When doing business globally it is important to be aware of factors that can affect smooth activity. One of the biggest factors in that regard is taxation on those activities. Taxation is, broadly speaking, a levy or cost imposed by a government on private entities (such as people or businesses) in exchange for permission to conduct business. It is a vital factor to consider when doing almost anything, especially for global businesses.
Taxation is a complicated topic, and the kinds of taxes levied by governments depend entirely on regional concerns. There are a few general kinds of taxes that exist in every country, but even the exact nature of how they work is different depending on where you are. Nonetheless, there are about three major categories of taxes:
Taxes on Income:
Taxes levied on the profit and income of a person or business fall in this category. Generally, the amount taxed by the government (by percentage) increases with the amount earned. This is divided into several tiers or brackets based on income. The major categories of this type include:
The Income Tax is a percentage of income directly taken by the state or federal government.
The Capital Gains Tax is a percentage of profit taxed from the sale of an asset, such as property, bonds, or company stocks. The amount taxed also depends on your net income, increasing proportionally.
The Estate Tax, a percent of the estimated value of an inherited estate is taxed if it falls above a significantly high threshold. Similar kinds of taxes to this include Inheritance Tax and Gift Tax.
Taxes on Property:
Several countries levy a tax on the ownership of land, automobiles, or other things of particular note, which is referred to as Property Tax. Generally, this tax is directly proportional to the value of the property item, foregoing the tax brackets which are applied to the taxes on income mentioned above. The value of the property is generally determined by an assessor on behalf of the local government body. Property Tax is paid to the local governing body on a recurring basis, which is commonly yearly.
An important subclass of Property Tax is Real Estate Tax. Real Estate property refers to owned land or constructions, such as houses, apartment complexes, shops, etc. The baseline of the Real Estate tax is monitored closely by the community near that property, and the actual value taxed often depends on the quality and state of the property.
Taxes on Goods and Services:
Taxes are levied on the sales of goods and items depending on their value and content. These are direct percentage value that is automatically added to the recommended cost of every item. The Sales Tax is a major category of this type, where a tax is levied on the sale of items. Similarly, Tariffs are taxes on imported goods, which are used to promote local sales and domestic businesses. Lastly, a Luxury Tax is levied on high-value luxury items such as rings, watches, cars, etc.
The popular saying goes that the only certainties in life are death and taxes. Taxes are a cornerstone that supports government finances worldwide. Some countries tax less than others according to their needs and requirements, such as the UAE and its neighbors (approximately 5% Sales Tax), Canada (5% Sales Tax), and Switzerland (at 7% Sales Tax). The highest-taxed countries in the world, by Sales Tax metrics, are Hungary (27% Sales Tax), Denmark (25% Sales Tax), and Finland (24% Sales Tax) respectively. Bear in mind that these are only the sales taxes, and their general income taxes for their residents is much lower respectively.
Countries Without General Corporate Income TAX
| COUNTRY | CONTINENT |
|---|---|
| Anguilla | North America |
| Bahamas | North America |
| Bahrain | Asia |
| Bermuda | North America |
| British Virgin Islands | North America |
| Cayman Islands | North America |
| Guernsey | Europe |
| Isle of Man | Europe |
| Jersey | Europe |
| Saint Barthelemy | North America |
| Tokelau | Oceania |
| Turks and Caicos Islands | North America |
| United Arab Emirates | Asia |
| Vanuatu | Oceania |
| Wallis and Futuna Islands | Oceania |
20 Lowest Statutory 5 Rates in the World
| COUNTRY | CONTINENT | TAX RATE |
|---|---|---|
| Barbados | North America | 5.5% |
| Uzbekistan | Asia | 7.5% |
| Turkmenistan | Asia | 8% |
| Hungary | Europe | 9% |
| Montenegro | Europe | 9% |
| Andorra | Europe | 10% |
| Bosnia and Herzegovina | Europe | 10% |
| Bulgaria | Europe | 10% |
| Chile | South America | 10% |
| Kosovo, Republic of | Europe | 10% |
| Kyrgyzstan | Asia | 10% |
| Paraguay | South America | 10% |
| Qatar | Asia | 10% |
| The Former Yugoslav Republic of Macedonia | Europe | 10% |
| Timor-Leste | Oceania | 10% |
| China | Asia | 12% |
| Republic of Moldova | Europe | 12% |
| Cyprus | Europe | 12.5% |
| Gibraltar | Europe | 12.5% |
| Ireland | Europe | 12.5% |
20 Highest Statutory 5 Rates in the World
| COUNTRY | CONTINENT | TAX RATE |
|---|---|---|
| Comoros | Africa | 50% |
| Puerto Rico | North America | 37.5% |
| Suriname | South America | 36% |
| Argentina | South America | 35% |
| Chad | Africa | 35% |
| Cuba | North America | 35% |
| Equatorial Guinea | Africa | 35% |
| Guinea | Africa | 35% |
| Malta | Europe | 35% |
| Saint Martin ( French Part) | North America | 35% |
| Saint Martin (Dutch Part) | North America | 35% |
| Sudan | Africa | 35% |
| Zambia | Africa | 35% |
| American Samoa | Oceania | 34% |
| Brazil | South America | 34% |
| Venezuela | South America | 34% |
| Cameroon | Africa | 33% |
| Saint Kitts and Nevis | North America | 33% |
| Seychelles | Africa | 33% |
| Bangladesh | Asia | 32.5% |
