Indirect taxes rise while corporate tax rates stabilize
Tax transparency and morality are key issues driving changes in global tax landscape

Since the last KPMG Corporate and Indirect Tax Rate Survey was published in January 2013, some 24 countries have lowered corporate tax rates while nine others have raised them.

In terms of indirect tax rates, 13 countries have pushed up indirect taxes and none decreased.

These are the key findings of the latest edition of the survey, which compares corporate and indirect tax rates from more than 130 countries.

Although corporate tax rates in many countries have stabilized after years of decline, there are still multiple factors that will influence corporate tax rates in the future. Dramatic changes in the global tax landscape are expected to continue.

Within ASEAN, there is an observed trend of decreasing corporate taxes over the past 15 years. In particular, there was an obvious fall in rates in 2007 on the signing of the ASEAN Economic Community (AEC) Blueprint. This reduction in corporate tax rates has continued, with Thailand and Vietnam reducing their corporate tax rates by three percent. Singapore continues to have the lowest corporate tax rate in the region.
Tax morality and transparency drive corporate tax fluctuations
The issue of tax transparency and morality – or whether companies are paying their 'fair share' of corporate tax – remain one of the most prominent areas scrutinized by governments, the general public, media and investors globally.

Meanwhile, tax authorities are also under pressure to increase revenues from their tax base with fewer resources.

This has led to more tax audits and investigations. Tax authorities are also looking for coordinated solutions in the European Union (EU), the Organization for Economic Co-operation and Development (OECD) and G20 contexts.

Besides actions pursued at the OECD or EU levels, countries have to independently adjust their legislation while maintaining their competitiveness. The cross-border interaction of these new measures remains to be seen, and corporate tax rates look set to go on a roller coaster ride.

The issues at play will also translate into challenges for companies. They must look into putting solid tax strategies in place, identify and manage tax risks, and invest in external communications around tax.
Indirect tax becoming 'tax of choice'
The increases in indirect tax rates globally are arguably evidence of it becoming the choice tax for governments around the world seeking to raise much needed income.

Japan is a recent example. The Japan consumption rate rose from five to eight percent effective 1 April 2014, and a further increase to 10 percent may take place in 2015, depending on the economic situation.

Standard, Reduced and Intermediary rate increases at the end of 2014 are also expected in Luxembourg.

Businesses must recognise that indirect taxes are here to stay, and should think carefully about where they put their tax time, effort and dollars. They must also ensure that they embrace technology so that their accounting and reporting systems can handle the increasing complexities of indirect tax.
Tax rates in a nutshell
For countries that impose an indirect tax, Hungary is the country imposing the highest rate at 27 percent. The lowest is Aruba at 1.5 percent.

In Asia, Singapore has the second lowest indirect tax rate at seven percent, just behind Taiwan at five percent.

Among countries that impose a corporate tax, the United Arab Emirates holds the top spot with the highest rate at 55 percent*. The lowest is Montenegro at nine percent.

Singapore, at 17 percent, has the ninth lowest corporate tax rate with Slovenia and Taiwan. Hong Kong at 16.5 percent is ranked just above Singapore, while Macau and Oman take the third lowest corporate tax rate position at 12 percent.

Users can compare corporate and indirect tax rates for more than 130 countries using KPMG’s online tax rate tool.
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