Everyone has an opinion on corporate tax rates. “They’re too low!” “They’re too high!” “What’s the effective tax rate?” But how do our corporate taxes compare to other countries? Which countries have the lowest corporate tax rates?
Let’s take a look at those countries now, and say a little bit about each of them. (For comparison, the U.S. corporate tax rate in 2020 is 21%.)
7. Hungary
Rate: 9%
Photo by Daniel Barbarics on Unsplash
Hungary recently suffered the indignity of losing its status as a democracy. Not great if you love civic freedoms. But if you’re more interested in financial freedom, Hungary is the place for you. The country lowered its corporate tax rate to an anemic 9% in 2017 in order to attract investment.
6. Montenegro
Rate: 9%
Photo by Wladislaw Peljuchno on Unsplash
The tiny Balkan nation of Montenegro ties with Hungary for the lowest tax rate in Europe. This is part of a theme. Tiny nations have a hard time jump-starting their economies since they have small work forces. One way of compensating for this is by becoming a tax haven.
5. Andorra
Rate: 10%
Andorra falls into the same category as Montenegro. It’s a small nation in the Pyrenees, between Spain and France. Andorra is known for its skiing and other alpine sports. Oh, and also for avoiding taxes. The country didn’t even have an income tax until 2015.
4. Bosnia and Herzegovina
Rate: 10%
Photo by Alexandre on Unsplash
Bosnia and Herzegovina is one of the world’s newer states. It also boasts some of the lowest corporate taxes in the world. The lack of government intervention is surely a tactic to help attract investment to the former Yugoslav state.
3. Bulgaria
Rate: 10%
Image by Martin Lazarov from Pixabay
Corporate taxes in Bulgaria are very simple. It’s a 10% flat tax, period, full stop. Not only is that number competitively low, the flat nature of the tax also means confusion is minimal for taxpayers in Bulgaria.
2. North Macedonia
Rate: 10%
Photo by Antonio Janeski on Unsplash
The corporate rate is very low in North Macedonia. Like Bulgaria its application is simple. It’s a 10% rate for anyone making money in the country. But take note: that includes capital gains.
1. Moldova
Rate: 12%
Image by osoian-marcel from Pixabay
Moldova is sort of sandwiched between Romania and Ukraine. Like many relatively new countries, Moldova has opted for one of the lowest corporate tax rates in the world. That’s certainly one way to attract foreign capital.
