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Tax Blog

Corporate Tax Rates Worldwide

The best way to attract business in your state is to have low tax rates and little regulation. Illinois proved the opposite of this concept when it raised its corporate tax rate from 7.3% to 9.5% in 2011. It simultaneously raised its individual tax rate from 3% to 5% (a 67% increase). Since then, a mass exodus out of Illinois has occurred at a rate of 100 taxpayers per day. Needless to say, Illinois is having even worse financial issues now more than ever.

The same has happened on the international level as well. Companies such as Medtronic, Eaton/Cooper, and Sara Lee have all left this country to avoid the United States tax rate. There are many citizens dropping their United States citizenship in order to avoid tax as. The United States used to have a captive audience of corporations and taxpayers. In the day of the Internet, where business can be conducted a globe away, permanency in presence and form are no longer necessary. Telecommunications that used to be expensive, are now nearly free and have constant availability.

Currently, 2 countries have higher corporate tax rates than the United States. Those nations are the United Arab Emirates and Puerto Rico at 55% and 39% respectively. This can’t be good for America.

What other rates do we compete with?

Among the highest, there is also Argentina, Congo, and India all at 35%. There is France at 34.4% and Brazil at 34%. Ireland, a popular destination country for US firms is at a mere 12.5%. Bulgaria is among the lowest tied in an 8 way race for the bottom at 10%. Fourteen countries have no corporate tax. Those also are popular destination countries for US firms. They include The Bahamas, Bermuda, Cayman Islands, and the British Virgin Islands.

While the United States enjoys having many of the largest corporations in the world native to our soil, there is no guarantee they will stay with the high tax rates. In all likelihood, we believe that corporate tax rates will come down in the near future. We don’t discourage anyone from buying or selling a company right now if the opportunity presents itself at the right time. But for now, we will have to take a wait and see approach to this occurrence.

If you are looking to reduce your tax liability or have your company valued, before and after rates decrease, please give us a call at (618) 997-3436

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