International Tax Competitiveness Index 2022

Launch 2023 Index

Introduction

The structure of a country’s tax code is a determining factor of its economic performance. A well-structured taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. code is easy for taxpayers to comply with and can promote economic development while raising sufficient revenue for a government’s priorities. In contrast, poorly structured tax systems can be costly, distort economic decision-making, and harm domestic economies.

Many countries have recognized this and have reformed their tax codes. Over the past few decades, marginal tax rates on corporate and individual income have declined significantly across the Organisation for Economic Co-operation and Development (OECD). Now, most OECD nations raise a significant amount of revenue from broad-based taxes such as payroll taxes and value-added taxes (VAT).[1]

Not all recent changes in tax policy among OECD countries have improved the structure of tax systems; some have made a negative impact. Though some countries like the United States and France have reduced their corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. rates by several percentage points, others, like Turkey, have increased them. Corporate tax base improvements have occurred in Chile and the United Kingdom, while the corporate tax baseThe tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates. has been made less competitive in Belgium.

The COVID-19 pandemic has led many countries to adopt temporary changes to their tax systems. Faced with revenue shortfalls from the downturn, countries will need to consider how to best structure their tax systems to foster both an economic recovery and raise revenue.

The variety of approaches to taxation among OECD countries creates a need to evaluate these systems relative to each other. For that purpose, we have developed the International Tax Competitiveness Index—a relative comparison of OECD countries’ tax systems with respect to competitiveness and neutrality.

The International Tax Competitiveness Index

The International Tax Competitiveness Index (ITCI) seeks to measure the extent to which a country’s tax system adheres to two important aspects of tax policy: competitiveness and neutrality.

A competitive tax code is one that keeps marginal tax rates low. In today’s globalized world, capital is highly mobile. Businesses can choose to invest in any number of countries throughout the world to find the highest rate of return. This means that businesses will look for countries with lower tax rates on investment to maximize their after-tax rate of return. If a country’s tax rate is too high, it will drive investment elsewhere, leading to slower economic growth. In addition, high marginal tax rates can impede domestic investment and lead to tax avoidance.

According to research from the OECD, corporate taxes are most harmful for economic growth, with personal income taxes and consumption taxes being less harmful. Taxes on immovable property have the smallest impact on growth.[2]

Separately, a neutral tax code is simply one that seeks to raise the most revenue with the fewest economic distortions. This means that it doesn’t favor consumption over saving, as happens with investment taxes and wealth taxes. It also means few or no targeted tax breaks for specific activities carried out by businesses or individuals.

As tax laws become more complex, they also become less neutral. If, in theory, the same taxes apply to all businesses and individuals, but the rules are such that large businesses or wealthy individuals can change their behavior to gain a tax advantage, this undermines the neutrality of a tax system.

A tax code that is competitive and neutral promotes sustainable economic growth and investment while raising sufficient revenue for government priorities.

There are many factors unrelated to taxes which affect a country’s economic performance. Nevertheless, taxes play an important role in the health of a country’s economy.

To measure whether a country’s tax system is neutral and competitive, the ITCI looks at more than 40 tax policy variables. These variables measure not only the level of tax rates, but also how taxes are structured. The Index looks at a country’s corporate taxes, individual income taxes, consumption taxes, property taxes, and the treatment of profits earned overseas. The ITCI gives a comprehensive overview of how developed countries’ tax codes compare, explains why certain tax codes stand out as good or bad models for reform, and provides important insight into how to think about tax policy.

Due to some data limitations, recent tax changes in some countries may not be reflected in this year’s version of the International Tax Competitiveness Index.

2022 Rankings

For the ninth year in a row, Estonia has the best tax code in the OECD. Its top score is driven by four positive features of its tax system. First, it has a 20 percent tax rate on corporate income that is only applied to distributed profits. Second, it has a flat 20 percent tax on individual income that does not apply to personal dividend income. Third, its property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. applies only to the value of land, rather than to the value of real property or capital. Finally, it has a territorial tax system that exempts 100 percent of foreign profits earned by domestic corporations from domestic taxation, with few restrictions.

While Estonia’s tax system is the most competitive in the OECD, the other top countries’ tax systems receive high scores due to excellence in one or more of the major tax categories. Latvia, which recently adopted the Estonian system for corporate taxation, also has a relatively efficient system for taxing labor income. New Zealand has a relatively flat, low-rate individual income tax that also largely exempts capital gains (with a combined top rate of 39 percent), a well-structured property tax, and a broad-based VAT. Switzerland has a relatively low corporate tax rate (19.7 percent), a low, broad-based consumption taxA consumption tax is typically levied on the purchase of goods or services and is paid directly or indirectly by the consumer in the form of retail sales taxes, excise taxes, tariffs, value-added taxes (VAT), or an income tax where all savings is tax-deductible. , and an individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. that partially exempts capital gains from taxation. Luxembourg has a broad-based consumption tax and a competitive international tax system.

France has the least competitive tax system in the OECD. It has a wealth taxA wealth tax is imposed on an individual’s net wealth, or the market value of their total owned assets minus liabilities. A wealth tax can be narrowly or widely defined, and depending on the definition of wealth, the base for a wealth tax can vary. on real estate, a financial transaction tax, and an inheritance tax. The French VAT covers less than 50 percent of final consumption, revealing both policy and enforcement gaps.

Countries that rank poorly on the ITCI often levy relatively high marginal tax rates on corporate income or have multiple layers of tax rules that contribute to complexity. Four of the five countries at the bottom of the rankings all have higher than average corporate tax rates. Ireland ranks poorly on the ITCI despite its low corporate tax rate. This is due to high personal income and dividend taxes and a relatively narrow VAT base. In addition, the five lowest-ranking countries have high consumption tax rates, with rates of 20 percent or higher.

Notable Changes from Last Year[3]

Czech Republic

The Czech Republic increased the top tax rate on personal income from 15 percent to 27 percent. The Czech Republic’s ranking fell from 4^th to 5^th.

France

France has been reducing its corporate income tax rate over several years, a process which concludes in 2022. As part of this scheduled reduction, France dropped its combined corporate rate (including a surtax) from 28.41 percent in 2021 to 25.83 percent in 2022. Its Index rank remained unchanged at 38.

Ireland

Prior to 2022, Ireland did not have a limit on interest deductions. Now interest is limited to 30 percent of earnings before interest, depreciation, and amortization. There is an exemption for borrowing costs below €3 million. Ireland’s rank fell from 28 to 35.

Italy

Italy repealed its patent box and replaced it with a 110 percent super deduction for research and development spending. Italy’s rank remained at 37.

New Zealand

New Zealand increased its top personal income tax rate from 33 percent to 39 percent. New Zealand’s ranking remained unchanged at 3.

Turkey

Turkey reduced its corporate income tax rate from 25 percent in 2021 to 23 percent in 2022. Turkey’s rank rose from 9^th to 4^th.

United Kingdom

The UK introduced a temporary 130 percent super-deduction for plant and equipment. The UK’s ranking increased from 27 to 26.

Table 2. Changes from Last Year

Country	2020 Rank	2020 Score	2021 Rank	2021 Score	2022 Rank	2022 Score	Change in Rank from 2021 to 2022	Change in Score from 2021 to 2022
Australia	10	77.1	9	76.2	11	75.5	-2	-0.6
Austria	17	70.7	16	70.6	18	68.6	-2	-1.9
Belgium	20	69.6	25	65.4	24	65.1	1	-0.3
Canada	16	71.7	18	69.7	16	69.3	2	-0.4
Chile	35	58.3	26	62.5	27	61.9	-1	-0.5
Colombia	29	61.2	35	56.3	32	57.8	3	1.5
Costa Rica	21	69	20	67.9	19	67.5	1	-0.4
Czech Republic	4	85.5	4	84.3	5	81.9	-1	-2.4
Denmark	32	60.1	34	57	33	57.3	1	0.3
Estonia	1	100	1	100	1	100	0	0
Finland	24	68.4	21	67.8	20	67.4	1	-0.4
France	38	43.3	38	45	38	45.3	0	0.3
Germany	14	72.4	15	71.5	15	70.2	0	-1.3
Greece	34	58.8	33	58.6	29	59.2	4	0.6
Hungary	7	78.6	7	78.3	7	77.9	0	-0.3
Iceland	28	61.6	31	59	31	57.9	0	-1
Ireland	30	61.1	28	60.5	35	55.6	-7	-4.8
Israel	11	75.6	10	75.2	10	76	0	0.8
Italy	37	50.6	37	49	37	49.1	0	0.1
Japan	19	70	17	69.7	21	67.3	-4	-2.4
Korea	25	67.9	24	67.1	25	64.1	-1	-3
Latvia	3	89.9	2	90.2	2	89.9	0	-0.3
Lithuania	8	77.5	8	77.3	8	76.9	0	-0.4
Luxembourg	6	81.1	6	80.9	6	80.6	0	-0.3
Mexico	33	59.2	29	59.6	30	58.4	-1	-1.2
Netherlands	15	72	14	72	14	71.3	0	-0.7
New Zealand	2	90.8	3	88.9	3	89.7	0	0.8
Norway	18	70.3	19	69.3	17	69	2	-0.3
Poland	31	60.6	30	59.5	28	59.3	2	-0.2
Portugal	36	54	36	53.3	36	51.4	0	-1.8
Slovak Republic	12	74.4	11	74.8	13	74.1	-2	-0.7
Slovenia	23	68.4	23	67.3	23	66.1	0	-1.2
Spain	26	64.4	32	58.9	34	56.9	-2	-1.9
Sweden	13	73.9	12	74.2	12	74.2	0	0.1
Switzerland	5	83.6	5	83.7	4	82.9	1	-0.8
Turkey	9	77.4	13	74	9	76.6	4	2.7
United Kingdom	27	61.7	27	61.1	26	62.9	1	1.8
United States	22	68.5	22	67.7	22	66.8	0	-0.9

Methodological Changes

Each year we review the data and methodology of the Index for ways that could improve how it measures both competitiveness and neutrality. This year we have incorporated several changes to the way the Index treats corporate taxes, individual taxes, consumption taxes, and cross-border tax rules.

We have applied each change to prior years to allow consistent comparison across years. Data for all years using the current methodology is accessible in the GitHub repository for the Index,[4] and a description of how the Index is calculated is provided in the Appendix of this report. Prior editions of the Index, however, are not comparable to the results in this 2022 edition due to these methodological changes.

General

Costa Rica was added to this year’s Index as it became the 38^th member of the Organisation for Economic Co-operation and Development (OECD) in 2021.

The Index previously relied on some measures of tax complexity that were developed by PwC in conjunction with the World Bank’s Doing Business report. In September 2021, that report was discontinued. The Index no longer uses any variables from that report or PwC’s “Paying Taxes” study. Instead, new measures of tax complexity have been included as described below.

Corporate Tax

The prior tax complexity measures have been replaced with three new measures for complexity. The first is a tally of tax rates that apply to corporate income. These rates could arise because corporate income is taxed at different rates due to business size or the size of business profits, or because there is an alternative minimum tax that sits alongside normal corporate tax rules. The second measure is the rate of a corporate surtaxA surtax is an additional tax levied on top of an already existing business or individual tax and can have a flat or progressive rate structure. Surtaxes are typically enacted to fund a specific program or initiative, whereas revenue from broader-based taxes, like the individual income tax, typically cover a multitude of programs and services. if any exists. The third is the amount of revenue collected on corporate or personal income from taxes apart from standard taxes on those lines of income.

Individual Taxes

The prior tax complexity measures for individual taxes have also been replaced with two new measures for complexity. The first is the rate of a corporate surtax if any exists. The second is the amount of revenue collected for social security or through payroll taxes other than standard taxes of that form.

Consumption Taxes

The complexity measure for consumption taxes has been removed as no suitable replacement for the prior measure was found to be compatible.

Cross-Border Tax Rules

In 2017, the United States adopted a unique approach to taxing foreign earnings of U.S. businesses. That approach has been partially incorporated into the design of a global minimum tax proposal. Starting this year, the Index is including another layer to the CFC rules variable which identifies whether a jurisdiction has a form of the minimum tax, which is currently only true of the U.S.

Anti-abuse provisions of this nature are not currently accounted for in the Index. However, if they were appropriately accounted for, countries like Australia, the United Kingdom, and the United States would likely receive worse scores on their cross-border tax rules—potentially also impacting their overall ranking on the Index.

Country Profiles

Australia

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
11	75.5	29	20	9	4	23

Australia ranks 11^th overall on the 2022 International Tax Competitiveness Index, two places worse than in 2021. Learn more about the Australian tax system here.

✔️ Some strengths of the Australian tax system:

• Property taxes in Australia are assessed on the value of the land rather than real estate or other improvements to land.
• Australia’s corporate and individual taxes have an integrated treatment of dividends, alleviating the burden of double taxationDouble taxation is when taxes are paid twice on the same dollar of income, regardless of whether that’s corporate or individual income. on distributed earnings.
• Australia ranks well on consumption taxes due to its low goods and services tax (GST) rate but applies it to a relatively narrow base.

❌ Some weaknesses of the Australian tax system:

• Australia’s treaty network consists of just 45 countries, when the average among OECD countries is 74.
• The corporate tax rate in Australia is 30 percent, above the OECD average (23.6 percent).
• Corporations are limited in their ability to write off investments.

Austria

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
18	68.6	23	32	17	15	7

Austria ranks 18^th overall on the 2022 International Tax Competitiveness Index, two places worse than in 2021. Learn more about the Austrian tax system here.

✔️ Some strengths of the Austrian tax system:

• Austria’s international tax system is relatively competitive as it is fully territorial without any country limitations, has a broad tax treaty network of 89 countries, and Controlled Foreign Corporation rules that only apply to subsidiaries that do not have substantial economic activity.
• The VAT in Austria applies to a broad base.
• There are no estate, inheritance, or wealth taxes.

❌ Some weaknesses of the Austrian tax system:

• The headline corporate rate of 25 percent is slightly above the OECD average (23.6 percent).
• Austria implemented a digital services tax (DST) in 2020.
• The tax wedgeA tax wedge is the difference between total labor costs to the employer and the corresponding net take-home pay of the employee. It is also an economic term that refers to the economic inefficiency resulting from taxes. on labor is the 3^rd highest among OECD countries.

Belgium

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
24	65.1	14	13	24	31	19

Belgium ranks 24^th overall on the 2022 International Tax Competitiveness Index, one spot better than in 2021. Learn more about the Belgium tax system here.

✔️ Some strengths of the Belgium tax system:

• Belgium has a broad tax treaty network, with 95 countries, and a territorial tax systemA territorial tax system for corporations, as opposed to a worldwide tax system, excludes profits multinational companies earn in foreign countries from their domestic tax base. As part of the 2017 Tax Cuts and Jobs Act (TCJA), the United States shifted from worldwide taxation towards territorial taxation. as it fully exempts foreign-sourced dividends and capital gains without any country limitations.
• Capital gains resulting from normal management of private wealth are exempt from tax.
• Belgium provides an allowance for corporate equity (ACE) to address the debt bias that is inherent to the standard corporate income tax.

❌ Some weaknesses of the Belgium tax system:

• The corporate rate of 25 percent is slightly above average among OECD countries (23.6 percent).
• Belgium levies an estate taxAn estate tax is imposed on the net value of an individual’s taxable estate, after any exclusions or credits, at the time of death. The tax is paid by the estate itself before assets are distributed to heirs. and a financial transaction tax and introduced a new annual tax on securities accounts.
• The Belgian tax wedge on labor is the highest among the OECD countries, with the average wage single worker facing a tax burden of 52.6 percent.

Canada

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
16	69.3	27	31	8	25	16

Canada ranks 16^th overall on the 2022 International Tax Competitiveness Index, two spots better than in 2021. Learn more about the Canadian tax system here.

✔️ Some strengths of the Canadian tax system:

• Consumption taxes are low, though the consumption tax base is relatively narrow.
• Canada allows businesses to immediately write off investments in machinery.
• Canada does not levy wealth, estate, or inheritance taxes.

❌ Some weaknesses of the Canadian tax system:

• The personal tax on dividends is 39.3 percent, well above the OECD average of 24.2 percent.
• Canada taxes capital gains at a rate of 26.75 percent, while the OECD average is 19 percent.
• The corporate rate of 26.2 percent is above average among OECD countries (23.6 percent).

Chile

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
27	61.9	13	34	11	13	38

Chile ranks 27^th overall on the 2022 International Tax Competitiveness Index, one spot worse than in 2021. Learn more about the Chilean tax system here.

✔️ Some strengths of the Chilean tax system:

• As a response to the COVID-19 pandemic, Chile temporarily allows businesses to immediately write off investments in buildings and machinery and to immediately amortize intangibles.
• Chile temporarily reduced its corporate income tax rate to 10 percent for smaller businesses.
• Chile has the second lowest tax wedge on labor among OECD countries, at 7 percent, compared to the OECD average of 34.6 percent.

❌ Some weaknesses of the Chilean tax system:

• Chile has a relatively small tax treaty network with just 33 treaties.
• The tax rate on capital gains is 40 percent, well above the OECD average of 19 percent.
• Chile has a worldwide tax systemA worldwide tax system for corporations, as opposed to a territorial tax system, includes foreign-earned income in the domestic tax base. As part of the 2017 Tax Cuts and Jobs Act (TCJA), the United States shifted from worldwide taxation towards territorial taxation. , while most OECD countries have territorial provisions.

Colombia

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
32	57.8	38	2	18	24	36

Colombia ranks 32^nd overall on the 2022 International Tax Competitiveness Index, three places better than in 2021. Learn more about the Colombian tax system here.

✔️ Some strengths of the Colombian tax system:

• A worker earning the nation’s average wage faces the lowest tax burden in the OECD.
• Colombia taxes dividends and capital gains at very low rates.
• While capital gains resulting from inheritance and gifts received are subject to a 10 percent tax, there is no comprehensive estate or inheritance taxAn inheritance tax is levied upon an individual’s estate at death or upon the assets transferred from the decedent’s estate to their heirs. Unlike estate taxes, inheritance tax exemptions apply to the size of the gift rather than the size of the estate. .

❌ Some weaknesses of the Colombian tax system:

• The VAT base is very narrow, covering less than 40 percent of Colombian consumption.
• Colombia levies a net wealth tax and a financial transactions tax.
• At 35 percent, Colombia’s corporate income tax rate is significantly above the OECD average (23.6 percent).

Costa Rica

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
19	67.5	36	33	7	12	17

Costa Rica ranks 19^th overall on the 2022 International Tax Competitiveness Index, one place better than in 2021. Learn more about the Costa Rican tax system here.

✔️ Some strengths of the Costa Rican tax system:

• Costa Rica has neither a net wealth nor an estate tax.
• The VAT rate is just 13 percent, below the OECD average of 19 percent.
• Capital gains and dividends are both taxed at rates below the OECD average.

❌ Some weaknesses of the Costa Rican tax system:

• Costa Rica has just three tax treaties while the average in the OECD is 74.
• Costa Rica has five separate tax bracketsA tax bracket is the range of incomes taxed at given rates, which typically differ depending on filing status. In a progressive individual or corporate income tax system, rates rise as income increases. There are seven federal individual income tax brackets; the federal corporate income tax system is flat. for corporate income.
• At 30 percent, Costa Rica’s corporate income tax rate is significantly above the OECD average (23.6 percent).

Czech Republic

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
5	81.9	6	5	25	6	11

The Czech Republic ranks 5^th overall on the 2022 International Tax Competitiveness Index, one place worse than in 2021. Learn more about the Czech tax system here.

✔️ Some strengths of the Czech tax system:

• The corporate rate of 19 percent is below the OECD average (23.6 percent), with above-average cost recoveryCost recovery is the ability of businesses to recover (deduct) the costs of their investments. It plays an important role in defining a business’ tax base and can impact investment decisions. When businesses cannot fully deduct capital expenditures, they spend less on capital, which reduces worker’s productivity and wages. provisions.
• Taxes on labor are minimally distortive.
• The Czech Republic has a territorial tax system, exempting both foreign dividend and capital gains income from other European countries, combined with a broad tax treaty network.

❌ Some weaknesses of the Czech tax system:

• The VAT threshold is relatively high, contributing to a distortionary VAT design.
• Net operating losses can only be carried forward for five years (they can, however, also be carried back for two years).
• The Czech Republic’s thin capitalization rules are among the stricter ones in the OECD.

Denmark

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
33	57.3	18	36	20	19	30

Denmark ranks 33^rd overall on the 2022 International Tax Competitiveness Index, one place better than in 2021. Learn more about the Danish tax system here.

✔️ Some strengths of the Danish tax system:

• Corporate income taxes are relatively less complex than in other countries.
• Denmark has a territorial tax system, exempting both foreign dividend and capital gains income for its treaty partners and other European countries.
• Property taxes are modest, and Denmark allows property taxes to be deducted against corporate income tax.

❌ Some weaknesses of the Danish tax system:

• In addition to a top statutory personal income tax rate of 55.9 percent (including the surtax), the personal income tax rates on dividends and capital gains are both at 42 percent, well above the OECD averages of 24.2 percent and 19 percent, respectively.
• Net operating losses can be carried forward indefinitely but are limited to 60 percent of taxable incomeTaxable income is the amount of income subject to tax, after deductions and exemptions. For both individuals and corporations, taxable income differs from—and is less than—gross income. if they exceed a certain amount.
• Denmark uses First-In-First-Out for assessing the cost of inventory for tax purposes.

Estonia

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
1	100	2	1	14	1	14

Estonia ranks 1^st overall on the 2022 International Tax Competitiveness Index, the same as in 2021, and for the ninth consecutive year. Learn more about the Estonian tax system here.

✔️ Some strengths of the Estonian tax system:

• Estonia’s corporate income tax system only taxes distributed earnings, allowing companies to reinvest their profits tax-free.
• The VAT applies to a broad base and has a low compliance burden.
• Property taxes only apply to the value of land.

❌ Some weaknesses of the Estonian tax system:

• Estonia has tax treaties with just 61 countries, below the OECD average (74 countries).
• Estonia’s territorial tax system is limited to European countries.
• Estonia’s thin capitalization rules are among the more stringent ones in the OECD.

Finland

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
20	67.4	9	28	21	20	22

Finland ranks 20^th overall on the 2022 International Tax Competitiveness Index, one place better than in 2021. Learn more about the Finnish tax system here.

✔️ Some strengths of the Finnish tax system:

• Finland has a relatively low corporate tax rate of 20 percent.
• The design of corporate and personal income taxes makes them relatively less complex than in other countries.
• Finland has a territorial tax system and a broad tax treaty network with 76 countries.

❌ Some weaknesses of the Finnish tax system:

• Finland levies both an estate and a financial transactions tax.
• Companies are limited in their ability to carry forward net operating losses and are restricted to using First-In-First-Out as the cost accounting method for inventory.
• Finland’s top statutory rate on personal income is relatively high at 51.3 percent (the OECD average is 42.5 percent).

France

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
38	45.3	35	38	33	35	15

France ranks 38^th overall on the 2022 International Tax Competitiveness Index, the same as in 2021. Learn more about the French tax system here.

✔️ Some strengths of the French tax system:

• France has above-average cost recovery provisions for investments in machinery, buildings, and intangibles.
• After several years of reductions, France’s corporate tax rate (25.8 percent) is much closer to the OECD average of 23.6 percent.
• France has a broad tax treaty network, with 122 countries.

❌ Some weaknesses of the French tax system:

• France has multiple distortionary property taxes with separate levies on estates, bank assets, financial transactions, and a wealth tax on real estate.
• The tax burden on labor of 47 percent is among the highest for OECD countries.
• A reduced 10 percent tax rate applies to income derived from IP rights through a so-called patent boxA patent box—also referred to as intellectual property (IP) regime—taxes business income earned from IP at a rate below the statutory corporate income tax rate, aiming to encourage local research and development. Many patent boxes around the world have undergone substantial reforms due to profit shifting concerns. .

Germany

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
15	70.2	30	26	15	11	6

Germany ranks 15^th overall on the 2022 International Tax Competitiveness Index, the same as in 2021. Learn more about the German tax system here.

✔️ Some strengths of the German tax system:

• The VAT rate of 19 percent is near the OECD average (19 percent).
• Germany has a broad tax treaty network, with 96 countries.
• Inventory can receive Last-In-First-Out treatment, the most neutral treatment of inventory costs.

❌ Some weaknesses of the German tax system:

• Germany has the sixth highest corporate income tax rate among OECD countries, at 29.9 percent.
• The corporate tax burden includes a 5.5 percent surtax.
• Companies are limited in the amount of net operating losses they can use to offset income on future or previous tax returns.

Greece

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
29	59.2	19	17	30	30	25

Greece ranks 29^th overall on the 2022 International Tax Competitiveness Index, four places better than in 2021. Learn more about the Greek tax system here.

✔️ Some strengths of the Greek tax system:

• The net personal tax rate of 5 percent on dividends is significantly below the OECD average of 24.2 percent.
• The corporate income tax rate of 22 percent is below the OECD average of 23.6 percent.
• Controlled Foreign Corporation rules in Greece are modest and only apply to passive income.

❌ Some weaknesses of the Greek tax system:

• Companies are severely limited in the amount of net operating losses they can use to offset future profits, and companies cannot use losses to reduce past taxable income.
• Greece has a relatively narrow tax treaty network (57 treaties compared to an OECD average of 74 treaties).
• At 24 percent, Greece has one of the highest VAT rates in the OECD on one of the narrowest bases.

Hungary

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
7	77.9	5	6	38	18	3

Hungary ranks 7^th overall on the 2022 International Tax Competitiveness Index, the same as in 2021. Learn more about the Hungarian tax system here.

✔️ Some strengths of the Hungarian tax system:

• Hungary has the lowest corporate tax rate in the OECD, at 9 percent.
• Hungary has a flat personal income tax system.
• Controlled Foreign Corporation rules are better-than-average.

❌ Some weaknesses of the Hungarian tax system:

• Companies are severely limited in the amount of net operating losses they can use to offset future profits, and companies cannot use losses to reduce past taxable income.
• Hungary has the highest VAT rate among OECD countries, at 27 percent.
• Hungary levies taxes on estates, real estate transfers, and bank assets.

Iceland

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
31	57.9	16	19	28	28	31

Iceland ranks 31st overall on the 2022 International Tax Competitiveness Index, the same as in 2021. Learn more about the Icelandic tax system here.

✔️ Some strengths of the Icelandic tax system:

• Iceland’s corporate tax rate of 20 percent is below the OECD average of 23.6 percent, and the tax treatment of investments is one of the best in the OECD.
• Corporate and labor taxes are less complex than they are on average in the OECD.
• Iceland has a territorial tax system that fully exempts foreign dividends and capital gains with no country limitations.

❌ Some weaknesses of the Icelandic tax system:

• Companies are limited in the amount of net operating losses they can use to offset future profits, and companies cannot use losses to reduce past taxable income.
• The VAT of 24 percent applies to a relatively narrow tax base.
• Iceland’s Controlled Foreign Corporation rules apply to both passive and active income.

Ireland

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
35	55.6	4	37	36	17	32

Ireland ranks 35th overall on the 2022 International Tax Competitiveness Index, seven spots worse than in 2021. Learn more about the Irish tax system here.

✔️ Some strengths of the Irish tax system:

• Ireland has a low corporate tax rate of 12.5 percent.
• Net operating losses can be carried back one year and carried forward indefinitely, allowing companies to be taxed on their average profitability.
• The tax treaty network (73 treaties) is just below the average of 74 countries.

❌ Some weaknesses of the Irish tax system:

• Ireland’s personal tax rate on dividend income of 51 percent is the highest among OECD countries.
• The VAT rate of 23 percent is one of the highest in the OECD and applies to a relatively narrow tax base.
• Corporations are limited in their ability to write off investments.

Israel

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
10	76	17	30	10	10	10

Israel ranks 10^th overall on the 2022 International Tax Competitiveness Index, the same as in 2021. Learn more about the Israeli tax system here.

✔️ Some strengths of the Israeli tax system:

• Net operating losses can be carried forward indefinitely.
• The VAT rate is relatively low at 17 percent and applies to a relatively broad base.
• Israel does not levy wealth or estate taxes.

❌ Some weaknesses of the Israeli tax system:

• Israel has complex incentives that reduce the corporate tax rate to as low as 7.5 percent on certain technology companies.
• The steep progressivity of Israel’s taxes on labor leads to efficiency costs.
• Israel has a relatively narrow tax treaty network, with 58 countries (the OECD average is 74).

Italy

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
37	49.1	24	15	37	38	27

Italy ranks 37^th overall on the 2022 International Tax Competitiveness Index, the same as in 2021. Learn more about the Italian tax system here.

✔️ Some strengths of the Italian tax system:

• Italy has above-average cost recovery provisions for investments in intangibles, as well as an allowance for corporate equity (ACE).
• Last-In-First-Out treatment of the cost of inventory is allowed.
• Italy has a broad tax treaty network, with 100 countries.

❌ Some weaknesses of the Italian tax system:

• Italy has multiple distortionary property taxes with separate levies on real estate transfers, estates, and financial transactions, as well as a wealth tax on selected assets.
• The VAT rate of 22 percent applies to the fourth narrowest consumption tax base in the OECD.
• The corporate tax rate of 27.8 percent is above the OECD average of 23.6 percent.

Japan

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
21	67.3	33	16	5	27	26

Japan ranks 21^st overall on the 2022 International Tax Competitiveness Index, four places worse than in 2021. Learn more about the Japanese tax system here.

✔️ Some strengths of the Japanese tax system:

• Japan has a low VAT rate of 10 percent.
• The consumption tax base is relatively broad, covering 65 percent of consumption.
• Japan’s personal income tax rate on dividends is 20.3 percent, below the OECD average of 24.2 percent.

❌ Some weaknesses of the Japanese tax system:

• Japan has poor cost recovery provisions for business investments in machinery and buildings.
• Japan has a hybrid international tax system with a 95 percent exemption for foreign dividends and no exemption for foreign capital gains, while many OECD countries have moved to a fully territorial system.
• Companies are severely limited in the amount of net operating losses they can use to offset future profits.

Korea

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
25	64.1	34	27	2	33	33

Korea ranks 25^th overall on the 2022 International Tax Competitiveness Index, one spot worse than in 2021. Learn more about the Korean tax system here.

✔️ Some strengths of the Korean tax system:

• Korea has a low VAT of 10 percent that is applied to a relatively broad base.
• Korea has a broad tax treaty network, with 93 countries.
• Business investments in machinery receive better-than-average treatment for corporate write-offs.

❌ Some weaknesses of the Korean tax system:

• Korea has multiple distortionary property taxes with separate levies on real estate transfers, estates, and financial transactions.
• The personal income tax rate on dividends is 44.0 percent (compared to an OECD average of 24.2 percent).
• Korea is one of the few OECD countries that operates a worldwide corporate tax system (rather than a territorial system).

Latvia

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
2	89.9	1	4	26	5	9

Latvia ranks 2^nd overall on the 2022 International Tax Competitiveness Index, the same as in 2021. Learn more about the Latvian tax system here.

✔️ Some strengths of the Latvian tax system:

• Latvia’s corporate income tax system only taxes distributed earnings, allowing companies to reinvest their profits tax-free.
• Corporations can deduct property taxes when calculating taxable income.
• Taxes on labor are relatively flat, allowing the government to raise revenue from taxes on workers with very few distortions.

❌ Some weaknesses of the Latvian tax system:

• Latvia’s network of tax treaties includes 62 countries, a relatively low number.
• Latvia’s thin-capitalization rules are among the stricter ones in the OECD.
• The threshold at which the VAT applies is significantly higher than the average VAT threshold for OECD countries.

Lithuania

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
8	76.9	3	11	31	7	24

Lithuania ranks 8^th overall on the 2022 International Tax Competitiveness Index, the same as in 2021. Learn more about the Lithuanian tax system here.

✔️ Some strengths of the Lithuanian tax system:

• Business investments in machinery, buildings, and intangibles receive better-than-average tax treatment.
• Lithuania’s corporate tax rate is 15 percent, well below the OECD average of 23.6 percent.
• Lithuania’s taxes on labor are flatter than average, allowing the government to raise revenue from taxes on workers with very few distortions.

❌ Some weaknesses of the Lithuanian tax system:

• Lithuania has tax treaties with just 54 countries, below the OECD average (74 countries).
• Lithuania has both a patent box and a super deduction for Research and Development expenditures.
• Multinational businesses face strict thin capitalization rules.

Luxembourg

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
6	80.6	26	14	6	14	5

Luxembourg ranks 6^th overall on the 2022 International Tax Competitiveness Index, the same as in 2021. Learn more about the Luxembourg tax system here.

✔️ Some strengths of the Luxembourg tax system:

• Business investments in machinery and intangibles receive better-than-average tax treatment.
• Luxembourg applies its relatively low VAT rate of 17 percent to nearly 80 percent of final consumption.
• Capital gains are tax-exempt if a movable asset such as shares was held for at least six months, encouraging long-term savings.

❌ Some weaknesses of the Luxembourg tax system:

• Companies are limited in the time period in which they can use net operating losses to offset future profits and are unable to use losses to offset past taxable income.
• Luxembourg has several distortionary property taxes with separate levies on real estate transfers, estates, and corporate net assets.
• Luxembourg has a solidarity tax which acts as a 7 percent surtax on personal income.

Mexico

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
30	58.4	28	29	12	9	37

Mexico ranks 30^th overall on the 2022 International Tax Competitiveness Index, one place worse than in 2021. Learn more about the Mexican tax system here.

✔️ Some strengths of the Mexican tax system:

• The personal income tax rate on dividends is 17.1 percent, below the OECD average of 24.1 percent.
• Corporations can deduct property taxes when calculating taxable income.
• Mexico allows for Last-In-First-Out treatment of the cost of inventory.

❌ Some weaknesses of the Mexican tax system:

• Business losses are severely restricted in the amount of profits that can be offset over time.
• The VAT base is the narrowest in the OECD, with only 37 percent of final consumption being taxed.
• Mexico has a higher-than-average corporate tax rate of 30 percent (the OECD average is 23.6 percent).

Netherlands

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
14	71.3	25	22	16	22	4

The Netherlands ranks 14^th overall on the 2022 International Tax Competitiveness Index, the same as in 2021. Learn more about the Dutch tax system here.

✔️ Some strengths of the Dutch tax system:

• The Netherlands allows net operating losses to be carried back one year, and the Last-In-First-Out treatment of the cost of inventory is allowed.
• The Netherlands has a territorial tax system exempting both foreign dividends and capital gains and a broad tax treaty network, with 92 countries.
• Corporations can deduct property taxes when calculating taxable income.

❌ Some weaknesses of the Dutch tax system:

• The Netherlands has a progressive taxA progressive tax is one where the average tax burden increases with income. High-income families pay a disproportionate share of the tax burden, while low- and middle-income taxpayers shoulder a relatively small tax burden. system with a combined top rate on personal income of 49.5 percent.
• The VAT of 21 percent applies to approximately half of the potential consumption tax base.
• Companies are limited in the time period in which they can use net operating losses to offset future profits.

New Zealand

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
3	89.7	32	7	1	2	21

New Zealand ranks 3^rd overall on the 2022 International Tax Competitiveness Index, the same as in 2021. Learn more about the New Zealand tax system here.

✔️ Some strengths of the New Zealand tax system:

• New Zealand allows corporate losses to be carried forward indefinitely and has introduced a temporary one-year carryback provision, allowing businesses to be taxed on their average profitability.
• The VAT of 15 percent applies to nearly the entire potential consumption tax base.
• New Zealand property taxes apply just to the value of land rather than real estate or other improvements to the land.

❌ Some weaknesses of the New Zealand tax system:

• New Zealand has an above-average corporate tax rate of 28 percent (the OECD average is 23.6 percent) and relatively poor cost recovery provisions for business investments.
• New Zealand has a narrow tax treaty network, with 40 countries.
• The cost of inventory can be accounted for using First-In-First-Out method or the average cost method (Last-In-First-Out is not permitted).

Norway

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
17	69	15	23	23	16	13

Norway ranks 17^th overall on the 2022 International Tax Competitiveness Index, two places better than in 2021. Learn more about the Norwegian tax system here.

✔️ Some strengths of the Norwegian tax system:

• Norway allows corporate losses to be carried forward indefinitely.
• Norway’s corporate income tax rate of 22 percent is close to the OECD average (23.6 percent).
• Norway has a territorial tax system, with a network of 87 tax treaties.

❌ Some weaknesses of the Norwegian tax system:

• Corporations are limited in their ability to write off investments.
• Norway is one of the few OECD countries that levies a net wealth tax.
• Controlled Foreign Corporation rules are applied to both passive and active income.

Poland

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
28	59.3	12	10	35	32	29

Poland ranks 28^th overall on the 2022 International Tax Competitiveness Index, two places better than in 2021. Learn more about the Polish tax system here.

✔️ Some strengths of the Polish tax system:

• Poland has a below-average corporate tax rate of 19 percent (OECD average is 23.6 percent).
• Poland’s taxes on labor are generally flat, allowing the government to raise revenue from taxes on workers with relative low efficiency costs.
• Poland has a broad tax treaty network including 86 countries.

❌ Some weaknesses of the Polish tax system:

• Poland has multiple distortionary property taxes with separate levies on real estate transfers, estates, bank assets, and financial transactions.
• Companies are severely limited in the amount of net operating losses they can use to offset future profits and are unable to use losses to reduce past taxable income.
• Companies can write off just 33.8 percent of the cost of industrial buildings in real terms (the OECD average is 50.7 percent).

Portugal

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
36	51.4	37	35	27	21	28

Portugal ranks 36^th overall on the 2022 International Tax Competitiveness Index, the same as in 2021. Learn more about the Portuguese tax system here.

✔️ Some strengths of the Portuguese tax system:

• Corporations can deduct their property taxes from their taxable income, and there is an allowance for corporate equity (ACE).
• Portugal has a territorial tax system, exempting foreign dividend and capital gains income for most countries.
• Portugal provides above-average capital cost write-offs for investments in machinery.

❌ Some weaknesses of the Portuguese tax system:

• Portugal has a high corporate tax rate of 31.5 percent (the OECD average is 23.6 percent).
• Companies are severely limited in the amount of net operating losses they can use to offset future profits and are unable to use losses to reduce past taxable income.
• The VAT at a rate of 23 percent applies to just half of the potential consumption tax base.

Slovak Republic

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
13	74.1	21	3	29	3	34

The Slovak Republic ranks 13^th overall on the 2022 International Tax Competitiveness Index, two spots worse than in 2021. Learn more about the Slovakian tax system here.

✔️ Some strengths of the Slovakian tax system:

• The personal income rate on dividends is very low at 7 percent (compared to an OECD average of 24.1 percent).
• The Slovak Republic has better-than-average tax treatment of business investment in machinery, buildings, and intangibles.
• Corporations can deduct property taxes when calculating taxable income.

❌ Some weaknesses of the Slovakian tax system:

• Companies are severely limited in the amount of net operating losses they can use to offset future profits and are unable to use losses to reduce past taxable income.
• The VAT of 20 percent applies to approximately half of the potential consumption tax base.
• The Slovak Republic has both a patent box and a super deduction for Research and Development expenditures, adding to the complexity of the system.

Slovenia

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
23	66.1	7	12	32	26	20

Slovenia ranks 23rd overall on the 2022 International Tax Competitiveness Index, the same as in 2021. Learn more about the Slovenian tax system here.

✔️ Some strengths of the Slovenian tax system:

• Slovenia has a 19 percent corporate tax rate, below the OECD average (23.6 percent).
• Slovenia’s 22 percent VAT applies to a tax base of roughly the OECD average.
• Capital gains taxes are reduced the longer assets are held (a zero percent rate applies after holding an asset for at least 20 years), encouraging long-term savings.

❌ Some weaknesses of the Slovenian tax system:

• Slovenia’s tax treatment of investments in buildings and intangibles is below the OECD average.
• Slovenia has a relatively narrow tax treaty network, with 59 countries, and only a partial territorial tax system.
• Slovenia has multiple distortionary property taxes with separate levies on real estate transfers, estates, and bank assets.

Spain

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
34	56.9	31	25	19	37	18

Spain ranks 34^th overall on the 2022 International Tax Competitiveness Index, two places worse than in 2021. Learn more about the Spanish tax system here.

✔️ Some strengths of the Spanish tax system:

• Spain has a territorial tax system that exempts 95 percent of foreign dividends and capital gains income from taxation.
• The Spanish tax treaty network is made up of 95 countries.
• Property taxes can be deducted against corporate income taxes.

❌ Some weaknesses of the Spanish tax system:

• The VAT of 21 percent applies to less than half of the potential consumption tax base.
• Spain has multiple distortionary property taxes with separate levies on real estate transfers, net wealth, estates, and financial transactions.
• Spain has both a patent box and a credit for Research and Development.

Sweden

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
12	74.2	8	18	22	8	12

Sweden ranks 12^th overall on the 2022 International Tax Competitiveness Index, the same as in 2021. Learn more about the Swedish tax system here.

✔️ Some strengths of the Swedish tax system:

• Sweden provides for net operating losses to be carried forward indefinitely, allowing for corporations to be taxed on their average profitability.
• Sweden has a territorial tax system that exempts both foreign dividends and capital gains income from taxation without any country limitations.
• Sweden has a broad tax treaty network, with 85 countries.

❌ Some weaknesses of the Swedish tax system:

• Sweden’s personal dividend tax rate and capital gains taxA capital gains tax is levied on the profit made from selling an asset and is often in addition to corporate income taxes, frequently resulting in double taxation. These taxes create a bias against saving, leading to a lower level of national income by encouraging present consumption over investment. rate are both 30 percent, above the OECD average (24.2 percent for dividends and 19 percent for capital gains).
• Sweden has a top statutory personal income tax rate of 52.3 percent.
• Sweden has Controlled Foreign Corporation rules that apply to both passive and active income.

Switzerland

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
4	82.9	11	9	4	36	2

Switzerland ranks 4^th overall on the 2022 International Tax Competitiveness Index, one place better than in 2021. Learn more about the Swiss tax system here.

✔️ Some strengths of the Swiss tax system:

• Switzerland has above-average cost recovery provisions for investments in buildings and intangibles.
• Switzerland has a broad tax treaty network, with 94 countries.
• The Swiss VAT of 7.7 percent applies to a broad base.

❌ Some weaknesses of the Swiss tax system:

• Switzerland has multiple distortionary property taxes with separate levies on real estate transfers, net wealth, estates, assets, and financial transactions.
• Companies are limited in the time period in which they can use net operating losses to offset future profits and are unable to use losses to reduce past taxable income.
• The VAT exemption threshold is almost twice as high as the OECD average.

Turkey

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
9	76.6	20	8	13	23	8

Turkey ranks 9^th overall on the 2022 International Tax Competitiveness Index, four places better than in 2021. Learn more about the Turkish tax system here.

✔️ Some strengths of the Turkish tax system:

• Turkey has a territorial tax system exempting foreign dividends and capital gains income without any country limitations.
• The personal income tax on dividends is 20 percent, below the OECD average (24.1 percent).
• Turkey provides an allowance for equity (ACE), addressing the debt bias inherent to the standard corporate income tax.

❌ Some weaknesses of the Turkish tax system:

• Companies are severely limited in the time period in which they can use net operating losses to offset future profits and are unable to use losses to reduce past taxable income.
• Turkey’s VAT rate of 18 percent applies to less than half of the potential tax base.
• Turkey has multiple distortionary property taxes with separate levies on real estate transfers, estates, and financial transactions.

United Kingdom

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
26	62.9	10	24	34	34	1

The United Kingdom ranks 26^th overall on the 2022 International Tax Competitiveness Index, one place better than in 2021. Learn more about the UK tax system here.

✔️ Some strengths of the UK tax system:

• The corporate income tax rate is 19 percent, below the OECD average (23.6 percent).
• The UK has a territorial tax system exempting both foreign dividend and capital gains income without any country limitations.
• The UK tax treaty network with 130 countries is the broadest in the OECD.

❌ Some weaknesses of the UK tax system:

• The top personal income tax rate on dividends is 39.35 percent, well above the OECD average (24.2 percent).
• The real property tax burden is among the highest in the OECD.
• The VAT at a rate of 20 percent applies to less than half of the potential consumption tax base.

United States

Overall Rank	Overall Score	Corporate Tax Rank	Individual Taxes Rank	Consumption Taxes Rank	Property Taxes Rank	Cross-Border Tax Rules Rank
22	66.8	22	21	3	29	35

The United States ranks 22^nd overall on the 2022 International Tax Competitiveness Index, the same as in 2021. Learn more about the U.S. tax system here.

✔️ Some strengths of the U.S. tax system:

• The U.S. provides full expensingFull expensing allows businesses to immediately deduct the full cost of certain investments in new or improved technology, equipment, or buildings. It alleviates a bias in the tax code and incentivizes companies to invest more, which, in the long run, raises worker productivity, boosts wages, and creates more jobs. for business investments in machinery.
• The U.S. allows for Last-In-First-Out treatment of the cost of inventory.
• Corporations can deduct property taxes when calculating taxable income.

❌ Some weaknesses of the U.S. tax system:

• U.S. states’ sales taxes apply on average to less than a third of the potential tax base.
• The U.S. has a partial territorial system and does not exempt foreign capital gains income.
• The real property tax burden is among the highest in the OECD.

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[1] Daniel Bunn, “Sources of Government Revenue in the OECD,” Tax Foundation, Feb. 10, 2022, https://www.taxfoundation.org/publications/sources-of-government-revenue-in-the-oecd/.

[2] Organisation for Economic Co-operation and Development (OECD), “Tax and Economic Growth,” Economics Department Working Paper No. 620, July 11, 2008.

[3] Last year’s scores published in this report can differ from previously published rankings due to both methodological changes and corrections made to previous years’ data.

[4] Tax Foundation, “International Tax Competitiveness Index,” https://github.com/TaxFoundation/international-tax-competitiveness-index

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