TORONTO, Nov. 23, 2011 /CNW/ - Canada's corporate tax rate has dropped
by more than 16% over the past 11 years, consistent with the global
trend according to KPMG International's latest annual survey of tax
rates affecting business.
The survey found tax rates on corporate profits have declined sharply
around the world over the past 11 years but this era is almost over as
year-over-year corporate tax rate cuts have become much smaller. At the
same time, value added tax and goods and services tax regimes have
proliferated around the world, rising each year to higher rates and
applying to more items.
Canada has bucked this trend by lowering its federal GST rate. Also, in
the provincial context, British Columbia is moving from a harmonized
sales tax back to its former provincial sales tax regime.
As in previous years, the survey compares corporate and indirect tax
rates from more than 125 countries. The survey shows that the world's
average corporate income tax rate has fallen in each of the past 11
years, from 29% in 2000 to 23% in 2011.
Canada's general corporate tax rate of 28% for 2011, which includes
federal and provincial tax, compares favourably with the U.S. corporate
rate of 40% but is still higher than the OECD average of 26% and the
European Region average of 20%.
Canada's corporate tax rate has dropped by 3% to 28% in 2011 (from 31%
in 2010) but the decline for 2011 in most regions of the world was much
smaller — only around 1% or less on average. Based on these results,
the survey says it seems certain that the decade-long era of sharply
declining corporate tax rates is almost behind us.
"Canada's corporate tax rate falls around the middle of the pack among
the OECD countries," said Elio Luongo, KPMG's Canadian Managing Partner
for Tax. "But Canada's general corporate tax rate is anticipated to
continue to fall in 2012, when the federal tax rate will be 15%, versus
16.5% in 2011."
The lowest average corporate tax rates are still found in the European
region (including non-EU countries), where the rate has increased
slightly since 2010 to stand at 20%.
"Headline corporate income tax rates are important but they are only one
factor in comparing country-to-country tax burdens," said Luongo. "You
also have to consider sales tax, property tax, capital tax and other
local business taxes. International companies should analyze all of
these costs carefully and how they interact."
The survey also compares value-added type indirect taxes (Goods and
Services Tax (GST) or Value-Added Tax (VAT)). The survey includes 119
jurisdictions around the world that have such indirect taxes and
indicates that the average rate is 15%, with little movement over the
past three years.
Canada's indirect tax rates vary between 5% GST-only in Alberta and 15%
HST in Nova Scotia, which is lower than the OECD average VAT rate of
19% and the European countries' average of 20%.
"As the survey points out, businesses in Canada also have to contend
with the harmonized sales tax or retail sales tax imposed by all the
provinces, except Alberta, which effectively increases their indirect
tax burden beyond the five percent GST," said John Bain, a partner in
KPMG's Indirect Tax Group in Canada.
It's possible to compare Canada's corporate income tax rate with the
rate in the U.S., Canada's neighbour and biggest trading partner, but
it's not easy to compare indirect tax rates because the U.S. does not
impose a national value-added tax. Instead, businesses have to deal
with a complex system of "sales and use" taxes imposed by most states
and many local governments at various rates.
KPMG's 2011 Corporate and Indirect Tax Rate Survey is available on KPMG's website.
New online tax rate tool
KPMG has also released a new interactive online tax rate tool available
The new online tool allows users to view and compare the latest
corporate and indirect tax rates from across the globe. With the new
tool, users can:
Compare a particular tax rate (e.g., corporate tax) between up to five
Choose the years they want to compare
View the corporate and indirect tax rates for a particular country.
About KPMG in Canada
KPMG is a global network of professional firms providing Audit, Tax and
Advisory services. We operate in 150 countries and have 138,000 people
working in member firms around the world. The independent member firms
of the KPMG network are affiliated with KPMG International Cooperative
("KPMG International"), a Swiss entity. Each KPMG firm is a legally
distinct and separate entity and describes itself as such.
KPMG's Canadian website is located at www.kpmg.ca
SOURCE KPMG LLP
For further information:
Manager, Media Relations, KPMG