Do Australian companies pay more tax than our neighbours?

Are Australian businesses slugged more company tax than their overseas counterparts? New research settles this question once and for all.

comparing asx shares and company tax represented by an apple and orange side by side

Image source: Getty Images

Company tax is often a sensitive topic. 

Foreign multinationals are accused of not paying enough, local companies complain they pay too much, and businesses clever enough to domicile in low-tax regions are accused of tax-dodging.

Conversely, nations manipulate their corporate tax level according to their needs. Lower it to attract business activity, or raise it to fund social spending.

The stereotype is that wealthy European nations will have a higher tax rate to pay for their more generous social spending. And poorer countries have lower corporate taxes to entice business. 

Accounting software provider QuickBooks recently actually did the sums to work out whether any of this is true.

Australia has the 9th highest company tax

Australia’s 30% company tax rate saw it ranked as the equal 9th highest in the world. In the Asia-Pacific region, only Japan’s company tax rate was higher, at 30.62%.

Oddly enough, the highest taxing “country” on QuickBooks’ league table is not a country at all — it is the United States territory of Puerto Rico, which slugs businesses a whopping 37.5%.

The biggest trend was that the old stereotype of developed nations having higher corporate taxes and poorer countries having lower rates was shattered.

European countries on average had a tax rate of 20.27%, while Africa averaged 28.45%.

South America was the most frequently represented in the top 10, with Brazil and Venezuelan businesses paying 34% in tax.

“It is unclear whether South America, as an emerging continent, is charging higher taxes in order to raise government revenue or to benefit from businesses that are looking to expand internationally and enter new markets,” said QuickBooks analyst, Lucy Desai.

“South America is becoming a popular choice for businesses to enter, with strong trade links and an advantageous geographic location.”

Looking at the richest countries, there is no magic formula for company taxes – some charge high and some charge low.

“The top five richest countries in the world’s corporation tax are relatively varied, with Luxemburg standing at 27.08%, Norway at 22%, Iceland at 20%, Switzerland at 18% and Ireland at 12.5%,” said Desai. 

“It would appear that some countries’ cultures factor into how much tax they pay. For example, Scandinavian countries are proud to pay higher taxes to contribute to social welfare.”

Countries with the highest corporate taxes

Nation/region Company tax rate (%)
Puerto Rico 37.5
Zambia 35
Brazil 34
Venezuela 34
France 33.3
Columbia 33
Morocco 31
Japan 30.62
Australia + 7 others 30
Source: QuickBooks, table created by author

Countries with the lowest corporate taxes

Nation/region Company tax rate (%)
Barbados 5.5
Hungary 9
Qatar 10
Bulgaria 10
Cyprus 12.5
Ireland 12.5
Iraq 15
Kuwait 15
Maldives 15
Georgia 15
Lithuania 15
Source: QuickBooks, table created by author


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