(increasedfrom4.8percentin2006)
whichappliestocertainsalesby
unregisteredfarmers.Suppliesof
fromVAT, forexamplecertainlettings
ofimmovableproperty, financialand
insuranceservices, passenger
transport, educationandhealth
andwelfareservices.
(xli) Israel
(M asErechM usaph;M a' am)is
15.5percent.Thereisareducedrate
example, exportsofgoods, supplyof
intangiblepropertytonon-residents
(withexceptions), supplyofservicesto
non-residentsinlimitedcircumstances,
internationalcargotransportservices,
saleofassetsinlimitedconditions,
supplyofcertainservicesinconnection
withtheentryordepartureofaircrafts
orvesselsintoorfromI srael.Supplies
ofcertaingoodsandservicesare
exemptfromVAT, forexample
residential(excludinghotels)leasesfor
aperiodnotexceeding25yearsand
saleofanapprovedrentalbuilding
undertheEncouragementofCapital
I nvestmentsLaw(subjecttocertain
conditions), depositoffundsbya
dealerwithafinancialinstitutionorthe
grantofaloanbyadealertoafinancial
institution.
(xlii) Italy
(I mpostasulValoreAggiunto;I VA)is
of10percent, fourpercentandzero
certainfoods, hotelaccommodation,
publictransport, pharmaceuticals,
water(10percent), basicfoodstuffs,
booksandnewspapers, main
residence, medicalequipmentandaids
forhandicapped(fourpercent), exports
ofgoodsandintra-Community
supplies, internationaltransport
servicesandservicesdirectly
connectedwithexportsorimports.
lotteries, bettingandothergamesof
chance, postalservices, education
servicesandwelfare.
(xliii) J amaica
(GeneralConsumptionTax)is
16.5percent.Therateof8.25percent
appliestocertaintourismservices.
Therateof20percentappliesto
telephoneservices.Zero-ratedsupplies
include:exports, agriculturalequipment
andmaterial, healthsuppliesand
medicationandgoodspurchasedby
orservicesrenderedtogovernment
entities.Exemptsuppliesinclude:
medicalsuppliesandequipment, books
andeducationalsupplies, energy-saving
devicesandmiscellaneousservices
includingconstruction, health, public
utilitiesandfinancialservices.
(xliv) J apan
ThestandardrateofConsumptionTax
isfivepercent.Thereisareducedrate
ofzeropercent, whichappliesto, for
example, exporttransactions, including
thetransferorleaseofgoods, other
exportrelatedactivitiessuchas
internationaltransportation, services
providedtoanon-resident(except
transportorstorageofassetsinJapan,
provisionofaccommodationandfood
inJapan, provisionofservicesofa
similarnatureinJapan).Suppliesof
fromConsumptionTax, forexample
saleandleaseofland, rentalof
housing, saleofsecuritiesandsimilar
instruments, monetarytransactions,
medicaltreatmentunderpublicmedical
insurancelaw, socialwelfareactivities,
schooltuitionandexaminationservices.
(xlv) Kazakhstan
(NalognaDobavlennuyuStoimost;
NDC)is14percent(decreasedfrom
15percentasfrom1January, 2007).
whichappliestoexportsofgoods,
internationaltransportservicesand
saleofgoodswithinspecialeconomic
zones.Certainsuppliesofgoodsand
examplesaleandleaseofland, right
touseland(withsomeexceptions),
leaseandsaleofbuildings, certain
financialservices, insuranceservices,
geologicalsurveyingandexploration
activities, saleofservicesrelatedto
governmentallyapprovedinfrastructure
projects, saleofanenterpriseorapart
thereof, medicalservicesand
education, certainimports.
(xlvi) Korea,Republicof
forexample, theexportsofgoods,
servicesrenderedoutsidetheRepublic
ofKorea, internationaltransportation
byshipsandaircraft, othergoodsor
servicessuppliedtoearnforeign
exchange.Suppliesofcertaingoods
forexampleunprocessedfoodstuffs,
medicalandhealthservices, certain
educationalservicesandpassenger
transportservices, books, newspapers
andmagazines, postagestampsand
publictelecommunicationservices.
(xlvii) Latvia
(pievienotasv ert i basnodoklis;PVN)is
fivepercentandzeropercentwhich
applyto, forexample, pharmaceuticals,
accommodationinhotels, booksand
newspapers, waterandheating,
passengertransportandentrancefees
tosportevents(fivepercent), supply,
import, repairandmaintenanceof
certainshipsandaircraft, passenger
transportbyairorsea, financial
transactionsoutsidetheEUand
exports(zeropercent).Suppliesof
fromVAT, forexample, landandused
immovableproperty, financialand
insuranceservices, educationand
healthandwelfareservices.
(xlviii) Lithuania
(pridetinesvertesmokestis;PVM )is
ofninepercent, fivepercentandzero
suppliesofservicesrelatingto
constructionandreconstructionof
residentialhousesfinancedbystateor
municipality(ninepercent), passenger
transportservices, books, newspapers
andperiodicals, pharmaceuticals
andcertainmedicalproducts,
accommodationathotels, organicfood
products, chilledmeat, live, freshand
frozenfish(fivepercent), exportsof
goods, intra-Communitysuppliesand
supply, modification, modernization,
hiringofsea-goingshipsandaircraft
(zeropercent).Thereisa specialrate
ofsixpercentunderthe farmer' sflat
ratescheme.Suppliesofcertaingoods
andservicesareexemptfromVAT, for
examplehealthandwelfare, social,
educational, culture, sports, postal,
financial, insuranceservices, saleof
realestate(olderthan24months)
andleasingofrealestate.
(xlix) Luxembourg
(Taxesurlavaleurajoute;TVA)is
12percent, sixpercent, threepercent
example, certainwines, fuel(otherthan
gasandelectricity), safekeepingand
managementofsecurities, management
ofcreditbypersonsnotgrantingit
(12percent), electricity, gas(sixpercent),
food(exceptdrinkscontainingalcohol)
andanimalfeed, books, newspapers
andperiodicals, passengertransport,
hotelaccommodation, certainsporting
andculturalservicesandcertain
pharmaceuticalproducts(three
percent), exportsandintra-Community
suppliesofgoods, suppliesofgoods
andservicesusedbyairlinesoperating
forrewardchieflyoninternational
routes, servicessuppliedfortheneeds
ofseagoingvesselsandinternational
passengertransportservices(zero
percent).Suppliesofcertaingoodsand
examplebankingandfinancialservices,
managementofinvestmentsfunds,
SI CAR, somepensionfundsand
securitizationvehicles, insuranceand
reinsuranceoperations, supplyand
lettingofimmovableproperty, postal
services, educationandcertainmedical
supplies.
(l) Macau
ThereisnoVATorGSTinM acau.
(li) Malaysia
Therearetwotypesofindirecttaxes
inM alaysia, aSalesTaxandaServices
Tax.ThestandardrateofSalesTaxis
10percent.ThereisareducedSales
Taxrateoffivepercentthatappliesto,
forexample, fruits, certainfoodstuff,
timberandbuildingmaterials, alcoholic
beverages, cigarettesandtobacco
products.ThestandardrateofService
Taxisfivepercent.M alaysianSalesTax
orServiceTaxdoesnotprescribetothe
conceptofzeroratingorexemptionas
thosetypicallyavailableunderVATor
GSTregime.
(lii) Malta
(Taxxafuqil-ValurM i jud)is18percent.
Therearereducedratesoffivepercent
example, lettingoforprovisionof
accommodationinpremises(incertain
conditions), thesupplyofelectricity,
medicalaccessories, printedmatter,
itemsfortheexclusiveuseofthe
disabled(fivepercent), exportsof
goods, internationaltransportand
ancillaryservices, suppliesofcertain
qualifyingvesselsandaircraft, the
charteringthereofandcertain
servicesprovidedthereto, foodand
pharmaceuticalgoods(zeropercent).
immovableproperty(withsome
exceptions), insuranceservices,
credit, bankingandotherrelated
services, cultural, sportingandreligious
services, postalservices, education,
healthandwelfare.
(liii) Mauritius
forexample, exportsofgoodsother
thanexemptgoods, sugar, wheatflour,
books, booklets, brochuresofspecific
customsheadings, thesupplyof
electricity, water, internationaltransport
ofpassengersandgoods, suppliesof
servicestononresidents.Suppliesof
fromVAT, forexamplerice, wheat,
bread, butter, milkandcream, medical,
hospitalanddentalservices, certain
pharmaceuticalproducts, educational
andtrainingservices, postalservices,
cargohandlingandcertainresidential
buildings.
(liv) Mexico
15percent.Thereducedrateof
10percentappliestothefrontierregion
(definedas20kilometersparallelto
thenorthernandsoutherninternational
divisionsofM exico).Zero-rated
suppliesinclude:exports, non-
industrializedanimalsandvegetables
(exceptrubber), patentmedicinesand
productsintendedforfood, except
beveragesotherthanmilk, syrupsor
concentratesforpreparationof
beverages, ixtle, palmleavesandtypes
ofagave, tractorsandagricultural
implements, reinsurance, supplies
ofwaterfordomesticuse.Exempt
suppliesinclude:salesofland, books,
newspapersandmagazinesunder
certainconditions, commissionson
mortgagesandretirementfunds, public
transportofpersonsbyland(exceptby
railway), internationalmaritime
transport, insuranceandreinsurance,
certaininterests, derivedfinancial
operations, professionalmedical
services, authorsroyalties, leasing
ofresidentialproperty, books,
newspapersandmagazines.
(lv) Montenegro
(Poreznadodatuvrijednost;PDV)is
sevenpercentandzeropercentwhich
applyto, forexample, basicfoodstuffs,
medicinesnotlistedontheHealthFund
list, textbooksandteachingaids, books
andserialpublications, dailyand
periodicpress(withsomeexceptions),
hotelandotheraccommodation, public
transportationofpassengersandtheir
personalbaggage(sevenpercent),
exportsofgoods, transportandother
servicesinrelationtoexport, goods
andservicesusedininternationalair
andmaritimetraffic, medicinesand
medicaldeviceslistedonHealth
I nsuranceFundlist(zeropercent).
financialandbankingservices,
thesupplyofimmovableproperty
(exceptthefirsttransfer), healthand
socialsecurityservices, cultural, sport
andreligiousservices.
(lvi) Mozambique
(I mpostosobreoValorAcrescentado;
I VA)is17percent.Thereisareduced
forexample, exportsofgoods, services
linkedtoexportsofgoods, international
passengertransportationandsome
basicfoodstuffs.Suppliesofcertain
VAT, forexamplemedicalandhealth
services, goodsandserviceslinkedto
welfareandsocialsecurity, education,
bankingandfinancialtransactions,
insuranceandreinsurancetransactions,
leasingofimmovableproperty(with
someexceptions), goodsandservices
relatedtoagricultural, forestry, livestock
andfishingactivities, andimportation
ofcertaingoodsapprovedformining
andindustrialfreezoneoperations.
(lvii) Netherlands
(omzetbelasting;BTW)is19percent.
Therearereducedratesofsixpercent
example, food, drink(excluding
alcoholicbeverages), medicines,
books, dailynewspapersand
magazines, passengertransport,
somelaborintensiveservices,
admissiontocultural, entertainment
andsportsevents(6percent), exports
ofgoods, intra-Communitysupplies,
servicesregardinggoodsnotyet
importedandsuppliesofsea-going
vesselsoraircrafts(zeropercent).
immovableproperty(withsomemajor
exceptions), financialandinsurance
services, education, healthandwelfare.
(lviii) NetherlandsAntilles
Thestandardrateofturnovertaxis
fivepercentinCuraaoandBonaire
(O mzetbelasting;O B)andthree
percentinSt.M aarten(Belasting
opBedrijfsomzetten;BBO ).
Exemptsuppliesincludemedical
servicesandcertainfuelsusedfor
businesspurposes.
(lix) NewZealand
ServicesTax(GST)is12.5percent.
Therateisareducedtozeropercentin
certainsituationssuchastheexportof
goodsandservicesandthesupplyofa
businessasagoingconcern.Supplies
exemptfromGSTunlessthesupplies
canbezero-rated.Exemptsupplies
includethesupplyoffinancialservices,
thesupplybynon-profitbodiesof
donatedgoodsandservices, the
supplyofresidentialaccommodation,
andthesupplyoffinemetals.
(lx) Norway
(M erverdiavgift;M VA)is25percent.
(increasedfrom13percentasfrom
1January, 2007), eightpercentand
example, food(14percent), hotel
accommodation, passenger
transportation, communicationofsuch
services, therighttoattendcinemas
(eightpercent), exportsofgoods,
suppliesrelatingtoshipsandaircrafts,
books, magazines, newspapersand
constructionservicesrelatingtopublic
roads(zeropercent).Suppliesofcertain
VAT, forexamplefinancialservices, real
estate(withsomemajorexceptions),
education, healthservicesandsocial
services.
(lxi) Oman
ThereisnoVATorGSTinO man.
(lxii) Pakistan
I ndirecttaxesinPakistaninclude
aSalesTaxandaFederalExcise
Duty(FED).
ThestandardrateofSalesTaxis
example, allexportsofgoods, local
suppliesofrawmaterialsandsupplies
ofspecifiedexportsectors, importand
localsuppliesofcapitalgoods.
areexemptfromSalesTax, forexample
agriculturalproducts, unprocessed
fooditems, animalsandtheirmeat,
fisheries, diaryproducts, construction
materials, computersoftware, ships,
navigationequipments, thesaleto
hospitalsandeducationalnon-profit
organizations.
FEDappliestotheimportand
manufacturingofspecifiedgoods
andprovisionofspecifiedservices
atdifferentrates.TherateofFEDon
specifiedservicesrangesfromfive
percentto15percent.
(lxiii) Panama
(I mpuestosobrelaTransferenciade
BienesCorporalesM ueblesyla
PrestacindeServicios;ITBM S)is
fivepercent.Theincreasedrateof
10percentappliestotheimport,
wholesale, andretailsaleofalcoholic
beveragesandthe15percent
increasedrateappliestotheimport,
wholesaleandretailofallkindsof
cigarettesandcigars.Zeroratesupplies
include:exportsandre-exportsof
goodsandthesalesofpharmaceutical
andfoodproductswhencertain
conditionsaremet(i.e.thetaxable
personisengagedexclusivelyinsuch
activitiesanditstotaloutputissold
withinthePanamanianterritory).
Exemptsuppliesinclude:othersales
offoodandpharmaceuticalproducts,
salesofoil, lubricants, fuelandsimilar
products, allkindsofseedsfor
agriculturalpurposes, toolsfor
agriculturalpurposes, newspapers,
magazines, educativemagneticmedia,
notebooks, pencilsandotheritemsfor
schoolpurposes, medicinesand
pharmaceuticalproducts, foreign
currency, stocksandpublic/private
securities, servicesrelatedtothe
healthofhumanbeings, certainrentals
orofrealproperty, servicesrelatedto
education, loansfromthestate,
transportation, electricenergy, fixed
telecommunication, media(social
communication)exceptforthegrant
ofadvertisingspace, insuranceand
reinsuranceservices, exportation
services, internetaccessservicefor
housesandeducationentities, cultural
publicshows, stock-exchangeactivities,
certainactivitiesofdirectors, managers
andadministrators, payments(including
interestpaidandreceived)arisingfrom
financialservices, professionalservices
thatareperformedtopersons
domiciledabroadwhodonotgenerate
taxableincomeinPanamaandfinancial
leasingcontracts.
(lxiv) PapuaNewGuinea
ServicesTax(GST)is10percent.
ofgoodsandservices, medical
supplies, suppliesofgoodsand
servicestoprescribedforeignaid
provider, suppliesofgoodsand
servicestoanon-profitbody.
financial, medicalandeducational
services, publicroadtransport,
postagestampsandtheretailsupply
ofnewspapers.
(lxv) Paraguay
10percent.Thefivepercentrateapplies
totransfersofrealstate;transfersof
therighttousegoods;certainbasic
fooditems(cestabsica);loansand
financialinterests, commissionsand
surcharges;suppliesofpharmaceutical
products.Exportsarezero-rated.
Exemptsuppliesinclude:certain
diplomaticandinvestmentimports;
farmproductsintheirnaturalstate;
foreigncurrencies, governmentalor
privatesecuritiesincludingsharesof
stock;goodsreceivedthrough
inheritance;transferofcredits;books,
magazinesandothersofscientific,
educationalandgeneralinterest;
interestonpublicorprivatesharesand
securities;depositsinfinancialentities
authorizedbytheCentralBankof
Paraguay;servicesofcooperatives,
homesavingsandloansunderthe
SistemadeAhorroyPrstamopara
laVivienda.
(lxvi) Peru
(I mpuestoGeneralalasVentas;I GV)is
17percent.TheM unicipalPromotion
Tax(I mpuestodePromocinM unicipal;
I PM )oftwopercentisalsoaddedto
thevalueofgoodsorservicesusedto
determinetheI GV, whichresultsina
19percentsalestaxoverall.Zero-rated
suppliesinclude:theexportofgoods,
theexportofservicesdetailedinthe
SoleArrangedTextofSalesTaxandthe
suppliesintheAmazonregion.Exempt
suppliesinclude:freshfish, vegetables,
seeds, fruit, educationalandcultural
books, creditservicesgrantedby
banks, financialandcreditinstitutions,
publictransportationserviceswithin
thecountry, cargotransportation,
culturalperformancesandlife
insurance.
(lxvii) Philippines
(VAT)is12percent(increasedfrom
10percentasof1February2006).
whichappliesto, forexample, thesale
ofgoodsandservicestointernational
shippingorairtransportcompanies,
internationaltransportofpassengers
andcargobyairorseavessels, exports
ofotherservicesincertainconditions
andthesaleofpowerorfuelgenerated
throughrenewablesourcesofenergy.
ThereisafinalwithholdingVATon
governmentpurchases;arateoffive
percentapplicabletopaymentsmade
tocontractorsbythegovernmentor
anyofitspoliticalsubdivisions,
instrumentalitiesoragencies, including
government-ownedandcontrolled
corporations.Suppliesofcertaingoods
andservicesareexemptfromVAT, for
exampleauthorizededucation, certain
financialtransactions, thesale, import
andleaseofpassengerorcargo
vesselsandaircraftfordomesticor
internationaltransportoperations, sales
ofresidentiallotsatthemaximum
valueofP1, 500, 000, salesofhouses
andotherresidentialdwellingsatthe
maximumvalueofP2, 500, 000andthe
leaseofresidentialunitsprovidedthat
themonthlyrentalfeeperunitdoes
notexceedP10, 000.
(lxviii) Poland
(Podatekodtowarowiuslug;PTU)is
22percent.Therearealsoreduced
ratesofsevenpercent, threepercent
example, foods, medicines, books
andnewspapers(sevenpercent),
agriculturalproducts, productsof
forestryandfishery, animalfeed
(threepercent), supply, import, repair
andmaintenanceofcertainshipsand
aircraft, internationaltransport, intra-
Communitysuppliesofgoodsand
exports(zeropercent).Certainsupplies
ofgoodsandservicesareexemptfrom
VAT, forexample, supplyofsecond-
handgoods, landotherthanbuilding
land, andsupplyofhousingstructures
andservicesofmanagementof
investmentfunds.
(lxix) Portugal
(I mpostoSobreoValorAcrescentado;
I .V.A.)is21percentforPortuguese
mainlandand15percentforM adeira
andAzoresislands.Therearereduced
ratesof12percent(eightpercentfor
islands), fivepercent(fourpercent
islands)andzeropercentwhichapply
to, forexample, restaurantservices,
fruitandvegetables(12percent(eight
percentforislands), watersupply,
booksandnewspapers(fivepercent
(fourpercentforislands), exports,
transportofgoodsandpeople
betweenthemainlandandtheislands
VAT, forexampleimmovableproperty,
financialandinsuranceservices.
(lxx) Romania
(tax apevaloareaad augat a;TVA)is
ninepercentandzeropercentwhich
applyto, forexample, accommodation,
books, newspapers(exceptfor
newspapersandmagazinesfor
advertisingpurposes), pharmaceuticals,
museumfees, culturalandsporting
services(9percent), intra-Community
suppliesandexportsofgoods(zero
percent).Suppliesofcertaingoods
forexampletherentalorsaleof
immovableproperty(withsomemajor
exceptions), financialandinsurance
services, educationandhealth
andwelfare.
(lxxi) Russia
(Nalognadabavlennuyustoimosty;
NDC)is18percent.Therearereduced
whichapplyto, forexample, food
products, specificgoodsintended
forchildren, booksandperiodicals,
pharmaceuticalandothermedical
products(10percent), exportsofgoods
andrelatedservices, servicesrelated
totransitofgoodsthroughRussia,
internationalpassengertransportation,
fuelforshipsandaircraft(zeropercent).
areexemptfromVAT, forexamplelease
ofpremisestoforeigncompanies
accreditedinRussia, medicalservices
andcertainmedicalproducts,
educationalservices, public
transportation, thesaleofsecurities,
bankingandinsuranceservices, the
rentofapartmentsandthesaleof
apartmentsandresidentialproperty.
(lxxii) SaudiArabia
ThereisnoVATorGSTinSaudiArabia.
(lxxiii) Serbia
(Poreznadodatuvrednost;PDV)is
eightpercentandzeropercentwhich
applyto, forexample, basicfoodstuffs,
medicineslistedontheHealthFund
list, textbooksanddailynewspapers,
hotelservices, publicutilityservices,
gasandfirsttransferofownershipon
residentialbuildings(eightpercent),
exportsofgoods, transportandother
servicesinrelationtoexport, supply,
repair, maintenance, charterandlease
ofaircraftandrivervessels
predominantlyoperatingininternational
traffic, internationalairandriver
transportofpassengersundera
reciprocityrule(zeropercent).
financialandbankingservices,
suppliesandrentingofland, transfer
ofsharesandsecurities, transferof
immovableproperty(exceptfirst
transfer), medicalandwelfareservices,
educationandprofessionalretraining,
cultural, scientific, sportandreligious
services.
(lxxiv) Singapore
ServicesTax(GST)isfivepercent
(tobeincreasedtosevenpercentas
from1July, 2007).Thereisareduced
rateofzeropercentwhichapplies
toexportsofgoodsandcertain
internationalservices.Suppliesof
mostofthefinancialservicesand
saleorleaseofresidentialproperties
areexemptfromGST.
(lxxv) Slovakia
(Dazpridanejhodnoty;DPH)is
of10percentandzeropercentwhich
applyto, forexample, medicaments
andcertainothermedicaland
pharmaceuticalproducts(10percent),
internationaltransportationandexports
ofgoods(zeropercent).Suppliesof
fromVAT, forexamplepostalservices,
educationandtraining, healthand
welfare, culturalservices, landand
realestates(incertainconditions).
(lxxvi) Slovenia
(daveknadodanovrednost;DDV)is
of8.5percentandzeropercentwhich
applyto, forexample, foodproducts,
watersupplies, medicines, medical
equipment, passengertransportand
theirpersonalluggage, booksand
newspapers, apartmentsintendedfor
permanentresidence, useofsports
facilities(8.5percent), exportsof
goods, certainservicesconnected
toexportorimportofgoodsandthe
purchase, repair, maintenance, lease
andrentalofsea-goingvesselsand
aircraft(zeropercent).Suppliesof
fromVAT, forexamplefinancialand
insuranceservices, supplyof
immovableproperties(withsome
exceptions), leasingandsub-letting
ofimmovableproperties, social
securityservices, educationand
culturalservices.
(lxxvii) SouthAfrica
forexample, exportsofgoodsand
services, certainfuelsandoils,
foodstuffs(forexamplefreshfruitand
vegetables), supplyofanenterpriseas
agoingconcern, internationaltransport
servicesandarrangingofcertain
servicesfornon-residents.Suppliesof
fromVAT, forexamplefinancial
services, residentialaccommodation,
certaintransportservices(forexample
bus, trainandtaxifares), education
andtraining.
(lxxviii) Spain
(I mpuestosobreelValorAadido;I VA)
is16percent.Therearereducedrates
ofsevenpercent, fourpercentandzero
deliveryofplantsandanimals, sport
events, cateringandhotelservices,
passengertransport(sevenpercent),
booksandnewspapers, somebasic
foodproducts, medicines(four
percent), exportsofgoodsandthe
supply, import, repair, maintenance
ofshipsandaircraftengagedin
internationalnavigation(zeropercent).
insuranceandfinancialservices, certain
realestatetransfers, education, health
andwelfare.
(lxxix) SriLanka
ratesoffivepercentandzeropercent
whichapplyto, forexample, essential
fooditemsincludingsugar, dhal,
potatoes, onions, dryfish, milkpowder,
vegetablesandchilies(fivepercent),
exportsofgoodsandinternational
transportationofgoodsorpassengers
(zeropercent).Thereisalsoaluxury
rateof20percentwhichappliesto
certainluxuryitemssuchasliquor, air
conditioners, refrigerators, washing
machines, TVsets, cameras, andmotor
vehicles(withsomeexceptions).
pharmaceuticalproductsanddrugs,
specifiedfinancialservicesand
educationalservices.
(lxxx) Sweden
(M ervrdesskatt;M O M S)is25
percent.Therearereducedratesof
12percent, sixpercentandzero
foodandhotelaccommodation
(12percent), domesticpassenger
transportationincludingskilifts, books
andnewspapers, certainsportingand
culturalevents(sixpercent), exports
ofgoods, aircraftfuel, shipsandaircraft
forcommercialtransportandservices
relatedtothemandpharmaceuticals
VAT, forexamplehealthandwelfare,
education, financialandinsurance
services, thesaleandleasingofreal
property.
(lxxxi) Switzerland
(M ehrwertsteuer;M WST/taxesur
lavaleurajoute;TVA/impostasul
valoreaggiunto;I VA)is7.6percent.
Therearereducedratesof3.6percent,
2.4percentandzeropercentwhich
applyto, forexample, hotel
accommodation(3.6percent), water
inconduits, medication, books,
newspaper, foodandnonalcoholic
beverages(2.4percent), exportsof
goodsandrentingorchartering-out
ofrailwaylocomotivesandwagons
ndaircraft, ifprimarilyusedinforeign
territory(zeropercent).Suppliesof
fromVAT, forexampleofficialpostal
service, healthandwelfare, education,
insurance, finance, supplyofcertain
immovableproperty.
(lxxxii) Taiwan
UndertheTaiwanValue-Addedand
Non-Value-AddedTaxLaw, thereare
twosystems, onebeingavalueadded
tax(VAT)systemandtheotherbeing
thegrossbusinessreceiptstax
(GBRT)system.
ThestandardrateofVATisfive
percent.Thereisareducedrateof
zeropercentwhichappliesto, for
example, theexportofgoods, services
renderedwhichrelatetotheexportof
goods, vesselsandaircraftusedfor
internationaltransportation, goods
andrepairservicessuppliedtoships
oraircraftusedininternational
transactionsorocean-goingfishing
boats.Suppliesofcertaingoodsand
example, thesaleofland, suppliesof
medicalservices, medicine, education
services, newspapersandmagazines,
insurancepolicies, financialderivative
products, corporatebonds, currency
callloansandforeignexchange
callloans.
GBRTappliesmainlytofinancial
institutionsinbanking, insurance,
trustandinvestment, securities,
futures, andshort-termcommercial
papersindustries.TheGBRTrateis
twopercentapplicableinrespectof
revenuesgeneratedfromcore
business.TheGBRTrateforrevenue
generatedfromnon-corebusinessis
fivepercent.
(lxxxiii) Thailand
(VAT)issevenpercent(increasedto
10percentasfrom1O ctober2007).
ofgoodsorservices.Suppliesof
fromVAT, forexampledomestic
transportation, healthcare, education,
leasingofimmovableproperty, thesale
ofagriculturalproducts, newspapers,
magazinesandtextbooks, services
renderedbylibraries, museums
andzoos.
(lxxxiv) Tunisia
ratesof12percentandsixpercent
whichapplyto, forexample, the
transportofgoodsexcludingagricultural
andfishproductsandgoodsusedfor
theirproduction, servicesrenderedto
hotels, servicesrenderedbylawyers,
notaries, legalandtaxcounselsand
otherexperts, cateringandITservices
(12percent), activitiescarriedoutby
doctors, nurses, masseurs, veterinarians
andtestlaboratories, thetransportof
personsandagriculturalproducts, the
import, productionandsaleof
fertilizers, suppliesoflivestock
concentratefood, Soyabeans, fish
meal, productsandarticlesforthe
pharmaceuticalindustry(sixpercent).
schooleducation, imports, the
productionandsaleofaircraftsfor
publictransport, servicesrenderedby
maritimetransportandshipagencies,
aircrafttransportservices, leasingof
vesselsandaircraftsforinternational
maritimeandairtransport, the
productionandsaleofflower, bread,
pasta, oliveoil, beans, Soya, Soyaoil,
theproduction, refiningand
conditioningofvegetableoil.
(lxxxv) Turkey
tax(KatmaDeerVergisi;KDV)is
ofeightpercent, 1onepercentand
example, basicfoodproducts, textile
products(eightpercent), agricultural
products, deliveryorleasingofthe
goodssubjecttoFinancialLeasingLaw
(onepercent), exportsofgoodsand
servicesandinternationaltransportation
VAT, forexamplebankingandinsurance
transactions, servicesrenderedinFree
TradeZones, social, cultural, educational
andhealthservicesrenderedbythe
governmentandotherrelated
organizations.
(lxxxvi) Ukraine
(Podatoknadodanuvartist;PDV)is
example, exportsofgoodsandrelated
services, suppliesforairplanesand
shipsusedininternationaltraffic.
certainfinancialservices, insurance
services, saleofbusinessasagoing
concern, royalties, subscriptionsfor
anddeliveryoflocalnewspapers,
magazinesandbooks, prescribed
pharmaceuticals, certaintransfersof
immovableresidentialpropertyand
land, localpassengertransportation
(exceptfortaxis), education, prescribed
healthandwelfare.
(lxxxvii) UnitedArabEmirates
ThereisnoVATorGSTintheUnited
ArabEmirates.
(lxxxviii) UnitedKingdom
(VAT)is17.5percent.Therearereduced
ratesoffivepercentandzeropercent
whichapplyto, forexample, childrens
carseats, certaincontraceptive
products, domesticfuelandpower,
renovations/conversionsofresidential
properties(fivepercent), foodand
animalfeed, booksandnewspapers,
prescriptiondrugsandmedicines,
childrensclothes, passengertransport
andexportsofgoods(zeropercent).
educationservicessuppliedbyeligible
bodies, certainculturalservices,
betting, gamingandlotteries,
subscriptionsandhealthandwelfare.
(lxxxix) UnitedStates
WhiletheUnitedStatesdoesnot
imposeanationalVAT, moststates,
andsomelocalgovernmentsimpose
transactionalbasedtaxescommonly
referredtoasSalesandUseTaxes.
Forty-fivestatesandtheDistrictof
Columbiaimposeastateleveltaxon
thesaleoruseofgoodsandsome
services.Localgovernmentsinthirty-
fourstatesareauthorizedtoimpose
localsalestaxes.Thereareabout7, 600
jurisdictionsacrossthecountrythat
havechosentoimposealocalsales
tax.Whichgoodsandservicesare
subjecttotax, alongwiththeapplicable
taxrates, varyaccordingtothe
jurisdiction.Allstatesandsome
localitieswithsalesandusetax
regimespossessbroadpowersto
determinewhethergoodsandservices
arefullytaxable, taxableataspecial
rate, orarefullyexempt.
(xc) Uruguay
23percent(isexpectedtobereduced
to22percentasfrom1July, 2007).
Thereducedrateof14percent
(expectedtobereducedto10percent
asfrom1July, 2007)appliestospecific
consumergoods, lodgingservicesand
certaintransportservices.Exportsare
zerorated.Exemptsuppliesinclude:
certainagriculturalgoodsandmachinery,
specifiedfuels, commissionsand
interestsonspecificfinancial
transactionsandtransportservices.
(xci) Venezuela
(ImpuestoalValorAgregado;IVA)is
11percent(reducedfrom14percentas
from1M arch,2007andwillbereduced
furthertoninepercentasfrom1July,
2007).Theincreasedrateof24percent
appliestoluxurygoods.Certaingoods
andservices(suchasredmeat,animal
oilorlocalplanetickets)havea
temporaryrateof8percent.Exportsare
zero-rated.Exemptsuppliesinclude:
importsunderATPA(AndeanTrade
PreferenceAct)regime,certain
categoriesofgroceries,foodand
livestock,medicine,fertilizer,fuel,
newspapers,booksandmagazines,
education,intangibleassets,loans,
banksandfinancialinstitutions
operationsexceptbyleasing,insurance
services,payroll,operationsperformedin
specifieddutyfreeandtouristareas,
nationalelectricity,waterandnaturalgas.
(xcii) Vietnam
(Giatrigiatang;GTGT)is10percent.
Therearereducedratesoffivepercent
example, medicalequipmentand
instruments, printingofcertainbooks,
freshfoodstuffs, scientificandtechnical
services, basechemicals, manufacturing
equipmentandmachinery, processed
metalsandmosttransportation
services(fivepercent), theexports
ofgoodsandservices(zeropercent).
equipment, machineryandmeansof
transportationusedexclusivelyin
technologicalchains, construction
supplies, transferoflanduserights,
creditservices, investmentfundsand
securitiestradingactivities, certain
insuranceservices, healthcareservices,
computersoftware, printing, publishing
anddistributionofnewspapers,
magazinesandcertainbooks.
(xciii) Zambia
(VAT)is17.5percent.Thereisareduced
forexample, theexportsofgoods,
suppliestoprivilegedpersons, building
suppliestocharitableorganizations,
hotelaccommodationinLivingstone
districtandmedicalsupplies.Supplies
exemptfromVAT, forexamplethe
watersupplyservices, healthservices,
educationalservices, booksand
newspapers, transportservices,
conveyanceofrealproperty, financial
services, reliefatimportation, domestic
kerosene, goodsunderaninvestment
certificate, statutoryfees, foodand
agriculture.
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