Top Low Corporate Tax Countries in 2022

The tax climate directly affects the attractiveness and competitiveness of the jurisdiction. An increase in the rates of mandatory payments and fees to the budget significantly reduces the foreign direct investment flow. Foreign businessmen try to find more attractive conditions for their companies and reduce the fiscal burden as much as possible.

Nowadays, offshore jurisdictions have begun to massively leave the EU black list and comply with the OECD and FATF requirements. Due to this, countries with traditional taxation had to take steps for reducing tax rates for businesses. And this has allowed many respectable and reputable jurisdictions to become in line with the classic offshores in terms of taxation.

In 2022, foreign investors and their companies will still face high corporate, municipal and other tax rates. But the authorities of countries with traditional taxation are gradually reducing them. Countries that used to scare away by large expenses can now attract with numerous benefits and the opportunity to save money. Yesterday’s unattractive jurisdictions are becoming interesting for many foreigners.

TOP 20 countries with the lowest corporate tax rates in 2022

The World Economic Forum carries out studies on this issue. This organization generates ratings taking into account all companies’ tax liabilities. In fact, with a minimum corporate tax rate, your business may pay relatively high indirect taxes (transport tax, property tax, shares transfer tax, etc.).

Therefore, it is rather challenging to determine the jurisdiction’s attractiveness for business only by the income tax rate. This requires a thorough analysis of not only the company incorporation jurisdiction but also the final profit recipient (the beneficial owner). For example, DTT (Double Taxation Treaty) with Austria can reduce the standard corporate tax to 15%, or employees in Sweden pay no personal income tax at all with a salary of less than USD 45,000.

This article will consider only the lowest corporate tax rates for businesses in 2022. The summary data will allow you to determine the range of jurisdictions where it is most profitable to register a business or create a subsidiary, representative office, or branch.

Estonia

This is a fairly popular jurisdiction among foreign investors, with a 20% corporate income tax rate. However, this tax applies exclusively to distributed income. In addition, all profits from abroad are not subject to taxation. If your business receives trading revenue, whether in the form of dividends or interest, it is not subject to fees until it is distributed. Since 2018, Estonia has introduced a reduced 14% rate for all dividends, starting from the third year of regular payments.

Thailand

Thailand has a 20% rate for all companies with tax resident status. Global income is subject to taxation in this country too. The exception is non-resident companies that can document their status. Local companies and individuals pay 10% withholding tax. There is a 50% dividend exemption for companies not listed on The Stock Exchange of Thailand.  Otherwise, the company can exempt 100% of dividends from taxes (subject to certain conditions).

Registering a company in Thailand is more profitable for VAT payers (from October 2021, the tax rate is only 10%). Regarding other business taxes, there are quite attractive property tax rates here. From 2022, they range from 0.15% to 3%, depending on the property use type.

Portugal

Portugal is quite an interesting European jurisdiction with a complex taxation system, depending on the company location. Countries with the lowest business taxes often have free zones. Portugal has such zones too. Free zone companies here pay only a 5% fee.

Portugal is among the countries with the lowest corporate tax rates for business in Europe. They range from 16.8% in Madeira to 21% on the mainland.

Hong Kong

The Hong Kong authorities have made great efforts to attract foreign investors and international companies. This jurisdiction has created a two-tier income tax scale, depending on the turnover. Registering a company in Hong Kong involves paying taxes ranging from 8.25% to 16.5%. Local companies receive a tax discount on the first 2 million Hong Kong dollars of profits. After that, the rate is 16.5%.

Lithuania

Corporate tax has not changed in Lithuania in 2022. It is 15%. The state has developed a low-tax program for supporting agricultural companies and attracting foreign investment. After such a company registration, you can take advantage of a 0-5% preferential tax rate for a certain period. According to The Financial Daily research, Lithuania is the second European state in terms of a favorable investment climate for businesses from various activity fields.

Armenia

As for 2022, local authorities do not plan changes in the corporate tax rate. It is 18% if the company was not registered on the free zone territory. Innovation in this jurisdiction was introduced in 2020 (previously, the tax rate was 20%). The effective VAT rate in Armenia is from 1.5% to 5% (previously, it was from 3.5% to 10%). Notary companies have to pay 20%.

Georgia

The income tax rate for Georgian resident companies is 15%. This small but very promising state can often be found in the ratings of countries with low taxes. All profits of a resident enterprise are subject to taxation in Georgia. For a non-resident company, only income from Georgian sources is taxed. Companies registered in Georgia free zones can enjoy zero VAT rates, income tax, and other fees.

Bulgaria

This state is another regular in the ratings of low corporate tax countries. It provides a 10% rate for all companies. Increased tax rates apply to specific types of business: gambling operators and companies providing telecommunications services to local consumers (15%).

Macau

After the IMF advised Macau to revise its taxation system, the country broke into the rating of jurisdictions with low income tax rates. In 2022, rates here range from 7% to 12%. In addition, Macau companies enjoy tax-free income threshold of MOP 600,000 per year. All income below this amount is not taxed at all.

North Macedonia

In addition to one of the lowest corporate tax rates, North Macedonia has another distinct advantage. This jurisdiction does not participate in the automatic exchange of tax information. Company registration in North Macedonia implies a 10% tax if the income exceeds EUR 100,000 per year. The rate has not changed since 2008. Otherwise, local companies enjoy preferential taxation at a 1% rate. The exception is gambling providers and banks located in the jurisdiction.

Montenegro

9% is the tax rate for Montenegro resident and non-resident companies with less than EUR 100,000 in annual profit. With a profit from EUR 100,000 to EUR 1,500,000, the tax rate will be 12%. Companies with higher profits use a 15% tax rate. Montenegro enterprises with tax resident status have to pay taxes on income received in any country in the world. When registering a company in Montenegro, it is important to take into account a large number of additional fees (customs, city, and other taxes).

Malta

Initially, the Maltese income tax scares – 35% is a fairly high rate. So, why did we include Malta in the ranking of countries with minimum taxation levels? The jurisdiction has developed a special program for paid fees refund, depending on the income type. For example, the effective rate may be 5% for operating income and 10% for passive income. When it comes to registering a company in Malta with foreign capital participation, 100% profit calculation for tax purposes is possible.

In 2022, Malta extended business inheritance privileges and introduced attractive conditions for buyers of Maltese historic housing. Reduced tax rates are available for EUR 400,000 of real estate value both for individuals and companies.

UAE

The jurisdiction appeared in the rating of countries with the lowest corporate tax rates for the complete absence of such taxes at the state level. Here, the taxation system involves separate fees for companies in each emirate. Therefore, the rate can range from 0% to 55%. For example, oil companies and banks have a 20% tax rate. In addition, the UAE has free zones within its territory. Registration of a free zone company allows you to be exempt from any types of taxes for 15-20 years.

Switzerland

Switzerland has a multi-level taxation system, so registering a company here involves different tax rates. They vary from canton to canton and range from 11.9% to 21.6%. The federal duty is 8.5%. It is calculated only after the cantonal corporation tax payment.

The Cayman Islands

Non-resident companies of the Cayman Islands can enjoy a 0% corporate tax rate in 2022. This is a classic offshore, which completely exempts local companies from taxes if they carry out activities outside the state. The grace period for companies is 20 years. The company obligations include only state license fee payments. But when transferring property, it is mandatory to pay a 7.5% stamp duty.

Luxembourg

Luxembourg companies with more than EUR 200,000 annual profit have to pay 17% income tax. If profit does not reach the specified value, the effective tax rate is 15%. In Luxembourg, there are additional fees for local companies, such as the solidarity tax and the municipal business tax. When registering a company in Luxembourg, it is extremely important to carefully plan taxation for reducing the tax burden (there are many tax incentives here).

Canada

Quite recently, this jurisdiction belonged to states with fairly serious taxation for resident companies. By 2022, the country’s authorities have provided for an income tax rate from 15% to 33%. This provoked an increased interest of investors to this state. Federal tax for companies in Canada is tied to the profit level and differs from province to province. In addition, Canada has one of the lowest VAT rates for businesses (5%). Registering a company in Canada also benefits with the ability to carry forward operating and capital losses for 20 years or more.

Singapore

This state has a 17% corporate tax rate, which has ensured its entry into the ranking of the states with low taxes. At the same time, it is important to take into account that all profits transferred to Singapore are subject to taxation here. To attract foreign investment, the country’s authorities introduce interesting and attractive incentives, including taxes ones. For example, if the company has up to 20 shareholders, it does not have to pay tax on the first SGD 100,000 of income.

Cyprus

Cyprus offers only a 12.5% income tax rate. At the same time, this country is on the list of EU members and not on the list of offshore countries. To use this tax rate, local companies must comply with all substance requirements. Otherwise, Cyprus company registration does not provide for obtaining a tax resident status of this jurisdiction. Here, all companies can exempt up to 80% of their profits from taxation. In this case, the effective tax rate will be only 2.5%.

Germany

The average corporate tax rate in Germany is 15% (with a 5.5% surcharge). It would seem that this is an excellent choice: the jurisdiction with high prestige, exceptional reliability, and a developed economy. However, registering a company in Germany imposes other corporate and tax obligations. Thus, all local businesses have to pay the trade tax of 20.3% and the above-mentioned solidarity tax of 5.5%, which can significantly increase the fiscal burden.

Company registration in a low tax jurisdiction in 2022

As you can see, the rating of countries with low corporate tax rates indicates the ability to open a business in almost any jurisdiction and boldly use all kinds of benefits. On the other hand, small income tax payments may incur additional costs due to the special obligations and other taxes. Therefore, we advise you to contact experts for developing an individual tax planning strategy.

In 2022, many states introduced special benefits and reduced corporate taxes to attract foreign capital, for example, France. In modern conditions, it is quite easy to get strong government support for international business and take advantage of reduced or even zero tax rates. Our experts can provide more information on how registering a company in a respectable jurisdiction can help reduce taxes. Leave your request in the online chat or contact us in a convenient way for details.