On Thursday 29 July, the OECD published the 3rd edition of its corporate income tax statistics, which highlights the persistence of Base Erosion and Profit Shifting (BEPS) practices and thus reinforces the importance of the international tax reform currently being negotiated.
The data shows that income tax continues to be an important source of tax revenue for States. On average, corporate income taxes account for a higher share of total tax revenues in Africa (19.2%) and Latin America and the Caribbean (15.6%) than in OECD countries (10%), the report concludes.
The data also shows a decline in statutory tax rates on profits in almost all countries over the last 20 years. Across 111 jurisdictions, 94 had lower tax rates in 2021 than in 2000, while 13 jurisdictions had the same tax rate and only four had a higher rate.
On average, the combined statutory corporate income tax rate across all jurisdictions reviewed has fallen from 20.2% in 2020 to 20% in 2021, down from 28.3% in 2000, according to the OECD.
A new country-by-country reporting dataset also provides aggregated information on the global tax and economic activities of nearly 6,000 multinational enterprise groups headquartered in 38 jurisdictions and operating in more than 100 countries worldwide.
This data shows that there is still a discrepancy between the place where profits are reported and the place where economic activities are carried out. On average, the share of profits reported by multinationals (26%) in investment hubs is relatively high compared to their workforce (3%) and tangible assets (14%).
Revenues per employee is also generally higher in countries with a zero statutory corporate income tax rate and in investment hubs. The median value of revenues per employee in jurisdictions with a zero corporate income tax rate is just under 2.6 million US dollars, compared to 320,000 US dollars in jurisdictions with a corporate income tax rate of over 20%.
According to the OECD, this new data further reinforces the importance of the international tax reform negotiated within the OECD/G20 Inclusive Framework on BEPS (see EUROPE 12753/1).
“Evidence of continuing BEPS behaviours as well as the persistent downward trend in statutory corporate income tax rates reinforce the need to finalise the agreement and begin implementation of the two-pillar approach to international tax reform”, the report says.
On the same day, based on the new data, the European Tax Observatory launched an online country-by-country accounts explorer, which allows you to see and compare in a few clicks how much multinationals earn and pay in taxes in each country where they operate.
See the OECD report: https://bit.ly/2VkVimF
See the European Tax Observatory Explorer: https://bit.ly/3BWaN5p (Original version in French by Marion Fontana)