A new report shows that corporate tax rates around the world continue to level off. “We aren’t seeing a race to the bottom, we’re seeing a race toward the middle,” said Sean Bray, EU policy analyst at the Tax Foundation.
Governments often justify higher tax burdens with more extensive public services. However, the cost of these services can be more than half of an average worker’s salary.
Designing tax policy in a way that sustainably finances government activities while minimizing distortions is important for supporting a productive economy.
Denmark (55.9 percent), France (55.4 percent), and Austria (55 percent) have the highest top statutory personal income tax rates among European OECD countries.
To recover from the pandemic and put the global economy on a trajectory for growth, policymakers need to aim for more generous and permanent capital allowances. This will spur real investment and can also contribute to more environmentally friendly production across the globe.
The EU countries with the highest standard VAT rates are Hungary (27 percent), Croatia, Denmark, and Sweden (all at 25 percent). Luxembourg levies the lowest standard VAT rate at 16 percent, followed by Malta (18 percent), Cyprus, Germany, and Romania (all at 19 percent).
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According to the corporate tax component of the 2021 International Tax Competitiveness Index, Latvia and Estonia have the best corporate tax systems in the OECD.
In the past three years, eight European OECD countries changed their top personal income tax rate, of which four of them cut their top personal income tax rates.
Patent box regimes (also referred to as intellectual property, or IP, regimes) provide lower effective tax rates on income derived from IP. Most commonly, eligible types of IP are patents and software copyrights. Currently, 14 of the 27 EU member states have a patent box regime.
Ireland and France levy the highest excise duties on cigarettes in the EU, at €8.42 ($9.60) and €6.61 ($7.53) per 20-cigarette pack, respectively. This compares to an EU average of €3.34 ($3.80). Bulgaria (€1.81 or $2.06) and Poland (€2.08 or $2.37) levy the lowest excise duties.
The highest excise duties are applied in Finland, Sweden, and Ireland, where the rates for a standard-size bottle of liquor are €14.10 ($16.08), €13.80 ($15.73), and €11.92 ($13.59), respectively.