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KPMG’s Corporate and

Indirect Tax Rate Survey 2008

TA X
Contents 1
Introduction

2
Commentary

Corporate
Tax Rates
9
Corporate Tax Rates
1999 - 2008

10
Corporate Tax Rates –
Comparison Charts

16
Corporate Tax Rates
Footnotes

Indirect Tax
Rates
29
Indirect Tax Rates
2004 - 2008

32
Indirect Tax Rates –
Comparison Charts

34
Indirect Tax Rates
Footnotes
KPMG’s Corporate and Indirect Tax Rate Survey 2008 1

Corporate and Indirect


Tax Rate Survey 2008 –
Introduction and
Commentary

Introduction
Welcome to the 2008 edition of KPMG’s Corporate
and Indirect Tax Rate Survey. This is the 16th year that we
have asked our member firms for details of the
corporate tax rates charged in their countries, and in
many ways, the changing results over the years reflect
an increasingly global mindset among tax policy makers
as well as corporates.

To help our member firm clients and other organizations consider developments
across borders, we have included both corporate and indirect tax rates from 106
and 90 countries, respectively. We started reporting on indirect tax rates in our
2007 survey and everything we have seen since appears to confirm that indirect
taxes are either at the same level as, or surpassing, corporate taxes as a concern
for international business. So, for the first time, we have looked back five years to
show trends in indirect tax rates.

In the commentary accompanying the information tables, and in the detailed


notes on current tax systems, KPMG’s tax specialists have looked behind the
figures to pick out the trends driving tax policy throughout the world. Our aim
is to add value to the important global debate on how corporates and
governments should deal with two major challenges they both face, namely
constant competitive pressures and accountability to multiple stakeholders.

We hope our readers find this an informative and stimulating study.

Loughlin Hickey
Global Head of Tax
KPMG in the United Kingdom
2 KPMG’s Corporate and Indirect Tax Rate Survey 2008

Commentary
The global trends in taxation identified in our 2007
Corporate and Indirect Tax Rate Survey have continued
and intensified during the course of the past year.
Average corporate tax rates among the 106 countries
surveyed this year have fallen again, from 26.8 percent
in 2007 to 25.9 percent in 2008, while average indirect
tax rates have remained steady at 15.7 percent.
This in itself shows that revenues from indirect taxes are becoming more and
more important to governments around the world, as direct corporate taxes fall
while indirect taxes stay broadly the same. But maintaining the level of indirect
tax rates is only the first of three key trends which point to a global shift towards
indirect taxes.

The second trend is the steady expansion in the number of governments which
have adopted or are planning to adopt a Value-Added Tax (VAT) or Goods and
Services Tax (GST). Today, there are 135 jurisdictions in the world with taxes
of this kind, and the countries either considering them, or with firm plans to
introduce them include India (see below), and the UAE. Most interestingly,
the debate on whether to introduce a federal VAT system has also begun in
the U.S., the only OECD economy not to have one.

The third trend is the steady expansion of the indirect tax base, a process
already familiar to businesses operating in the European Union and now, more
than ever before, a significant part of the tax challenge facing businesses in
other parts of the world. This is partly because governments may want to make
use of the flexibility and stability that indirect taxation offers in order to protect
their revenues. It is also necessary to keep the tax system up to date as new
products, services, and methods of doing business are constantly being
developed, often aided by new technology. An effective indirect tax system
needs to evolve constantly if it is to keep up with the pace of commercial and
technological change.
KPMG’s Corporate and Indirect Tax Rate Survey 2008 3

Looking back at indirect tax rates

To try to put these trends into an historic context, for this year’s survey we have
collected indirect tax rate information going back five years, to see how these
rates have moved over time.

At first glance, it appears that there has been very little movement. The 87
countries reporting indirect rates for 2004 had an average rate of 15.6 percent,
the 88 countries reporting for 2005 also averaged 15.6 percent, whilst the 89
countries reporting for 2006 saw a small drop in their average to 15.4 percent
and the 90 countries reporting for 2007 and 2008 averaged 15.7 percent for
both years.

But looking more closely, at the country level there are movements both up
and down. Some of these reflect the global trends identified above whilst
others have been driven by local social, political and economic factors.

Canada, for example, has seen a two point cut in its Goods and Services Tax
(GST) from seven percent in 2004-2006 to six percent in 2007 and five percent
in 2008. The reasons for this are largely down to Canadian politics; the GST is
widely disliked in Canada and having enjoyed a budget surplus for some years
the government has reduced this tax along with others. Its direct corporate tax
rate has come down from 36.1 percent in 2007 to 33.5 percent in 2008.

There have also been reductions in India, which took the opportunity in 2005,
with the introduction of a state-level VAT system, to cut its main indirect tax rate
from 16 percent to 12.5 percent. (The figure of 16 percent is an average of the
sales taxes imposed by Indian states at the time).

This is essentially a local realignment of existing indirect tax systems with two
aims. The first is to improve international trade and encourage the import of
technology into India, by bringing Indian taxation into line with the generally
lower taxes found in the Association of Southeast Asian Nations (ASEAN).
The second is to prepare the ground for a move to a national GST by 2010.

If Canada and India are being driven by local considerations, Germany and
Singapore show global trends in action. We previewed Singapore’s increase
from five percent to seven percent in our 2007 report, and that budget measure,
plus the reduction in corporate tax rate from 20 percent to 18 percent, has now
come into force.

Germany raised its VAT rate from 16 percent to 19 percent in 2007, in a response
to long-standing budget deficits on one hand and the need to reduce its
corporate tax rate to remain internationally competitive on the other. Germany’s
corporate tax rate fell from 38.4 percent in 2007 to 29.5 percent in 2008.
4 KPMG’s Corporate and Indirect Tax Rate Survey 2007

Changes in regulation and enforcement

But it is not just in rate changes that government tax policies are revealed.
In a move that is being replicated elsewhere in the world, both Singapore and
Germany have introduced specialized groups within their tax authorities, focused
on helping businesses to improve their handling of VAT/GST. This may reflect
another growing trend, seen in Europe in particular, towards greater co-operation
and transparency between tax authorities, businesses and their advisors. While
this process may result in improvements and simplifications, the ultimate
objective is clearly to ensure protection of the indirect tax base.

In Singapore, the GST Compliance Assurance Program (CAP) was launched


in 2006. Its officers work with large businesses on GST accounting, record
keeping and reporting, by developing their understanding of the company’s
systems and internal controls and identifying compliance risks through field
visits. The government plans to introduce this program systematically to all
businesses starting with those making annual GST supplies of SGD $1 billion
(USD $740 million at July 2008 rates) or more.

The German equivalent is a pilot scheme, currently running in one federal state,
where a specialist tax office has been created dealing solely with VAT issues.
All other tax offices in the state are obliged to report significant VAT cases to
this central group, to help develop a highly experienced, centralized VAT
regulatory system. Again, this is very likely to be rolled out to other states.

As further proof of the progressively tougher application of indirect tax


regulations, a separate survey of finance professionals in 22 countries, carried
out for KPMG’s Global Indirect Tax practice earlier in the year, revealed that errors
in VAT compliance are now a bigger concern for them than errors in corporate
tax. It should come as no surprise that 75 percent of those polled expected
governments to rely more on indirect taxation in the next five years.
KPMG’s Corporate and Indirect Tax Rate Survey 2008 5

Asia Pacific experience

Among respondents in the Asia Pacific countries this rose to 88 percent, and
looking at the average indirect tax rates in countries in this part of the world
we can see why.

Average Asia Pacific indirect rates have risen by half a percentage point since
2006, the largest regional rate of increase we have recorded. But even so, at an
average of 11.1 percent, indirect taxes in the Asia Pacific region are the lowest in
the world. They are nearly five points below the global average of 15.7 percent,
and 8.4 points below the EU average of 19.5 percent. Meanwhile, Asia Pacific
average corporate tax rates, at 28.4 percent, are the highest in the world even
though they have been falling steadily, year on year.

The impact of globalization on Asia Pacific economies is clearly bringing with it


the same pressures on taxation policy that have been felt in Europe and the
Americas for some time. The response of governments seems to be following
the same pattern that has been played out elsewhere. More revenue from
indirect taxes is clearly seen as the way forward.

Looking ahead, the combination of international pressure for reductions in


corporate taxes, a global reduction in economic activity, and the ever-rising
demand for spending on social and capital programs suggests that indirect
tax rates are most likely to rise.

In a world where companies and their profits are increasingly mobile, taxes on
consumption present a source of revenue that few can avoid. They draw on the
whole economy, rather than on corporate profits, offer a steady stream of income
rather than large sums at widely spaced intervals, and are collected much more
rapidly after the event than corporate taxes. Despite the political problems which
introducing these taxes inevitably present, this is a combination that few
governments will be able to resist.
6 KPMG’s Corporate and Indirect Tax Rate Survey 2008

Transfer pricing regulations rise as corporate taxes fall

Turning to corporate tax rates, the most remarkable result of our 2008 survey is
that we have found no country anywhere that has raised its rate since last year.
The global average is, once again, down nearly a full point to 25.9 percent with
the EU average down to 23.2 percent, the Latin American rate down half a point
to 26.6 percent, and the Asia Pacific rate down 0.8 percent to 28.4 percent.

Here, again, we are seeing a steady strengthening of efforts to widen the tax
base and improve enforcement. This is especially so in the area of transfer
pricing, where a rapidly increasing number of countries is introducing rules to
regulate the prices at which companies in the same group buy and sell from
each other across borders.

The international standard in transfer pricing is a framework of guidelines laid


down by the OECD. Most countries with transfer pricing regimes have been
happy to adhere to its principles. In practical terms, enforcement of these rules
has often taken the form of demands for more and better documentation of
cross-border transactions, to prove that they were undertaken at open market
prices. More frequently, however, we are seeing countries setting their own rules
on what is acceptable as a legitimate business cost, with the aim of keeping
taxable profits in their jurisdiction.

One notable example of this is the Indian government’s tough attitude to


companies using India’s low cost base to improve margins elsewhere in the
world. India’s tax authorities insist on assigning high profit margins to the Indian
operations of foreign companies, because of their belief that location savings
generate significantly higher operating profits than companies would earn if they
were based in another country.

The international development of transfer pricing regulations is still in its relatively


early stages, but the rapid spread of this new arm of taxation is further evidence
of the globalization of tax policy.
KPMG’s Corporate and Indirect Tax Rate Survey 2008 7

New forms of tax, new tax competition, new challenges


for corporates

Taking these themes together, we seem to be seeing a global move towards


real time taxation rather than the traditional, retrospective taxation that has driven
the development of most corporate systems. Real time taxation demands that
tax departments have a real time view of what is going on in their companies,
with a far greater degree of daily detail and accuracy than many enjoy today.

Indeed, with the implementation of legislation like the U.S.’s FIN 48, tax directors
may have to predict for official purposes the real time tax obligations of their
companies for some time into the future. The penalties for getting this wrong
are no less severe than for errors in retrospective tax calculations. No wonder
that this presents quite a challenge for even the best run tax department.

On a macroeconomic level, governments are increasingly exchanging information


and revising their tax structures to meet the demands of a commercial world
where country borders matter less and less. At the same time, they are looking
for new ways to encourage companies to repatriate earnings, as evidenced
by the discussions now under way in the U.K., Japan and elsewhere over
appropriate tax treatment of dividends earned abroad and profits from
controlled foreign companies.

There is an obvious tension here between the undoubted economic benefits to


all of more efficient supply chains and freer trade, and the need for governments
to secure their revenues. Tax professionals are right in the middle of this
dilemma. They need to be able both to articulate the economic benefits of
efficient cross-border business to the countries in which they operate, and to help
develop the new fiscal policies that these countries will have to adopt if
they are to balance budgets and secure their share of global wealth.

This is a difficult political as well as economic problem, but it is of huge


importance to companies and governments alike. This is why we believe that
the need for a forward thinking, value-orientated, global mindset in corporate
tax matters is greater now than ever before.

Niall Campbell
Global Head of Indirect Tax Services

Wilbert Kannekens
Global Head of International Corporate Tax
8 KPMG’s Corporate and Indirect Tax Rate Survey 2008
Corporate Tax Rates
1999 - 2008
10 KPMG’s Corporate and Indirect Tax Rate Survey 2008

European Asia - Latin 1 Jan 1999 1 Jan 2000 1 Jan 2001 1 Jan 2002
OECD Country (%) (%) (%) (%)
Union Pacific America

Afghanistan
Albania
Angola
I Argentina 35 35 35 35
I Aruba
I I Australia 36 36 34 30
I I Austria 34 34 34 34
Bahrain
I Bangladesh 35 35 35 35
I Barbados 40 40 40 37.5
Belarus
I I Belgium 40.17 40.17 40.17 40.17
I Bolivia 25 25 25 25
Bosnia and Herzegovina
Botswana 25 25 25 25
I Brazil 33 37 34 34
I Bulgaria
I Canada 44.6 44.6 42.1 38.6
I Cayman Islands 0 0 0 0
I Chile 15 15 15 16
I China 33 33 33 33
I Colombia 35 35 35 35
I Costa Rica 30 30 30 30
Croatia 25 25 20 20
I Cyprus 28 28
I I Czech Republic 35 31 31 31
I I Denmark 32 32 30 30
I Dominican Republic 25 25 25 25
I Ecuador 15 25 25 25
Egypt
I Estonia
I Fiji 35 35 34 32
I I Finland 28 29 29 29
I I France 40 36.66 35.33 34.33
I I Germany 52.3 51.6 38.36 38.36
I I Greece 40 40 37.5 35
Guatemala 27.5 25 31 31
I Honduras 25 25 25 25
I Hong Kong 16 16 16 16
I I Hungary 18 18 18 18
I Iceland 30 30 30 18
I India 35 38.5 39.55 35.7
I Indonesia 30 30 30 39
Iran
I I Ireland 28 24 20 16
Israel 36 36 36 36
I I Italy 41.25 41.25 40.25 40.25
I Jamaica
I I Japan 48 42 42 42
Jordan
Kazakhstan
I I Korea, Republic of 30.8 30.8 30.8 29.7
Kuwait
KPMG’s Corporate and Indirect Tax Rate Survey 2008 11

1 Jan 2003 1 Jan 2004 1 Jan 2005 1 Jan 2006 1 Jan 2007 1 Jan 2008 Footnote
Country (%) (%) (%) (%) (%) (%)

Afghanistan 20 20 1
Albania 23 20 20 10 2
Angola 35 35 3
Argentina 35 35 35 35 35 35 4
Aruba 35 35 28 28 5
Australia 30 30 30 30 30 30 6
Austria 34 34 25 25 25 25 7
Bahrain 0 0 0 8
Bangladesh 30 30* 30 30 30 30 9
Barbados 36 33 30 25 25 25 10
Belarus 24 24 11
Belgium 33.99 33.99 33.99 33.99 33.99 33.99 12
Bolivia 25 25 25 25 25 25 13
Bosnia and Herzegovina 30 10 14
Botswana 25 25 25 25 25 25 15
Brazil 34 34 34 34 34 34 16
Bulgaria 15 15 10 10 17
Canada 36.6 36.1 36.1 36.1 36.1 33.5 18
Cayman Islands 0 0 0 0 0 0 19
Chile 16.5 17 17 17 17 17 20
China 33 33 33 33 33 25 21
Colombia 35 35 35 35 34 33 22
Costa Rica 36 30 30 30 30 30 23
Croatia 20 20 20 20 20 20 24
Cyprus 15.00 15.00 10 10 10 10 25
Czech Republic 31 28 26 24 24 21 26
Denmark 30 30 28 28 28 25 27
Dominican Republic 25 25 25 30 29 25 28
Ecuador 25 25 25 25 25 25 29
Egypt 20 20 20 30
Estonia 24 23 22 21 31
Fiji 32 31 31 31 31 31 32
Finland 29 29 26 26 26 26 33
France 34.33 34.33 33.83 33.33 33.33 33.33 34
Germany 39.58 38.29 38.31 38.34 38.36 29.51 35
Greece 35 35 32 29 25 25 36
Guatemala 31 31 31 31 37
Honduras 25 25 30 30 30 30 38
Hong Kong 16 17.5 17.5 17.5 17.5 16.5 39
Hungary 18 16 16 16 16 16 40
Iceland 18 18 18 18 18 15 41
India 36.75 35.875 36.5925 33.66 33.99 33.99 42
Indonesia 30 30 30 30 30 30 43
Iran 25 25 44
Ireland 12.5 12.5 12.5 12.5 12.5 12.5 45
Israel 36 36 34 31 29 27 46
Italy 38.25 37.25 37.25 37.25 37.25 31.4 47
Jamaica 33.33 33.33 33.33 33.33 48
Japan 42 42 40.69 40.69 40.69 40.69 49
Jordan 35 35 50
Kazakhstan 30 30 30 30 51
Korea, Republic of 29.7 29.7 27.5 27.5 27.5 27.5 52
Kuwait 55 55 53
12 KPMG’s Corporate and Indirect Tax Rate Survey 2008

European Asia - Latin 1 Jan 1999 1 Jan 2000 1 Jan 2001 1 Jan 2002
OECD Country (%) (%) (%) (%)
Union Pacific America

I Latvia
Libya
I Lithuania
I I Luxembourg 37.45 37.45 37.45 30.38
I Macau
I Malaysia 28 28 28 28
I Malta
Mauritius 35 35 35 25
I I Mexico 35 35 35 35
Montenegro
Mozambique
I I Netherlands 35 35 35 34.5
I Netherlands Antilles
I I New Zealand 33 33 33 33
I Norway 28 28 28 28
Oman 12 12 12 12
I Pakistan 35 43 34.65 35
Palestine
I Panama 37 37 37 37
I Papua New Guinea 25 25 25 25
I Paraguay 30 30 30 30
I Peru 30 30 30 30
I Philippines 33 32 32 32
I I Poland 34 30 28 28
I I Portugal 37.4 37.4 35.2 33
Qatar
I Romania 25 25
Russia 43 24
Saudi Arabia 45 30 30 30
Serbia
I Singapore 26 26 25.5 24.5
I I Slovak Republic 29 25
I Slovenia 25 25 25 25
South Africa 37.8 37.8
I I Spain 35 35 35 35
I Sri Lanka 35 35 35 42
Sudan
I I Sweden 28 28 28 28
I Switzerland 25.1 25.1 24.7 24.5
Syria
I Taiwan 25 25 25 25
I Thailand 30 30 30 30
Tunisia
I Turkey 33 33 33 33
Ukraine 30 30
United Arab Emirates
I I United Kingdom 31 30 30 30
I United States 40 40 40 40
I Uruguay 30 30 30 30
I Venezuela 34 34 34 34
I Vietnam 35 32.5 32 32
Yemen
Zambia

Average corporate tax rate 31.4 31.1 30.6 29.8


KPMG’s Corporate and Indirect Tax Rate Survey 2008 13

1 Jan 2003 1 Jan 2004 1 Jan 2005 1 Jan 2006 1 Jan 2007 1 April 2008 Footnote
Country (%) (%) (%) (%) (%) (%)

Latvia 15 15 15 15 54
Libya 40 40 55
Lithuania 15 15 15 15 56
Luxembourg 30.38 30.38 30.38 29.63 29.63 29.63 57
Macau 12 12 12 12 58
Malaysia 28 28 28 28 27 26 59
Malta 35 35 35 35 60
Mauritius 25 25 25 25 22.5 15 61
Mexico 34 33 30 29 28 28 62
Montenegro 20 20 9 9 9 9 63
Mozambique 32 32 32 32 64
Netherlands 34.5 34.5 31.5 29.6 25.5 25.5 65
Netherlands Antilles 34.5 34.5 34.5 34.5 66
New Zealand 33 33 33 33 33 30 67
Norway 28 28 28 28 28 28 68
Oman* 12 12 12 12 12 12 69
Pakistan 35 35 35 35 35 35 70
Palestine 16 16 71
Panama 30 30 30 30 30 30 72
Papua New Guinea 30 30 30 30 30 30 73
Paraguay 30 30 20 10 10 10 74
Peru 27 30 30 30 30 30 75
Philippines 32 32 32 35 35 35 76
Poland 27 19 19 19 19 19 77
Portugal 33 27.5 27.5 27.5 25 25 78
Qatar 35 35 79
Romania 25 25 16 16 16 16 80
Russia 24 24 24 24 24 24 81

Source for all rates, KPMG member firms. Rates as at 1 January each year except 2008, where rates are as at 1 April.
Saudi Arabia 30 30 30 20 20 20 82
Serbia 14 12.33 10 10 10 10 83
Singapore 22 22 20 20 20 18 84
Slovak Republic 25 19 19 19 19 19 85
Slovenia 25 25 25 25 23 22 86
South Africa 37.8 37.8 37.8 36.9 36.9 34.55 87
Spain 35 35 35 35 32.5 30 88
Sri Lanka 35 35 32.5 32.5 35 35 89
Sudan 35 35 90
Sweden 28 28 28 28 28 28 91
Switzerland 24.1 24.1 21.3 21.3 21.32 21.17 92
Syria 28 28 93
Taiwan 25 25 25 25 25 25 94
Thailand 30 30 30 30 30 30 95
Tunisia 33 33 35 35 30 30 96
Turkey 30 33 30 20 20 20 97
Ukraine 30 30 25 25 25 25 98
United Arab Emirates 40 40 55 55 55 55 99
United Kingdom 30 30 30 30 30 28 100
United States 34 34 40 40 40 40 101
Uruguay 35 30 30 30 30 25 102
Venezuela 34 34 34 34 34 34 103
Vietnam 32 28 28 28 28 28 104
Yemen 35 35 105
Zambia 35 35 35 35 106

Average corporate tax rate 28.9 28.0 27.4 26.5 26.8 25.9
14 KPMG’s Corporate and Indirect Tax Rate Survey 2008

Corporate Tax Rates


All Countries 1999 – 2008
35

31.4
31.1

Percentage
30.6 29.8
30
28.9
28.0
27.4
26.8
26.5
25.9

25
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

ASPAC 1999 – 2008


33
31.8 31.9
32
31.3 31.5
31 30.6
30 30 30
30
Percentage

29.2
29
28.4
28

27

26

25
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

OECD 1999 – 2008


37

34.8
35
34.1

33 32.8
Percentage

31.4
31 30.6
29.8
29 28.8
28.2
27.7
27 26.7

25
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
KPMG’s Corporate and Indirect Tax Rate Survey 2008 15

EU 1999 – 2008
36
34.8
31.8 33.9
34
32
32
30.9
29.7
30

Percentage
28.3
28
26.1 25.8
26
24.2
24 23.2

22

20
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Latin America 1999 – 2008


31

30

29 28.7
28.5 28.4
28.2 28.1 28.1
Percentage

27.9 28.0
28
27.1
27 26.1 25.8 26.6

26 24.2
23.2
25

24
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Comparison by Global Region 1999 – 2008


36
34.8 34.8
99 Avg. Rate
34
08 Avg. Rate
31.8
32
31.4
30
Percentage

28.4
27.9
28
26.6 26.7
26 25.9

24 23.2
22

20
All ASPAC EU LAT OECD

Source for all graph information: KPMG member firms.


16 KPMG’s Corporate and Indirect Tax Rate Survey 2008

Corporate Tax Rates


Footnotes

1 Afghanistan (2008 rate = 20%) contributions. Setting up of reserves minimum income tax. Minimum income
Generally, two types of taxes are payable do not lead to tax deductible expenses, tax only applies to the extent it exceeds
by the corporations. The corporate except for banks and insurance the (regular) income tax calculated as a
income tax rate is 20 percent. It is companies. Dividends by an Albanian percentage of the taxable income.
applied to the taxable income. Whereas resident entity which is subject to Minimum income tax paid in any given
the business receipt tax (ranging from corporate income tax to Albanian year reduces the (regular) income tax
2 percent to 10 percent) is applied to the resident taxpayers who own more of subsequent years (maximum
gross revenue. Qualifying extractive than 25 percent of the capital of such carryforward of 10 years).
industries (mines and hydrocarbons) entity are tax exempt.
are exempt from the business receipt 5 Aruba (2008 rate = 28%)
tax. Taxable income is determined by 3 Angola (2008 rate = 35%) The corporate income tax rate is
deducting all business-related tax Corporate taxpayers may fall under 28 percent. Companies operating in the
deductible expenses from gross Group A, Group B, or Group C. so-called Free Zone are taxed at a
revenue. The tax deductible expenses Group A generally includes state rate of 2 percent. A so-called
also include dividends paid by the companies, financial and credit imputation payment company (IPC) is
corporation and business receipt institutions, insurance companies, subject to an effective corporate tax
tax. Expenses which are subject to foreign exchange houses, and all the rate of 2 percent; an IPC pays 28
withholding tax are not tax deductible properly registered companies and percent corporate income tax while the
if the taxpayer fails to withhold permanent establishments. Group B shareholder is entitled to an imputation
withholding tax and to pay it to the comprises of taxpayers that do not fall payment of 26 percent from the Aruban
tax authorities. Under a tax incentive under Groups A or C, as well as those government upon distribution of a
scheme, so-called approved enterprises who carry out a one-off activity of a dividend by the IPC.
(that is, enterprises registered with the commercial or industrial nature.
Afghanistan Investment Support Agency Group C comprises any individual 6 Australia (2008 rate = 30%)
according to the Investment Law) are that cumulatively fulfils the following The corporate income tax rate is 30
eligible for accelerated depreciation conditions: works for himself/herself percent, and applies to both resident
(four years for buildings and two years and does not have more than three and non-resident companies. A resident
for other assets). employees; does not keep a set of company is liable to corporate income
accounts; does not make use of more tax on its worldwide income and capital
2 Albania (2008 rate = 10%) than two vehicles; and whose annual gains. A non-resident company is liable
The corporate income tax rate is applied gross turnover is below 13 UCFs. to corporate income tax on its
to the taxable profit of the fiscal year Australian-source income only, and on
(1 January to 31 December). Taxable 4 Argentina (2008 rate = 35%) capital gains from the disposal of an
profit is defined as gross income A minimum income tax at a rate of asset that is taxable Australian real
generated minus related tax deductible 1 percent applied to the tax value of property (TARP). Broadly, TARP will
expenses. There are certain non-tax the company’s assets (liabilities cannot include Australian real property and an
deductible expenses, for instance, be deducted). Some assets, such as indirect interest in Australian real
business expenses unsupported by a stocks, shares in other entities subject property. The Australian tax system
regular invoice, interest accrued up to to taxation, and assets of mining provides taxation relief against
a certain limit, interest paid on loans companies, are exempt from minimum international double taxation by
and pre-payments which exceed four income tax. The acquisition of new granting foreign tax credits in some
times the amount of owned equity goods, except for automobiles, as well circumstances and in others, by
during the period, representation as the investment in newly constructed exempting the foreign income from
expenses over a certain limit, cost of or refurbished buildings (for the first Australian tax.The corporate income tax
fringe benefits, voluntary pension two years) are also excluded from rate applies to income earned during
KPMG’s Corporate and Indirect Tax Rate Survey 2008 17

the period from 1 July to 30 June of rebate on the tax payable. In case the for exemption for certain insurance
the following year. If a company has dividend is lower than 10 percent of the companies, a 1.75 percent rate for
approval to use a different year-end paid-up capital, the corporate income qualifying insurance companies and a
for tax purposes, the approved period tax rate is increased to 40 percent. variable rate of 1 percent to 2.5 percent
must still relate to a 30 June year-end Should the dividend amount be less than for other qualifying international
(that is, year ended 31 December 2006 15 percent in spite of having sufficient business activities. Recent changes
in lieu of 30 June 2007). For the year distributable profits, the company is to note in domestic legislation include
1 July 2001 to 30 June 2002 and later subject to an additional 5 percent tax an exemption from tax in Barbados
taxable years, the corporate income on the undistributed profits. Banks, for certain dividends received by
tax rate has been 30 percent. insurance companies, leasing companies, companies resident in Barbados from
and other financial institutions, and non-resident companies, as well as an
7 Austria (2008 rate = 25%) mobile phone operators are taxed at exemption from withholding tax in
The corporate income tax rate is 25 45 percent. All other companies including Barbados on certain dividends paid
percent. There are no trade income or branches of foreign companies are taxed by companies resident in Barbados
net worth taxes. Austrian corporations at 40 percent. A rebate in the amount of out of foreign-source income to non-
may benefit from the liberal 50 percent of the income derived from resident shareholders. These changes
international participation exemption export business will be granted to are applicable from the taxable year
and the group taxation (including companies registered in Bangladesh. 2007 onwards.
cross-border loss utilization and good- Textile/jute industries are subject to
will depreciation for the acquisition of 15 percent but these industries will not 11 Belarus (2008 rate = 24%)
qualifying Austrian subsidiaries). qualify for an export rebate. Tax at The corporate income tax rate is
0.25 percent deducted by the bank 24 percent. For special zones the
8 Bahrain (2008 rate = 0%) from export proceeds received by corporate income tax rate may be
Bahrain is an income tax-free country. export-oriented knitwear and woven reduced to approximately 10 percent.
There is no corporate or personal garment industries is treated as final There are various requirements and
income tax in Bahrain. Accordingly, tax. If the profit earned by a bank every case should be analyzed closely.
all profits, dividends, or any other exceeds 50 percent of its capital and
income is tax-free. Bahrain only taxes reserves, the bank is subject to a 12 Belgium (2008 rate = 33.99%)
oil and gas companies in the drilling 15 percent excess profits tax on the A lower tax rate applies to companies
and exploration sector at a rate of additional profit. The aforesaid rates will that are more than 50 percent owned
46 percent. There are no exchange remain valid for companies whose by individuals. All companies subject to
control regulations and accordingly accounting year ends on any dates resident or non-resident corporate tax
there is no restriction on repatriation within 30 June 2007. benefit from the risk capital or notional
of capital, profits, royalties, or wages, interest deduction that is computed
and free movement if foreign 10 Barbados (2008 rate = 25%) on the companies’ adjusted equity
exchange is permitted. The corporate income tax rate is 25 capital (including retained earnings).
percent. The corporate income tax The deduction equals 4.307 percent
9 Bangladesh (2008 rate = 30%) rate may be reduced, on a sliding scale, (4.807 percent for small companies)
The corporate income tax rate is to 1.75 percent, by a foreign currency for fiscal year 2009 (taxable years
30 percent for corporations (except tax credit granted for qualifying foreign starting 1 January 2008 or later). The
banks and other financial institutions) currency generating activities. For notional interest deduction reduces the
listed at a stock exchange. If such listed small business, manufacturing, or effective tax rate to an average range
corporation pays a dividend that exceeds certain insurance concessions special from 25 percent to 27 percent (or
20 percent of the paid-up capital for a rates apply. An international financial lower depending on the equity capital).
taxable year, it receives a 10 percent service center tax regime provides
18 KPMG’s Corporate and Indirect Tax Rate Survey 2008

13 Bolivia (2008 rate = 25%) period of five years will be lost. 17 Bulgaria (2008 rate = 10%)
The corporate income tax rate is This arrangement can limit the overall The corporate income tax rate is 10
25 percent (annual profit tax IUE). corporate income tax levied on both percent of the taxable profit. The
Payments of this tax are considered the company and the shareholder to taxable profit is determined by
an on-account payment for any 25 percent. Lower company tax rates adjusting the financial result (under
subsequent year’s 3 percent are available for manufacturing entities IFRS or Bulgarian National Accounting
transactions tax. Certain foreign (5 percent). An approved International Standards) due to certain tax non-
companies` activities performed in Financial Service Center entity is only deductible and/or non-taxable items.
Bolivia through branches or agencies liable for company tax and not for Corporate income tax returns should
are subject to different tax rules. ACT. Mining entities (with the exception be filed and the reported in it liabilities
Such activities include transportation, of diamond mining) are settled by 31 March of the following
international news agencies, foreign taxed at a rate between 15 percent year. Tax of 10 percent is levied on
insurance companies, and distribution and 45 percent (excluding ACT). certain types of expenses.
of movies and videotapes. An effective Diamond mining taxation is negotiated
rate of 5.5 percent is applied to gross with the government. 18 Canada (2008 rate = 33.5%)
income arising from these activities. Up Includes federal tax of 19.5 percent for
to 4 percent of this tax is considered an 16 Brazil (2008 rate = 34%) 2008 plus provincial tax. Depending on
on-account payment for any The corporate income tax rate is 25 the province, the total effective general
subsequent year’s 3 percent percent. In addition social contribution corporate income tax rate for 2008
transactions tax. on net profits at a rate of 9 percent are ranges from 29.5 percent to 35.5
levied, leading to a overall rate of 34 percent (24.5 percent to 35.5 percent
14 Bosnia and Herzegovina percent. Please note that the social for manufacturers). Lower rates are
(2008 rate = FBiH and RS: 10%) contribution on net profits tax rate has available to Canadian-controlled private
Please note that Bosnia and Herzegovina been increased from the current 9 corporations (CCPC) on their first CAD
consists of two separately administered percent to 15 percent to financial 400,000 to CAD 500,000 of taxable
territorial entities: Federation of Bosnia institutions, private insurance, and active business income. A
and Herzegovina (FBiH) and Republic capitalization companies starting 1 May representative tax rate for 2008 for a
of Srpska (RS). The Corporate Profit 2008.The 25 percent corporate income CCPC on its first CAD 400,000 of
Tax Law (CPT Law) is subject to the tax rate comprises of a 15 percent eligible taxable income is approximately
respective entity’s legislation. In FBiH, basic rate and 10 percent surtax on 16.5 percent (11 percent federal tax
the new CPT Law has been recently income over BRL 240,000 per year. plus 5.5 percent provincial tax).
adopted and it became applicable as The tax base for the corporate income Depending on the province, the total
of 1 January 2008. The corporate tax are the adjusted net profits. effective tax rate for a CCPC on its
income tax rate (CPT) is 10 percent ´ Depending on the type of income and eligible income ranges from 13 percent
in both entities. Tax incentives are further conditions a social contribution to 19 percent.
envisaged in both entities; in FBiH a on net profits tax credit (bônus de
tax holiday is allowed for the year in adimplência fiscal) may be granted to 19 Cayman Islands (2008 rate = 0%)
which over 30 percent of total certain corporate income tax payers. There are no notes for 2008.
taxpayer’s incomes is realized through A tax deferral of four years of social
export as well as tax incentives in both contribution on net profits tax may be 20 Chile (2008 rate = 17%)
entities related to investment as per available for companies that purchase Chilean corporate tax (named first
the FBiH CPT Law and the RS CPT certain industrial assets between 1 category tax) applies to all types of
Law. Further in FBiH, tax losses can October 2004 and 31 December 2010 taxable income realized by a taxpayer,
be carried forward for five years, the (MP 428/08). Deferral is equivalent to individual or legal entity, regardless of
same rule applies in RS. 25 percent of the depreciation of its nationality, residence or domicile,
these assets. Reduced effective with the exception of income from
15 Botswana (2008 rate = 25%) corporate tax rates may be applicable dependent employee’s and independent
The corporate income tax rate is for companies qualifying for the personal services. Tax base is the
25 percent. It is split into a 15 percent election of the presumed profit system accrued net taxable income after
company tax and a 10 percent (such as those with gross revenues allowable deductions and expenses.
additional company tax (ACT). The lower than BRL 48 million on the year First category tax paid can be credited
ACT can be used to offset any preceding the election). against final taxes, which are global
withholding tax payable on dividend complementary tax in case of Chilean
distributions. ACT unused after a resident individuals and withholding tax
in case of non-residents.
KPMG’s Corporate and Indirect Tax Rate Survey 2008 19

21 China (2008 rate = 25%/20%/15%) exceeding CRC 67.791 million are for up to five years is available under
As of 1 January 2008, a new corporate subject to the ordinary 30 percent rate. special investment incentive schemes.
income tax applies to resident
enterprises and non-resident enterprises 24 Croatia (2008 rate = 20%) 27 Denmark (2008 rate = 25%)
with establishments in China or without The corporate income tax rate is 20 Two prepayments of corporate income
establishments in China but having percent. The taxable income is tax during the taxable year are mandatory.
China-sourced income. The corporate determined by adjusting the accounting If the final tax liability exceeds the
income tax rate is 25 percent. The profit in accordance with the provisions prepayments a surcharge of 6.3
reduced rate applicable to small-scale of the Corporate Profit Tax Law. percent (2008) of the outstanding tax
enterprises with low profitability is 20 Dividends received are not subject to liability is payable. There are no local
percent and to hi-tech enterprises corporate income tax. A company can taxes on corporate income.
eligible for key support from the state is reduce its tax base if it qualifies under
15 percent. the Investment Promotion Law, 28 Dominican Republic
Special State Care Areas Law, Hill (2008 rate = 25%)
22 Colombia (2008 rate = 33%) and Mountain Areas Law, Free Trade In July 2007, the tax rate reduction
The corporate income tax rate is 33 Zones Law, and Law on Renewal and (Law 172-07) entered into force which
percent from 2008 onwards (it was Development of the City of Vukovar. reduces the corporate tax rate to
already reduced for 2007 from 35 Tourist tax, forestry tax, and 25 percent from 2007 onwards.
percent to 34 percent). The surcharge of monumental protection fee are taxes
the 10 percent which previously applied based on turnover. 29 Ecuador (2008 rate = 25%)
was abolished. Colombian companies A corporate income tax rate of
and foreign branches qualifying as 25 Cyprus (2008 rate = 10%/25%) 15 percent applies when the taxpayer
industrial users established in Colombian The corporate income tax is 10 percent decides to reinvest its profits. This
Duty Free Zones are subject to a applicable on active income whereas reinvestment shall be intended to
reduced corporate income tax rate of 15 dividend received are tax exempt. the acquisition of new machinery
percent from 2007 onwards. The 7 Income deriving from the sale of or equipment and the company’s
percent income tax rate that applied to securities is also tax exempt. capital must be increased by the
dividends and participations transferred In ascertaining a company’s taxable reinvested amount.
abroad was reduced to 0 percent. In income all outgoings and expenses
addition, there is a regional tax called the wholly and exclusively incurred by such 30 Egypt (2008 rate = 20%)
industry and commerce tax levied on person in the production of the income The corporate income tax rate is
industrial, commercial, and service are deducted. The corporate income tax 20 percent applicable for active
activities carried out within a for public corporate bodies (meaning income whereas dividend received are
municipality. The rate depends on the legal persons of public law tax exempt. Income deriving from the
municipality and ranges between 4.14 or any other public corporate body sale of securities registered in the
and 13.8 per thousand. For corporate established by law for the public Egyptian stock market is also tax
income tax purposes, 100 percent of the interest) is at 25 percent plus 3 exempt. In ascertaining a company’s
industry and commerce tax and of the percent special contribution for the taxable income all outgoings and
property tax is deductible. Also, 25 defense of the republic. expenses wholly and exclusively
percent of the financial transactions tax incurred by such person in the
effectively paid is deductible for 26 Czech Republic (2008 rate = 21%) production of the income are
corporate income tax purposes. A special rate of 5 percent applies to deducted so long as they are
profits of investment, mutual, and supported by external documents
23 Costa Rica (2008 rate = 30%) pension funds. Dividend income is and related to business.
The corporate income tax rate is 30 taxed at 15 percent or, if received by a
percent. Reduced rates are available parent company from a subsidiary 31 Estonia (2008 rate = 21%)
for smaller companies. Corporate (currently defined as a company in Only profit distributions are subject to
entities with a gross income under CRC which the parent has held at least 10 taxation. Profits that are not distributed
33.701 million are subject to a 10 percent for at least 12 months and but retained in the company and/or
percent corporate income tax rate; which is resident in the Czech Republic, reinvested are not subject to taxation;
corporate entities with gross income of EU, Switzerland, or a country with a 21 percent tax applies to profit
more than CRC 33.701 million but less which the Czech Republic has signed a distributions including dividend payments
than CRC 67.791 million are subject to a double-tax treaty, as long as the and other forms of profit transfers
20 percent corporate income tax rate. corporate tax rate is at least 12 (transfer pricing items, non-business
Corporate entities with gross income percent), 0 percent. Income tax relief costs, payments to low-tax territories).
20 KPMG’s Corporate and Indirect Tax Rate Survey 2008

32 Fiji (2008 rate = 31%) The minimum trade tax multiplier is administrative region of the People’s
The corporate income tax rate is 31 200 percent). The local trade tax is not Republic of China. The 16.5 percent
percent (reduced in 2004 from 32 deductible as a business expense from rate (with effect from the year
percent to 31 percent). It applies to 2008 onwards. assessment) applies to Hong Kong
companies incorporated in Fiji and sourced profits that are derived from
branches of non-resident companies. 36 Greece (2008 rate = 20%/25%) a business carried on in Hong Kong.
Dividend distribution out of full The 25 percent rate applies to listed Offshore profits, capital gains,
corporate tax paid retained earnings AE companies (corporations) and to dividends, and most bank deposit
are not subject to any further income EPE entities (limited liability interest income are exempt from
tax. With effect from 1 January 2008, companies).The same rate applies to tax. Profits derived from certain
an additional 15 percent normal tax will domestic unlisted AE companies, securities or types of business
be charged on remittance of branch banks, and credit institutions operating (such as qualifying debt instruments
profits on which full corporate income as co-operatives and branches of or profits derived from the business
tax has not been paid. foreign entities. General partnerships of reinsurance of offshore risks by a
(OE) and limited partnerships (EE) are professional re-insurer) are either
33 Finland (2008 rate = 26%) considered legal entities in Greece and exempt from tax or subject to a
The corporate income tax rate is are subject to the corporate tax rate of concessional rate of 8.25 percent (half
26 percent (effective as of 1 20 percent for fiscal year 2007. A 3 of the 16.5 percent standard rate).
January 2005). percent surcharge applies to gross
rental income, but the surcharge may 40 Hungary (2008 rate = 16% plus 4%)
34 France (2008 rate = 33 1/3%) not exceed the primary corporate tax. The corporate income tax rate is
plus additional contribution if applicable) 16 percent, which can be reduced to 10
For fiscal years ending after 1 January 37 Guatemala (2008 rate = 31% or 5%) percent on the first HUF 50 million
2007, the corporate tax rate is The system operates based on the (approximately, HUF 200,000) positive
33.33 percent. A 3.3 percent social territoriality principle; that is, all tax base if the company meets certain
contribution of the corporate income Guatemalan-source income is taxed. requirements, (the excess is subject to
tax is applicable to the portion of Beginning 1 July 2004 two systems 16 percent). Effective from September
corporate income tax exceeding for payment of ISR exist; one calls 1, 2006, a so-called solidarity tax of
EUR 763,000 resulting in an overall for payment of 5 percent on gross 4 percent was introduced for all
tax rate of 34.43 percent (for this income and the other for payment companies which is based on pretax
portion). Companies which have a of 31 percent on taxable income; profit modified by certain items. An
turnover of up to EUR 7.63 million and taxpayer’s choice. Under the 31 percent additional local business tax of up to
of which individuals hold at least 75 on taxable income system, 2 percent is applicable based on the
percent of the share capital (or which tax is paid annually but advanced total trading turnover (two times the
are owned by companies meeting the quarterly. Under the 5 percent local business tax is deductible for
same conditions) are subject to a on gross income system, tax is CIT purposes). In addition, effective from
corporate income tax rate of 15 paid monthly. 1 July 2007, a minimum tax was also
percent. This applies to the part of introduced. The AMT base is calculated
the taxable profit up to EUR 38,120. 38 Honduras (2008 rate = 30%) by 2 percent of total incomes less
These companies are exempted The overall income tax rate for COGS and value of mediated services;
from the 3.3 percent contribution. corporations comprises of a there are some other adjustments as
25 percent corporate income tax rate well. If it exceeds the greater of profit
35 Germany (2008 rate = 29.51%) and a temporary 5 percent solidarity before tax or the normal corporate
The overall income tax rate for surcharge that applies if the taxable income tax base then either a
corporations includes corporate income exceeds HNL 1 million. In declaration needs to be attached to the
income tax at a rate of 15 percent, addition, there is a net assets tax of tax return or tax needs to be paid on
solidarity surcharge at a rate of 0.825 1 percent of the value of the assets of the minimum tax base.
percent (5.5 percent of the corporate the company less allowances for
income tax) and local trade tax. The certain accounts and accumulated tax 41 Iceland (2008 rate = 15%)
local trade tax generally is in a range depreciation. Net assets tax is payable The corporate income tax rate for
between 7 percent and 17.15 percent, only to the extent it exceeds the resident limited liability companies is
assuming a municipality multiplier corporate income tax. 15 percent. The income tax rate for
(Hebesatz) ranging normally from 200 other resident legal entities, such as
percent to 490 percent. (The average 39 Hong Kong (2008 rate = 16.5%) limited partnerships, associations,
multiplier for 2006 was 391 percent. Hong Kong SAR is a special private nonprofit institutions, trusts
KPMG’s Corporate and Indirect Tax Rate Survey 2008 21

funds, estates of deceased persons, Dividend distribution tax (DDT) is levied stocks/shares in corporate entities
and bankrupt estates is 23.5 percent. at 16.995 percent (15 percent, plus which are subject to tax at fixed rates
Tax is imposed on their net income, surcharge of 10 percent of the tax, plus on transfer, gains/losses are aggregated
after allowable deductions. Non- education tax of 3 percent of tax and with other corporate results. Transfer of
resident entity’s tax rate and surcharge) on dividends distributed by a freehold property is subject to tax at
deduction depends on the type of domestic company. In case of money a rate of 5 percent of the taxable value.
income and the entity’s residence. market mutual fund or liquid fund to Transfer of shares and their right in the
Interest derived by non-residents from unit holders it is increased to 28.33 listed companies on the Tehran Stock
Icelandic sources is not subject to percent (25 percent, plus surcharge of Exchange is subject to tax at 0.5
corporate income tax in Iceland. 10 percent of the tax, plus education percent of the sales price. Transfer of
tax of 3 percent on tax and surcharge). shares in other corporate entities is
42 India (2008 rate = 33.99%/30.90%) For non-equity oriented mutual fund taxed at the rate of 4 percent of the
For the fiscal year ending 31 March other than money market mutual fund par value.
2008 the basic corporate income tax or liquid fund to individuals or HUF unit
rate for domestic companies is 30 holders, the rate is 14.163 percent (12.5 45 Ireland (2008 rate = 12.5%)
percent, and the surcharge is 10 percent, plus surcharge of 10 percent The corporate income tax rate is
percent of the corporate income tax if of the tax, plus education tax of 3 12.5 percent for active income of
the income is in excess of INR 10 percent on tax and surcharge). For non- new operations. A corporate income
million. The effective tax rate for equity oriented mutual fund, other than tax rate of 25 percent applies to
domestic companies having income money market mutual fund or liquid passive income and income from
less than INR 10 million of income is fund to unit holders other than certain land dealing activities, mining,
30.90 percent (30 percent plus individual and HUF, the rate is 22.66 and petroleum activities. A corporate
education tax of 3 percent on tax); percent (20 percent, plus surcharge of income tax rate of 20 percent applies
otherwise, 33.99 percent (30 percent, 10 percent of the tax, plus education to dealing in undeveloped residential
plus surcharge of 10 percent of the tax, tax of 3 percent on tax and surcharge). land in Ireland. A special corporate
plus education tax of 3 percent income tax rate of 10 percent applies to
on tax and surcharge). A minimum 43 Indonesia (2008 rate = 30%) active trading income earned by certain
alternate tax (MAT) is levied at 10 The corporate income tax rate is 30 existing manufacturing companies. This
percent of the adjusted profits of percent for resident corporations with special corporate income tax rate will
companies where the tax payable is income over IDR 100 million. Taxable expire in 2010 and will be replaced by
less than 10 percent of their book income between IDR 0 to IDR 50 the standard corporate income tax rate
profits. In the case of companies million is taxed at a rate of 10 percent of 12.5 percent. Capital gains are taxed
having income of more than INR 10 and income between IDR 50 to IDR at 20 percent with a participation
million, the effective rate would be 100 million is taxed at a rate of 15 exemption for gains on disposals of
11.33 percent/10.558 percent (10 percent. Certain income received by shareholdings of 5 percent or more of
percent plus a surcharge of 10 percent/ non-residents is taxed at 20 percent. companies resident in EU or income
2.5 percent of the tax, plus an An additional 20 percent branch profit tax treaty states.
education tax of 3 percent on the tax tax is imposed on the after-tax profits
plus surcharge). The effective tax rate of a permanent establishment (subject 46 Israel (2008 rate = 27%)
for foreign companies having income to income tax treaty relief). The corporate income tax rate will be
less than INR 10 million is 41.2 percent gradually reduced: 27 percent in 2008,
(40 percent plus education tax of 3 44 Iran (2008 rate = 25%) 26 percent in 2009, and 25 percent in
percent on tax); otherwise, 42.23 The corporate income tax is 25 2010. Financial institutions are subject
percent (40 percent, plus surcharge percent. There are no other direct to a profit tax and a payroll tax at a
of 2.5 percent of the tax, plus taxes imposed on the profit or the 15.5 percent rate; both of which are
education tax of 3 percent on tax and dividend distributions or reserves. All deductible for corporate income tax
surcharge). Income of domestic corporate entities engaged in any kind purposes. The effective tax rate of
shipping companies can be computed of commercial activity in the Free Trade financial institutions is 36.8 percent (for
under the tonnage tax scheme. Non- and Industrial Zones are exempt from the year 2008). Companies with
residents and foreign companies payment of corporate income corporate an approved enterprise are taxed at a
engaged in shipping, aviation, oil/gas, tax for 15 years from the date of reduced tax rate that varies depending
and turnkey power projects are taxed commencement of operations in the on the national priority zone in which
on a deemed profit basis of 7.5 percent, zones. There is no legislation regarding the company is located, the type of
5 percent, and 10 percent respectively, capital gains or losses. Except for the incentive scheme applied for, and the
plus surcharge and education tax. transfer of freehold property and level of foreign ownership in the
22 KPMG’s Corporate and Indirect Tax Rate Survey 2008

company. Capital gains are subject to companies with paid-in capital of JPY 52 Korea, Repuplic of
25 percent tax. Special terms apply to 100 million or less). Local tax rates vary (2008 rate = 27.5%)
assets purchased prior to 31 December depending, for instance, on local The corporate income tax rate is 27.5
2002. Dividends from foreign sources government and the amount of paid-in percent (including resident surtax) if
are subject to a 25 percent tax, with a capital of the company. The tax rate the taxable income exceeds KRW 100.
credit for foreign withholding tax, or, shown is the illustrative effective tax For lower taxable income a corporate
in certain circumstances, the corporate rate for a company in Tokyo with paid-in income tax rate of 14.3 percent
income tax rate with an underlying capital of more than JPY 100 million (including resident surtax) applies.
tax credit for tax paid by the after taking into account a deduction for
distributing company. business tax (business tax itself being 53 Kuwait (2008 rate = 0%/55%)
tax deductible). Size-based business tax The corporate income tax rates range
47 Italy (2008 rate = 31.4%) is also levied on a company with paid-in from 0 percent to 55 percent. On 26
This overall income tax rate for capital of more than JPY 100 million, in December 2007, the Kuwait National
corporations consists of a 27.5 percent addition to the income-based business Assembly approved the passing of a
corporate income tax (the so-called tax. So the overall tax rate for such bill which would result in a corporate
IRES) and a basic 3.9 percent regional companies can be higher than 40.69 income tax rate of 15 percent for non-
tax (the so-called IRAP). The taxable percent. The size-based business tax resident corporations. The bill has yet to
basis differs as certain expenses are rates in Tokyo are 0.504 percent on the become law. This will occur on the bill
allowed for IRES purposes but not for added-value component tax base (total being signed by the Amir of Kuwait and
IRAP, for instance, interest and almost of labor costs, net interest payments, the notification of this being published
all labor costs. Italian regions have the net rent payments, and income/loss of in the Official Gazette of Kuwait. The
right to vary the basic IRAP rate up to 1 the current year) and 0.21 percent on proposed change in tax rate is
percent. The 2008 Italian Budget Law the capital component tax base (total expected to become effective
reduced the IRES rate from 33 percent paid-in capital and capital surplus). For in the first half of 2008.The existing
to 27.5 percent and the IRAP rate small and medium-sized companies Kuwait Income Tax Decree No.3 of
from 4.25 percent to 3.9 percent with paid-in capital of JPY 100 million or 1955 will remain in force until such
(with an overall reduction of nominal less, the effective tax rate in Tokyo is time as the new law takes effect.
5.85 percent). IRAP rates varied by 42.05 percent with no size-based
regions (in force on 1 January 2008) business tax imposed. 54 Latvia (2008 rate = 15%)
must be multiplied by the coefficient The corporate income tax rate is
0.9176; such coefficient (equal to the 50 Jordon 15 percent. There are four regions in
ratio 3.9:4.25) is coherent with the (2008 rate = 15%/25%/35%) Latvia called Special Economic Zones
IRAP rate reduction. The corporate income tax rate of 15 (SEZ). Companies operating in these
percent applies in case of mining, zones are subject to a corporate
48 Jamaica (2008 rate = 33 1/3%) industry, hotels, hospitals, income tax rate of 25 percent, but
Companies must declare their income transportation, contracting, and other are granted a 80 percent corporate
and make prepayments of the corporate sectors approved by the Council of income tax relief.
tax in four installments (15 March, Ministers. The corporate income tax
15 June, 15 September, and 15 rate of 35 percent applies in case of 55 Libya (2008 rate =
December) during the taxable year. If banks, financial and finance companies, 15%/20%/25%/30%/35%/40%)
the final tax exceeds the prepayments, exchange companies, and brokerage The annual corporate income tax
the balance is payable by the due date companies. The corporate income tax rates are on slices basis as follows:
of filing the income tax return (15 rate of 25 percent applies to all other the first LYD 200,000 at 15 percent;
March of the year following the year companies. the following LYD 300,000 at 20
of assessment). percent; the following LYD 500,000 at
51 Kazakhstan (2008 rate = 30%) 25 percent; the following LYD 500,000
49 Japan (2008 rate = 40.69%) The corporate income tax rate is 30 at 30 percent; the following LYD
Japanese corporate income taxes percent. Branches of foreign 500,000 at 35 percent; and over LYD
consist of corporation tax (national tax), companies operating in Kazakhstan are 2 million at 40 percent.
business tax (local tax), and prefectural subject to an additional branch profits
and municipal inhabitant taxes (local tax of 15 percent of their after-tax
tax). The corporation tax rate is 30 income resulting in an overall tax rate
percent (22 percent on the first JPY 8 of 40.5 percent for branch offices.
million for small and medium-sized Income tax treaties may reduce the
branch profits tax.
KPMG’s Corporate and Indirect Tax Rate Survey 2008 23

56 Lithuania (2008 rate = 15%/13%) permanent establishment in Malaysia 61 Mauritius (2008 rate = 15%)
The corporate income tax rate is 15 is taxed at 26 percent whereas The corporate income tax rate is
percent. A rate of 13 percent applies a non-resident corporation with no 15 percent.
if the average number of employees Malaysian permanent establishment
of an entity does not exceed 10 and the is taxed at 10 percent. A special 5 62 Mexico (2008 rate = 28%)
income does not exceed LTL 500,000 percent tax rate applies to corporations The corporate income tax rate is 28
(EUR 144,810) (additional conditions which conduct an inward reinsurance percent. In addition, effective 1 January
have to be satisfied). Currently, business or an offshore insurance 2008, a new business flat tax (IETU)
corporate income tax relieves are business. Income generated by a life is in force. Such flat tax is paid at the
available for agricultural companies, fund of an insurance company is taxed rate of 16.5 percent (17 percent in 2009
free economic zone companies, at 8 percent. A non-resident corporation and 17.5 percent in 2010) on a cash
manufacturing companies employing with shipping or air transport income is flow basis. It is provided that income
people with disabilities, credit unions, taxed at 26 percent either on 5 percent on sale of goods, rendering of
and cooperatives. All relieves are of its gross shipping or air transport independent services and temporary
applied only if certain conditions are income derived in Malaysia or on that use or enjoyment of goods will be
satisfied and their impact on corporate part of the Malaysian gross income considered to determine such
income tax varies with regard to the computed as a proportion of worldwide retribution, with certain expenses
particular situation. Additionally, the profits to worldwide gross income. being tax deductible. The IETU is
income of investment companies with Income of resident corporations derived defined as a minimum tax in respect to
variable capital and insurance from the transportation of passengers income tax (IT), but with a wider
companies’ income from investments or cargo on Malaysian ships is exempt. taxable base as many of the tax
(except for dividends) are exempt from Finally, companies engaged in deductions authorized for IT purposes
corporate income tax. petroleum operations are subject to tax are not permissible for the IETU.
at 38 percent.
57 Luxembourg (2008 rate = 29.63%) 63 Montenegro (2008 rate = 9%)
A corporate income tax rate of 60 Malta (2008 rate = 35%) The corporate income tax rate is 9
22.88 percent includes a 4 percent The corporate income tax at a rate percent. Taxable profit is calculated by
employment fund contribution. The is 35 percent. Malta operates a full adjusting the company’s profit or loss
municipal business tax rate varies; imputation system of taxation for both declared in the P&L account according
for example, the rate for the City of residents and non-residents, which to the provisions of the CIT Law.
Luxembourg is 6.75 percent. ensures the full relief of economic Adjustments include certain disallowed
double taxation upon the distribution costs, as well as depreciation. Operating
58 Macau (2008 rate = 12%) of taxed profits by companies resident losses stated in the tax balance may be
An exemption on the taxable in Malta. On the distribution of taxed carried forward for five years and offset
income up to MOP 200,000 has been profits the shareholders may opt to against operating profit declared in the
announced by the government in 2008 claim a partial/full refund of the tax paid tax balance. Capital losses could be
and was introduced retrospectively in by the distributing company. As a carried forward and offset against capital
2007. Income between MOP 200,000 general rule the tax refund amounts to gains up to five years.
and MOP 300,000 is taxable at 9 six-sevenths of the tax paid. The refund
percent; 12 percent is applicable to the will be reduced to two-thirds if the 64 Mozambique (2008 rate = 32%)
portion of income over MOP 300,000. shareholder claims double-taxation The corporate income tax rate is 32
relief and five-sevenths in those cases percent. In addition, income of
59 Malaysia (2008 rate = 26%) where the distributed profits are agricultural companies or organizations is
Resident companies with paid up derived from passive interest or royalty taxed at 10 percent until 31 December
capital of MYR 2.5 million and below at income being subject to foreign tax at 2010. Furthermore, agricultural, cultural,
the beginning of the basis period for a less than 5 percent. Dividends and and artisan cooperatives benefit from a
Year of Assessment (YA) are subject to capital gains derived from participation 50 percent reduction in the tax rate,
corporate tax at a rate of 20 percent on holdings will qualify for a full refund. resulting in an effective tax rate of
the first MYR 500,000 of chargeable The Malta tax suffered on distributed broadly 16 percent. Generally, certain
income. For chargeable income in profits hence ranges between 0 investment projects approved by the
excess of MYR 500,00, corporate tax is percent to 10 percent. The tax paid government of Mozambique prior to 1
at the rate of 26 percent (reduced to 25 on profits derived, directly or indirectly, January 2003 are subject to various
percent from YA 2009). Leasing income from immovable property situated in lower tax rates, applicable until the end
(from moveable property) derived by a Malta is not available for refund. of the project. Those investment projects
approved as of 1 January 2003 are, in
24 KPMG’s Corporate and Indirect Tax Rate Survey 2008

general, subject to the standard tax rate 69 Oman (2008 rate = 12%) is issued. Non-resident mining
of 32 percent but receive a tax credit of The corporate income tax rate is 12 companies pay tax at 40 percent. In
5 percent of the investment made in the percent on taxable profits exceeding case of other businesses, a branch of a
first five years of a project. OMR 30,000 and applies to all foreign company is taxed at 48 percent.
companies incorporated in Oman Non-residents are taxed on a deemed
65 Netherlands and branches and permanent profit basis (shipping: 5 percent, that
(2008 rate = 20%/23%/25.5%) establishments in Oman of companies is, an effective tax rate of 2.4 percent
In 2008 taxable profits of up to EUR incorporated in the other Gulf Co- of gross income; insurance: 10 percent,
40,000 are taxed at 20 percent, profits operation Council (GCC) countries that is, an effective tax rate of 4.8
between EUR 40,000 and EUR (Bahrain, Kuwait, Qatar, Saudi Arabia, percent of gross income). Foreign
200,000 are taxed at 23 percent, and and United Arab Emirates). In the contractors can elect to be taxed on a
profits over EUR 200,000 are taxed at case of branches and permanent deemed profit basis of 25 percent
25.5 percent. In 2007, taxable profits of establishments in Oman of non-GCC (that is, an effective tax rate of 12
up to EUR 25,000 were taxed at 20 companies the tax rates range from percent of gross income).
percent, profits between EUR 25,000 0 percent to 30 percent depending
and EUR 60,000 were taxed at 23.5 upon amount of taxable profits. 74 Paraguay (2008 rate = 10%)
percent, and profits over EUR 60,000 The corporate income tax rate is
were taxed at 25.5 percent. 70 Pakistan (2008 rate = 35%) 10 percent. If the company distributes
The corporate income tax rate is 35 utilities to shareholders domiciled in
66 Netherlands Antilles percent and applies to all banking, Paraguay, a 5 percent rate will be
(2008 rate = 34.5%) public, and private limited companies. applied to distributed utilities,
The corporate income tax rate is However, subject to certain conditions resulting an effective rate of 14.5
34.5 percent and includes a 15 percent being met, small companies are taxed percent. To utilities distributed to
surcharge although, for certain at 20 percent. shareholders not domiciled in
activities, tax holidays are available Paraguay a 15 percent rate will be
which generally lower the tax rate to 2 71 Palestine (2008 rate = 15% and 16%) applied, resulting an effective rate of
percent. Companies operating in The 15 percent corporate income tax 27.33 percent. There are differential
economic zones are also taxed at a rate rate is applied in the case of local effective rates for the following
of 2 percent. The income of qualified companies and the 16 percent taxed acts carried out by non-domiciled
limited liability companies engaged in corporate income tax rate is applied in entities: insurance premium that
certain financial activities is exempt. the case of foreign companies. covers risks of people/goods in the
country: 3 percent; people
67 New Zealand (2008 rate = 30%) 72 Panama (2008 rate = 30%) transportation fares/freight of goods:
The corporate income tax rate is 30 Tax due is the higher of 30 percent of 3 percent; communications (phone,
percent. A flat tax of 3 percent applies net taxable income and 1.4 percent of internet, and similar): 3 percent; news
to general insurance premiums and Panamanian-source gross income agencies: 4.5 percent; distributors of
film hire taxes paid to non-residents. (alternative minimum tax). Corporations movies, cinema/television, and similar:
The New Zealand government has with losses may request a three-year 12 percent; and transfer of the use of
introduced the large budget screen holiday from the application of alternative containers: 4.5 percent. For financings
production grant scheme which, minimum tax. If there is no distribution, received from external banks, current
provided certain requirements are met, or if the distributed amount is less than effective rate is 6 percent. Corporate
allows for a rebate of 12.5 percent of 40 percent of net earnings, a income earned by individuals/foreign
the qualifying New Zealand production complementary tax of 4 percent is due entities for their activities carried
expenditure on film and television as an advanced dividend tax. out in Paraguay (independently of
production companies. A film or their branches, agencies or
television company is eligible for the 73 Papua New Guinea permanent establishment) is currently
grant if it is a resident company or (2008 rate = 30%) at an effective rate of 15 percent.
a foreign corporation operating with For mining and gas companies,
a permanent establishment in the corporate income tax rate is 30 75 Peru (2008 rate = 30%)
New Zealand. percent. Existing petroleum projects The corporate income tax rate is
are subject to a 50 percent tax rate 30 percent. Additionally, dividends
68 Norway (2008 rate = 28%) while new petroleum projects are taxed are subject to the rate of 4.1 percent
The corporate income tax rate is at either 45 percent or 30 percent when paid by a domiciled corporation
28 percent. depending on when the license to individuals (domiciled or not) or to
KPMG’s Corporate and Indirect Tax Rate Survey 2008 25

foreign entities. Branches of foreign 77 Poland (2008 rate = 19%) 81 Russia (2008 rate = 24%)
entities are also subject to the 4.1 The corporate income tax rate is 19 The corporate income tax rate is
percent tax rate. A tax on net assets percent, with no other taxes on 24 percent. Federal tax authorities
has been introduced with effect from corporate income. However, a 50 determine the applicable tax rates,
2005. A marginal rate system is percent penalty rate applies for transfer however, tax payments are split into
applied to determine this tax (the rate pricing adjustments if a taxpayer is federal taxes (6.5 percent) and regional
varies from 0 percent to 0.5 percent unable to provide, within seven days of taxes (17.5 percent with the right to
depending on the amount of taxable a request by the tax authorities, reduce to 13.5 percent). Local taxes
net assets). The tax is based on the net transfer pricing documentation (as are no longer payable. Interest income
assets of domiciled corporate taxpayers required under statute) in respect of on state securities is taxed at 15
after deducting certain balance sheet transactions with related parties. percent or 0 percent.
items specified in the legislation. This Companies located in the special
tax can be applied as a tax credit economic zones may benefit from tax 82 Saudi Arabia (2008 rate = 20%)
against corporate income tax. exemptions. Dividend income is taxed The corporate income tax rate is 20
at 19 percent; under certain conditions percent. Corporate tax is payable by
76 Philippines (2008 rate = 35%) exemptions are available for dividends non-Saudi shareholders only. Zakat (a
The corporate tax rate increased to 35 received from subsidiaries resident in religious tax) at 2.5 percent is levied on
percent effective 1 July 2005 and will be Poland, Switzerland, Member States of Saudi and GCC shareholders. In
reduced to 30 percent effective 1 January the European Union, and the European addition, withholding tax of 5 percent is
2009. On the fourth taxable year Economic Area. payable on dividends distributed to non-
following the start-up year, domestic resident shareholders.
corporations and resident foreign 78 Portugal (2008 rate = 25%)
corporations are subject to a 2 percent The corporate income tax rate is 25 83 Serbia (2008 rate = 10%)
minimum corporate income tax (MCIT). percent. This rate is to be increased by The corporate income tax rate is 10
This tax is calculated based on gross a municipal surcharge of up to 1.5 percent. Taxable profit is calculated by
income and is due if the MCIT is greater percent, which is to be levied over the adjusting the company’s profit or loss
than the corporation’s corporate income company’s taxable profit. declared in the P&L account according
tax liability, determined by applying the 35 to the provisions of the CIT Law.
percent tax rate to net income. A 10 79 Qatar (2008 rate = 35%) Adjustments include certain disallowed
percent improperly accumulated earnings The corporate income tax rate is 35 costs, as well as depreciation.
tax (IAET), subject to certain exceptions, percent. It is the maximum rate in a
is also imposed on undistributed earnings progressive rate structure and is 84 Singapore (2008 rate = 18%)
of closely-held corporations. These are applicable to income in excess of QAR The corporate income tax rate is 18
corporations in which at least 50 percent 5 million. However, tax is only imposed percent. A partial tax exemption is
of the value of outstanding capital stock on foreign companies operating in granted on 75 percent of the first SGD
or at least 50 percent of the total Qatar or Qatari companies with foreign 10,000 of regular income (excluding
combined voting power of all classes of shareholders. Companies which are Singapore franked dividends) and 50
stock entitled to vote is owned directly or wholly owned by Qatari shareholders percent on the next SGD 290,000. For
indirectly by 20 individuals or less. or GCC nationals are exempt. Certain the first three assessment years for
Philippine branches of foreign companies established pursuant to an new companies, full tax exemption of
corporations are exempt from the 10 emiree decree may be subject to a regular income (excluding Singapore
percent IAET. Foreign corporations with specific flat tax rate rather than the franked dividends) up to SGD 100,000
Philippine branches pay 15 percent standard progressive rates. can be claimed provided certain
branch profits remittance tax. Philippine conditions are met and a partial tax
branches of foreign corporations not 80 Romania (2008 rate = 16%) exemption of 50 percent on the next
subject to the 10 percent IAET. Philippine The corporate income tax rate is 16 SGD 200,000 of regular income
Economic Zone Authority (PEZA) percent. Profits earned from nightclubs, (excluding Singapore franked
registered corporations which enjoy casinos, discotheques, and sport dividends). A concessionary tax rate
payment of special tax rate on their betting organizers are subject to tax at of 10 percent or lower applies to
registered operations or activities in lieu 16 percent as well, although the tax entities engaged in certain prescribed
of other taxes, national and local are payable cannot be lower than 5 percent activities or granted tax incentives.
exempt from the 10 percent IAET. There of the taxpayer’s qualifying gross
are also several other special tax regimes revenue earnings. A special relief is 85 Slovak Republic (2008 rate = 19%)
for certain types of activity. available for small companies. The corporate income tax rate is
19 percent.
26 KPMG’s Corporate and Indirect Tax Rate Survey 2008

86 Slovenia (2008 rate = 22%) taxed at 20 percent, except in respect 1 January 2005, a taxable interest
The corporate income tax rate is 22 of results not related to their corporate charge is levied on such provisions.
percent. However, the corporate purpose, which will be taxed at the
income tax rate will be 21 percent in general rate. 92 Switzerland
2009 and 20 percent in 2010. Taxable (2008 rate = 12.66% to 25.45%)
persons performing non-profit activities 89 Sri Lanka (2008 rate = 35%) The corporate tax rate in the city of
are exempt. There is also a special rate For the assessment year 2008/09 Zurich is 21.17 percent. All 26 cantons
of 0 percent which under certain (1 April 2008 to 31 March 2009), apply different tax rates and in most of
conditions applies to investment funds, the corporate income tax rate is 35 them the statutory tax rate needs to be
pension funds, insurance undertakings percent. However, small companies multiplied with the communal and/or
for pension plans, and venture capital (with taxable income not exceeding cantonal coefficients that may vary
companies (only for activities based on LKR 5 million and not being a holding, from tax period to tax period. The rate
venture capital). subsidiary, or any associate company shown above comprises federal,
of a group of companies) are taxed at cantonal, and communal taxes. As
87 South Africa (2008 rate = 34.55%) 15 percent and companies in the first corporate income taxes are deductible
The corporate income tax rate is 28 five years of listing are taxed at 33.33 when computing the tax basis, the
percent. However, South Africa percent. Certain identified sectors also effective corporate income tax rates are
imposes an additional secondary tax on enjoy concessionary rates, such as lower than the statutory rates published
companies (STC) at 10% on any net exports (other than traditional in the tax codes. In 2008, the cantons
dividends declared by them. Therefore, products), tourism, agriculture, and of Obwalden and Appenzell
if a company distributes 100 percent of construction at 15 percent and venture Ausserrhoden have the lowest
its after-tax earnings as a dividend, an capital companies/ specialized housing corporate income tax rate (12.66
effective tax rate of 34.55 percent will banks at 20 percent. Dividends or the percent ) while the canton of Berne and
apply. This does not apply to gold repatriation of profits by a non-resident the community of Malleray have the
mining companies (which are taxed on company are taxed at 10 percent. An highest (25.45 percent). However, if a
a formula basis) or to South African economic service charge (ESC) is 1 company qualifies for a holding,
branches of foreign entities which are percent of turnover (although lower principal, or mixed company ruling,
taxed at a rate of 33 percent. Further, it rates are applicable where companies effective tax rate can be reduced to 5
is proposed that STC will be replaced benefit from tax holidays or percent/12 percent. Additionally, full tax
by a withholding tax from next year. concessionary rates) but can be set-off holiday up to 10 years might be
against corporate tax liability. The social available in some regions.
88 Spain (2008 rate = 30%) responsibility levy is 1.5 percent on
Companies with tax years starting from income tax for year 2008/2009. A 93 Syria (2008 rate = 28%)
1 January 2008 are subject to tax at 30 deemed dividend tax at 15 percent is The corporate income tax rate is
percent. Where a company’s turnover applicable for non-declaration of 28 percent. Lower progressive rates
(alone or combined with other group dividends. apply to the first SYP 3 million of net
companies) in the immediately profit. Investment law entities are taxed
preceding tax period is less than 90 Sudan at a flat rate of 22 percent, industrial
EUR 8 million, it is taxed on the first (2008 rate = 10%/15%/30%/35%) entities at a flat rate of 25 percent, and
EUR 120,202 of taxable income at 25 Industrial companies are subject to public majority joint stock companies
percent with the balance of its taxable corporate income tax at 10 percent; at a flat rate of 14 percent. Local
income being subject to tax at 30 trading, real estate, and banks service administration surcharges vary from
percent. The following entities will be companies are subject to corporate 4 percent to 10 percent of the tax
taxed at 25 percent: general mutual income tax at 15 percent; tobacco amount, depending upon location.
insurance companies, social welfare companies are subject to corporate Foreign-controlled service sector
institutions and qualified social security income tax of 30 percent; and oil entities are subject to withholding taxes
mutual entities for accidents at work companies are subject to 35 percent. on gross turnover in lieu of corporate
and occupational diseases, mutual income tax on their net profits, at rates
guarantee entities and guarantee 91 Sweden (2008 rate = 28%) that vary from 3 percent to 10 percent
underwriting companies regulated by The corporate income tax rate is 28 according to industry type. Tourism
Law 1/1994 of 11 March on the Legal percent. An optional provision for entities (domestic or foreign) are subject
Regime for Mutual Guarantee Societies untaxed income is available. The to withholding tax at 2.5 percent of
Registered with the Bank of Spain; and provision must not exceed 25 percent gross turnover.
credit and rural credit co-operatives. of the tax base and must be dissolved
Tax protected co-operatives will be within the following six years. Starting
KPMG’s Corporate and Indirect Tax Rate Survey 2008 27

94 Taiwan (2008 rate = 25%) loans or amounts in Thailand (which corporate taxpayer is a Ukrainian
The corporate income tax rate is 25 were undertaken before 18 April 2006) company with annual revenues of
percent. It is the maximum rate in a and to gross income (reduced to 2 less than UAH 1 million (approximately
progressive rate structure. The rate percent for certain types of income) of USD 200,000) and the annual average
is applicable to income in excess of foundations and associations engaged number of employees of less than 50,
TWD 100,000. in business activities. A petroleum (oil, and that which is predominantly (that
gas, and derivatives) tax rate of 50 is, in excess of 75 percent) owned by
95 Thailand (2008 rate = 30%) percent applies to the net taxable individuals and/or small-size Ukrainian
The corporate income tax rate is 30 profits of companies with concessions companies. No election is available for
percent but it may be reduced to 20 to explore for and produce petroleum. small-size Ukrainian companies that are
percent or 25 percent for certain Thai engaged in manufacturing and trading
companies which are listed on the 96 Tunisa (2008 rate = 10%/30%/35%) of excise goods, gabling, and certain
Stock Exchange of Thailand prior to Companies are taxed at 10 percent, 30 other businesses.
31 December 2009. A tax rate of 10 percent, or 35 percent depending on
percent applies to the remittance of industry. The corporate income tax rate 99 United Arab Emirates
dividends or branch profits abroad. For applies to resident companies and to (2008 rate = 0%/20%/55%)
companies small and medium sized permanent establishments of non- The UAE consists of seven emirates:
enterprises (SME) with less than THB resident companies with a minimum Abu Dhabi, Dubai, Sharjah, Ajman,
5 million paid up capital, the corporate tax payable of 0.1 percent under certain Umm Al Quwain, Fujairah, and Ras Al
income tax rate is reduced to 0 percent conditions. Fully export companies Khaimah. While there are no corporate
for the initial taxable profits of THB are taxable at the rate of 10 percent income taxes at a federal level, some
150,000, 15 percent on THB 150,001 to effective 1 January 2011. The fully emirates have issued their own income
the first THB 1,000,000 of net taxable export companies established before tax decrees. Although in theory these
profits, and 25 percent on the THB 1 January 2011 continue to benefit emirate level decrees impose tax on
1,000,001 to 3,000,000 of net taxable from the exoneration for the period of the income of all corporate entities, in
profits next THB 2,000,000 but not 10 years. Financial institutions working practice tax is currently only enforced
exceeding THB 3,000,000. Corporate with residents as well as banks for their on foreign oil companies and branches
income tax exemptions (tax holidays transactions of the same nature with of foreign banks. Although the tax rate
and corporate tax rate reductions) are residents are taxable at the rate of 35 applicable to oil companies is generally
granted to companies promoted by the percent. For regional development 55 percent of operating profits, the
board of investment (BOI), asset projects, there is exoneration for 10 amount of tax actually paid by such
management companies (AMCs) and years and 50 percent tax base companies is based on a rate agreed in
venture capital companies investing in reduction for additional 10 years. individual concessions between the
SMEs subject to certain conditions. company and the respective emirate.
Corporate income tax incentives were 97 Turkey (2008 rate = 20%) This rate can range between 55
introduced in 2002 for Thai regional The corporate income tax rate is percent and 85 percent. Branches of
operating headquarters (ROH). The 20 percent. foreign banks are taxed at 20 percent
corporate income tax rate for a ROH is of their taxable income in the emirates
reduced to 10 percent on qualifying 98 Ukraine (2008 rate = 25%) of Abu Dhabi, Dubai, Sharjah, and
ROH service income, royalties, and The corporate income tax rate is 25 Fujairah. Municipal taxes are also levied
interest and 0 percent on dividends percent. Special tax rates may apply in some of the emirates. In Dubai, a 10
received from associated enterprises. depending on the business activities percent municipal tax is charged on
A rate of 3 percent applies to gross (for instance a nil or 3 percent rate is hotel revenues (usually passed on
income of companies engaged in applied to insurance income earned by to the consumer as a service charge),
international transportation. A rate of 10 Ukrainian insurance companies). Also, a 10 percent municipality fee is levied
percent applies to the net taxable small-size Ukrainian companies can on the rent from commercial property,
profits of commercial banks which are elect to be taxed under a simplified and a 5 percent fee is levied on the
engaged in obtaining deposits or loans taxation regime that exempts the rent of residential property. Abu Dhabi
from foreign countries and re-lending eligible corporate taxpayer from the does not levy a municipality tax on
such loans or amounts to other, or the payment of virtually all other Ukrainian rented premises, but landlords are
same, foreign countries. A rate of 10 taxes. An eligible taxpayer can elect to required to pay certain annual license
percent also applies to the net taxable be taxed at 6 percent or at 10 percent fees (which they may pass on to
profits of commercial banks derived of all revenues from the sale of goods tenants).
from obtaining deposits or loans from and services depending on the VAT
foreign countries and re-lending such status of such taxpayer. An eligible
28 KPMG’s Corporate and Indirect Tax Rate Survey 2008

100 United Kingdom generally subject to corporate income basis of the price obtaining on the
(2008 rate = 28%) tax at 50 percent (also applicable to London metal exchange. Where there is
A 21 percent rate applies to companies income from any other sources). no windfall tax, there will be variable
with taxable profits of up to GBP This rate does not include municipal tax. The variable tax rates will vary
300,000 with marginal relief up to GBP business taxes which range from between 1% and 15%. The windfall tax
1.5 million. Companies with taxable 0.3 percent to 9.4 percent of gross rates will be 25%, 50%, and 75%.
profits of GBP 1.5 million or more pay income, depending on the district and
tax at the full rate of 28 percent. All the business activity.
these thresholds are reduced for
accounting periods of less than 12 104 Vietnam (2008 rate = 28%)
months and if there are associated The corporate income tax rate is 28%
companies. Bermuda, Gibraltar, and applies to resident companies
Guernsey, Isle of Man, and Jersey: with foreign investors (including, joint
these countries are dependent ventures, 100% foreign-owned
territories or crown dependencies of companies, and business co-operation
the United Kingdom, which has formally contracts) licensed from 1 January
confirmed that the OECD Convention 2004 (25% if licensed before 1 January
applies to these countries. These 2004) and Vietnamese enterprises.
countries are not included when However, incentive corporate income
calculating the averages and ranges tax rates (10%, 15%, and 20%) will
indicated above. apply for certain projects. Corporate
income tax rates from 28% to 50%
101 United States (2008 rate = 40%) apply to businesses conducting
The marginal federal corporate income prospecting, exploration, and
tax rate on the highest income bracket of exploitation of petroleum and gas
corporations (for 2007, USD 18,333,333 and other rare and precious natural
and above) is 35 percent. State and local resources.
governments may also impose income
taxes ranging from less than 1 percent 105 Yemen (2008 rate = 35%)
to 12 percent, and the top marginal The corporate income tax rate is
rates of which average approximately 35% and applies to all categories of
7.5 percent. A corporation may deduct commercial activity. Tax holidays of
its state and local income tax expense seven years or more are available to
when computing its federal taxable projects licensed under the investment
income, generally resulting in a net law. Oil and mineral activities are
effective rate of approximately 40 subject to special regimes of taxation,
percent. The effective rate may vary and education and agriculture are
significantly depending on the locality in tax exempt.
which a corporation conducts business.
The United States also has a parallel 106 Zambia (2008 rate = 35%)
alternative minimum tax (AMT) system, The corporate income tax rate is 35%.
which is generally characterized by a However, income earned by banking
lower tax rate (20 percent) but a broader institutions is subject to 40% tax on
tax base. profits in excess of ZMK 250 million.
Profits from farming, chemical fertilizer
102 Uruguay (2008 rate = 25%) production, and export of non-traditional
The corporate income tax rate is items are taxed at a rate of 15%.
25 percent. Companies with a turnover of ZMK 200
million or less pay a turnover tax of 3%.
103 Venezuela (2008 rate = 34%) Tax on foreign exchange earned by sun
The corporate income tax rate is 34 hotel is subject to tax at 15%. Windfall
percent. However, corporations tax has been introduced on companies
engaged in the exploitation of producing base metals of copper and
hydrocarbons and related activities are cobalt which will be calculated on the
Indirect Tax Rates
2004 - 2008
30 KPMG’s Corporate and Indirect Tax Rate Survey 2008

European Asia - Latin 1 Jan 2004 1 Jan 2005 1 Jan 2006 1 Jan 2007 1 Jan 2008 Footnote
OECD Country % % % % %
Union Pacific America

Afghanistan 15 15 15 15 15 1
Albania 20 20 20 20 20 2
Angola N/A N/A N/A N/A N/A 3
I Argentina 21 21 21 21 21 4
I Aruba N/A N/A N/A 3 3 5
I I Australia 10 10 10 10 10 6
I I Austria 20 20 20 20 20 7
Bahrain N/A N/A N/A N/A N/A 8
I Bangladesh 15 15 15 15 15 9
I Barbados 15 15 15 15 15 10
Belarus 18 18 18 18 18 11
I I Belgium 21 21 21 21 21 12
I Bolivia 13 13 13 13 13 13
Bosnia and Herzegovina N/A N/A 17 17 17 14
Botswana 10 10 10 10 10 15
I Brazil 19 19 19 19 19 16
I Bulgaria 20 20 20 20 20 17
I Canada 7 7 7 6 5 18
I Cayman Islands N/A N/A N/A N/A N/A 19
I Chile 19 19 19 19 19 20
I China 17 17 17 17 17 21
I Colombia 16 16 16 16 16 22
I Costa Rica 13 13 13 13 13 23
Croatia 22 22 22 22 22 24
I Cyprus 15 15 15 15 15 25
I I Czech Republic 22 19 19 19 19 26
I I Denmark 25 25 25 25 25 27
I Dominican Republic 12 16 16 16 16 28
I Ecuador 12 12 12 12 12 29
Egypt 10 10 10 10 10 30
I Estonia 18 18 18 18 18 31
I Fiji 12.5 12.5 12.5 12.5 12.5 32
I I Finland 22 22 22 22 22 33
I I France 19.6 19.6 19.6 19.6 19.6 34
I I Germany 16 16 16 19 19 35
I I Greece 18 18 19 19 19 36
Guatemala 12 12 12 12 12 37
I Honduras 12 12 12 12 12 38
I Hong Kong N/A N/A N/A N/A N/A 39
I I Hungary 25 25 20 20 20 40
I Iceland 24.5 24.5 24.5 24.5 24.5 41
I India 16 16 12.5 12.5 12.5 42
I Indonesia 10 10 10 10 10 43
Iran N/A N/A N/A N/A N/A 44
I I Ireland 21 21 21 21 21 45
Israel 17 18 16.5 15.5 15.5 46
I I Italy 20 20 20 20 20 47
I Jamaica 15 15 16.5 16.5 16.5 48
I I Japan 5 5 5 5 5 49
Jordan 16 16 16 16 16 50
Kazakhstan 15 15 15 14 13 51
I I Korea, Republic of 10 10 10 10 10 52
Kuwait N/A N/A N/A N/A N/A 53
I Latvia 18 18 18 18 18 54
Libya N/A N/A N/A N/A N/A 55
I Lithuania 18 18 18 18 18 56
I I Luxembourg 15 15 15 15 15 57
I Macau N/A N/A N/A N/A N/A 58
I Malaysia 10 10 10 10 10 59
KPMG’s Corporate and Indirect Tax Rate Survey 2008 31

European Asia - Latin 1 Jan 2004 1 Jan 2005 1 Jan 2006 1 Jan 2007 1 Jan 2008 Footnote
OECD Country % % % % %
Union Pacific America

I Malta 18 18 18 18 18 60
Mauritius 15 15 15 15 15 61
I I Mexico 15 15 15 15 15 62
Montenegro 17 17 17 17 17 63
Mozambique 17 17 17 17 17 64
I I Netherlands 19 19 19 19 19 65
I Netherlands Antilles * * * * * 66
I I New Zealand 12.5 12.5 12.5 12.5 12.5 67
I Norway 24 25 25 25 25 68
Oman N/A N/A N/A N/A N/A 69
I Pakistan 15 15 15 15 20 70
Palestine 14.5 14.5 14.5 14.5 14.5 71
I Panama 5 5 5 5 5 72
I Papua New Guinea 10 10 10 10 10 73
I Paraguay 10 10 10 10 10 74
I Peru 17 17 17 17 17 75
I Philippines 10 10 10 12 12 76
I I Poland 22 22 22 22 22 77
I I Portugal 19 19 21 21 21 78
Qatar * * * * * 79
I Romania 19 19 19 19 19 80
Russia 18 18 18 18 18 81
Saudi Arabia N/A N/A N/A N/A N/A 82
Serbia N/A 18 18 18 18 83
I Singapore 5 5 5 5 7 84
I I Slovak Republic 19 19 19 19 19 85
I Slovenia 20 20 20 20 20 86
South Africa 14 14 14 14 14 87
I I Spain 16 16 16 16 16 88
I Sri Lanka 15 15 15 15 15 89
Sudan 10 10 10 12 15 90
I I Sweden 25 25 25 25 25 91
I Switzerland 7.6 7.6 7.6 7.6 7.6 92
I Taiwan 5 5 5 5 5 93
I Thailand 7 7 7 7 7 94
Tunisia 18 18 18 18 18 95
I Turkey 18 18 18 18 18 96
Ukraine 20 20 20 20 20 97
United Arab Emirates ** ** N/A N/A N/A 98
I I United Kingdom 17.5 17.5 17.5 17.5 17.5 99
I United States * * * * * 100
I Uruguay 23 23 23 23 22 101
I Venezuela 16 15 14 14 9 102
I Vietnam 10 10 10 10 10 103
Zambia 17.5 17.5 17.5 17.5 17.5 104

Average indirect tax rate 15.6 15.6 15.4 15.7 15.7

*See footnote Source for all rates: KPMG member firms. Rates as at 1 January each year.
** No IBFD info
32 KPMG’s Corporate and Indirect Tax Rate Survey 2008

Indirect Tax Rates


All countries 2004 – 2008
15.75
15.70 15.68
15.67
15.65
15.61 15.62
15.60
15.55
Percentage

15.50
15.45
15.38
15.40
15.35
15.30
15.25
15.20
1-Jan-04 1-Jan-05 1-Jan-06 1-Jan-07 1-Apr-08

ASPAC 2004 – 2008


11.14
11.20

11.10

11.00

10.90
10.83 10.83
Percentage

10.80 10.75

10.70 10.64

10.60

10.50

10.40

10.30
2004 2005 2006 2007 2008

OECD 2004 – 2008


17.00
16.97
16.95
16.90
16.90
16.86 16.86
16.85
Percentage

16.80

16.75
16.72
16.70

16.65

16.60

16.55
2004 2005 2006 2007 2008
KPMG’s Corporate and Indirect Tax Rate Survey 2008 33

EU 2004 – 2008
19.80
19.56 19.49 19.49
19.60
19.45
19.40
Percentage 19.20

19.00

18.80
18.65
18.60

18.40

18.20

18.00
2004 2005 2006 2007 2008

Latin America 2004 – 2008


15.80

15.60
15.41
15.40

15.20 15.19 15.13


Percentage

15.00

14.80 14.7*

14.60

14.20 14.3*

14.20
14.00
2004 2005 2006 2007 2008

*The average rates for 2007 and 2008 reflect the introduction of the BBO in Aruba in January
2007, at a rate of 3 percent.

Source for all graph information: KPMG member firms.


34 KPMG’s Corporate and Indirect Tax Rate Survey 2008

Indirect Tax Rates


Footnotes

1 Afghanistan 4 Argentina of certain gases, and production and


Consumption tax rate (instead of VAT) The standard rate of value-added tax distribution of programs, films, and
ranges from 1 percent to 15 percent (impuesto al valor agregado; IVA) is 21 record of any type to be transmitted
and is payable by corporation, percent. There is a reduced rate of 10.5 by radio or television.
partnerships, limited liability companies, percent for certain goods and services,
and state owned enterprises that are including, sales or imports of cattle, There is an increased rate of 27 percent
engaged in manufacturing, processing, sheep, camels, goats, and derivatives for certain services if they are rendered
assembling, and mining. The tax is which are fresh or frozen under certain outside properties exclusively used as
payable on quarterly basis. Some conditions, imports of certain capital a dwelling, entertainment, summer
essential items like flour, bread, goods included in the tariffs list of the homes or vacant land and the beneficiary
stationery, books, pharmaceuticals, Common Nomenclature of Mercosur of the services is a registered or a small
coal, chemical fertilizer, moves, etc. (Southern Cone Common Market), taxpayer: telecommunication services
are tax exempt. The government has certain supplies of services related (except services rendered by the national
recommended the abolishment of this to the soil (such as, preparation) and telecommunications agency or news
tax to Parliament; however, the final farming activities (such as, sowing and agencies), the supply of gas or electrical
approval is awaited. harvest), certain constructions related power (except public illumination),
to dwelling houses, interest on loans certain supplies of water, and
2 Albania from foreign banks located in a country sewage services.
The standard rate of value-added tax the central bank of which has adopted
(tatimi mbi vleren e shtuar; TVSH) is 20 the international supervision standards Exports of goods and services are zero-
percent. There is a reduced rate of 0 of the base Banks Committee, the rated. Exempt goods include, among
percent applicable to exports of goods processing and manufacturing of others: imports and sales of books,
and services (under certain conditions) movable goods in Argentina by a third retail distribution of newspapers, and
and supplies related to international party, even if the movable property is periodicals, shares, bonds, and
transport. Supplies of certain goods fixed to immovable property. Such securities, stamps, gold and metallic
and services are exempt from VAT, supplies do not include tax-free currency, and airplanes constructed and
for example lease and sale of land, services supplied through the delivery destined for the transportation of
sale of real estates, financial services, of movable goods representing simply passengers and/or freight and ships for
medicines, medical equipment, and the material support in relation to a the exclusive use in commercial
certain supplies in connection with supply, subject to certain restrictions, activities or for defense and security.
oil exploration. sales, hiring, and imports of animals Exempt services include: services
alive or their meat, fruits, vegetable, rendered by the state, provinces,
3 Angola honey, grains, dried vegetable, municipalities, and institutions
There is no VAT system in Angola common bread, bakery products, belonging thereto, specified medical
at this time. However, there is a and wheat flour, provision of certain services, transportation of persons and
consumption tax which to some services including sowing, plantation, freight, including international
extent substitutes VAT. Consumption harvesting, use of chemicals to enrich transportation, financial placements and
tax is levied on: importation of goods, the soil, building, installation, repairing, services in those cases listed in the
local production of goods, and maintenance, and preservation of law, services proper of directors,
telecommunication, electricity, water, properties destined for housing, sales controllers and members of boards of
and tourism services. The rate for and imports of newspapers and stock corporations and those of
goods varies from 2 percent to 30 periodicals, transport services supplied managers and members of managing
percent with the general rate being by taxis and other means of transport if boards of other companies, the letting
10 percent. The rate for the services the distance traveled is more than 100 of immovable property relating to
is 2 percent. km, medical services in specific cases, dwelling houses and to farming and the
sales and services provided by certain letting of immovable property with
cooperatives, sales, hiring, and imports monthly rents less than ARG 1,500.
KPMG’s Corporate and Indirect Tax Rate Survey 2008 35

5 Aruba 8 Bahrain 10 Barbados


The standard rate of turnover tax There is no value-added tax or sales The standard rate of value-added tax is
(belasting op bedrijfsomzetten; BBO) tax. Bahrain follows the GCC Unified 15 percent. There is a 7.5 percent rate
is 3 percent. The reduced rate of 1 Customs Duty law and imposes 5 which applies to the provision of hotel
percent applies to goods sold and percent on most imports. and condo-hotel accommodation.
exported directly by seller. Zero-rated supplies include: exports of
9 Bangladesh goods and services, basic food items,
6 Australia The standard rate of value-added tax printed matter, certain agricultural
The standard rate of goods and is 15 percent. There are reduced rates machinery, and international transport
services tax (GST) is 10 percent. of 9 percent, 5 percent, 4.5 percent, of passengers and freight, as well as
There is a reduced rate of 0 percent 2.25 percent, 1.5 percent, and 0 importations by approved educational
which applies to, for example, some percent which apply to, for example, institutions and companies in the
food products, most medical and health certain categories of advertisement international financial services sector,
services, drugs, medical aids, and (9 percent), the supply of electricity, among others. Exempt supplies include
appliances, exports of goods and air conditioned bus service (5 percent), certain financial services, health and
services, supply of a business as a engineering services, security services, educational services, and specific
going concern, eligible education, services rendered by construction supplies of real property.
some religious and charitable activities, contractors, audit and accounting firms,
water, sewerage, and drainage consultants, printing press, architects, 11 Belarus
services. Supplies of certain interior and graphic designers, The standard VAT rate in Belarus is
goods and services are exempt from immigration adviser, coaching center, 18 percent. Reduced rates are 10
GST, for example financial services, English medium school, non- percent (applied for clothes for children
residential rent, residential premises government medical and engineering and some social products, such as milk,
(not new), and some fund-raising college, photo producer, courier and butter, horseflesh, and other products
events conducted by charitable EMS services, specialized doctor, legal included in a list approved by the
institutions. adviser (4.5 percent), supplies of goods President), 2.4 percent (from 2008) for
and services through participation in a white sugar, and 0.5 percent (from 2007)
7 Austria tender/quotation and for pathological for diamonds delivered from Russia for
The standard rate of value-added tax laboratory work, supplies of goods and processing in the territory of Belarus,
(Umsatzsteuer; USt) is 20 percent. services by hospitals and petroleum and 0 percent (export). Some goods
There are reduced rates of 10 percent carriers, maintenance and cleaning of and services are exempt from VAT
services (10 percent), exports of goods, building floors/premises, dental medical application, such as medical equipment,
supply, import, repair, and maintenance center (2.25 percent), trading services, remedy included, and other goods
of certain ships and aircraft, and land development and construction of included in the list approved by
international passenger transport by apartments, retail sales of furniture the President.
air or sea (0 percent). There is a (1.5 percent), and exports of goods and
special rate under the farmer's flat services (0 percent). Supplies of certain 12 Belgium
rate scheme; a rate of 12 percent goods and services are exempt from The standard rate of value-added tax
is applicable to supplies of typical VAT, for example, certain food items (taxe sur la valeur ajoutée; TVA /
agricultural goods and services. (such as meat, fish, potatoes, belasting over de toegevoegde waarde;
Certain supplies of goods and services vegetable, and fruits), jute and jute BTW) is 21 percent. There are reduced
are exempt from VAT, for example goods and social welfare, cultural, rates of 12 percent, 6 percent, and 0
financial services, insurance services, training, rehabilitation services, and percent. The 12 percent rate applies to,
leasing or letting of immovable property agricultural development. for example, social housing (as from 1
(with some exceptions), education, January 2007, 6 percent in certain
and health and welfare. circumstances), margarine, and pay
36 KPMG’s Corporate and Indirect Tax Rate Survey 2008

television. Most food and drinks, books, are exempt from VAT, for example, the electronic data processing industry
pharmaceuticals, hotel and camping prescription drugs, residential (7 percent). Certain supplies are
accommodations, passenger accommodation, education at approved exempt from ICMS, for example
transportation, agricultural services are institutions, public medical facilities supplies of books, newspapers,
charged at a 6 percent rate, and services, non-fee based financial periodicals, and the paper consumed
newspapers and periodicals published services, and passenger transportation in the printing of such products,
(in certain conditions), supplies related (excluding the transportation of tourists). sale of fixed assets, fruits, vegetables,
to aircrafts and sea-going vessels and and farm and garden produce and
exports of goods are charged with 0 16 Brazil preservatives.
percent. Supplies of certain goods and There are two types of value-added
services are exempt from VAT, for tax in Brazil: a state sales tax (imposto The reduced IPI rate of 0 percent
example financial services, letting of sobre circulação de mercadorias e applies to, for example, live animals
immovable property, hospital services, serviços; ICMS) and a federal excise and animal products, plant products,
medical care, and cultural activities. tax (imposto sobre produtos chemical products, textile products,
industrializados; IPI). There are other and shoes. Certain supplies are exempt
13 Bolivia taxes on supplies of goods or services: from IPI, for example supplies of
The standard rate of value-added tax a services tax (imposto sobre serviços; vessels (except sporting or pleasure
(impuesto al valor agredado; IVA) is 13 ISS), a social contribution for social boats), exports, books, newspapers,
percent of the total price of the service security financing (contribuição para o periodicals, and paper consumed in
rendered for an effective rate of 14.943 financiamento da seguridade social; the printing of such products, electric
percent. Exports of goods and services COFINS) and an employees’ profit energy, petroleum products, fuel, and
are zero-rated. Exempt services participation program (programa de minerals belonging to the country.
include: financial transactions such as integração social; PIS).
insurance and reinsurance, interest, There are reduced rates of ISS which
commissions on financial services and The standard rate of ICMS is 17 vary from one municipality to another.
sales, and purchases of shares. percent (in São Paulo, Minas Gerais, Certain supplies are exempt from ISS,
and Paraná the standard rate is 18 for example exports of services,
14 Bosnia and Herzegovina percent and in Rio de Janeiro it is 19 amounts intermediated in the bonds
The standard rate of value-added tax percent). IPI is normally charged at an and securities market, the amount of
(porez na dodanu vrijednost; PDV) is ad valorem (value) rate according to bank deposits, the capital, interests,
17 percent. There is a reduced rate of 0 the classification of the product based and default interests regarding credit
percent which applies to, for example, upon the international Harmonized operations performed by financial
exports of goods and certain related Commodity Description and Coding institutions.
services. Supplies of certain goods and System, administered by the World
services are exempt from VAT, for Customs Organization in Brussels. Reduced rates of 0.65 percent PIS
example financial services, insurance Rates range from 0 percent to a and 3 percent COFINS apply under
and reinsurance services, education, maximum of 330 percent and average a so-called cumulative regime. Unlike
healthcare, rent of residential property about 10 percent. The standard rate the non-cumulative regime there is no
for a period longer than 60 days, certain of ISS is ranges from 2 percent to recognition of any tax credits under the
supplies of immovable property, dealing 5 percent. The standard rates of PIS cumulative regime. Certain supplies
in shares, management of investment and COFINS under the so-called are exempt from PIS and COFINS, for
funds, and stamps. non-cumulative regime are 1.65 percent example the exportation of goods, the
and 7.6 percent, respectively. exportation of services with payment in
15 Botswana convertible currency, sales of products
The standard rate of value-added tax There are reduced rates of 7 percent to a commercial export company for
is 10 percent. There is a reduced rate and 12 percent ICMS which apply export purpose specifically and sales
of 0 percent which applies to, for to inter-state supplies within Brazil of fixed assets.
example, exports of goods and depending on the region into which
services, international transport goods are sold and to certain intra-state
services, disposal of businesses as supplies, for example, to diesel oil and
going concerns, certain food products hydrated ethyl alcohol fuel, motor
not mixed with other products, some vehicles and transport services (12
pesticides, fertilizers, farming tractors percent), products that are part of the
and supplies to the Head of State. basic food basket and products from
Certain supplies of goods and services
KPMG’s Corporate and Indirect Tax Rate Survey 2008 37

17 Bulgaria The province of Québec applies its own 21 China


The standard rate of value-added tax value-added tax, the Québec sales tax There are three types of indirect taxes
(danak dobawena stoinost; DDS) is 20 (QST), at a rate of 7.5 percent or 0 in China: value-added tax, consumption
percent. There are reduced rates of 7 percent to generally the same base of tax, and business tax.
percent and 0 percent which apply to, goods and services as the GST, except
for example, hotel accommodation for financial services which are zero- The standard rate of value-added tax is
services where part of a package rated. The QST applies to the GST- 17 percent. There are reduced rates of
tour (7 percent), exports and intra included price of taxable supplies 13 percent and 0 percent which apply
community supplies of goods, made in Québec. to, for example, basic necessities,
international transport of goods and agricultural products, utility services
passengers, transport processing of The provinces of British Columbia, (13 percent), and exports of goods
goods and passengers when part of Saskatchewan, Manitoba, Ontario, and (0 percent). Exports of various goods
international transport, supplies of Prince Edward Island levy retail sales are not wholly zero-rated and all the
goods for fuelling and provisioning taxes in their respective jurisdictions. associated input tax is not refundable
of aircrafts and ships engaged in The rates vary from 5 percent to in full to the exporters. There are two
international transportation, construction, 10 percent. special rates under the small-scale
repair, modification, maintenance, taxpayers’ flat rate scheme; a rate of
assembly, equipment, transportation, 19 Cayman Islands 6 percent for businesses engaged in
and destruction aircrafts and ships There is no value-added tax or goods production and 4 percent for
(0 percent). Supplies of certain goods and services tax in Cayman Islands. businesses engaged in wholesale or
and services are exempt from VAT, for retail. Certain supplies of goods and
example health, social, education, and 20 Chile services are exempt from VAT, for
cultural services, transfer of property The standard rate of value-added tax example, agricultural products self-
rights over land and old buildings under (impuesto al valor agregado; IVA) is produced for the purpose of sale,
special conditions, financial, insurance, 19 percent. Exports of goods are zero- ancient and antiquated books, and
and postal services. rated. Exempt supplies include: capital imported equipment for scientific
goods imported by foreign investors or research and experiment.
18 Canada companies receiving foreign investment
The standard rate of goods and services that have subscribed an investment Business tax rates are: 3 percent,
tax (GST) is 5 percent (decreased from agreement with state of Chile under 5 percent, and a range of 5 percent
6 percent as of 1 January 2008). Decree Law 600; income from tickets to 20 percent. For example, services
There is a reduced rate of 0 percent to sports events and certain artistic of transportation, construction, post
which applies to zero-rated supplies, and cultural events; international and telecommunication, cultural
for example, exports of certain goods, transportation of cargo or people; activities, and sports (3 percent),
prescription drugs, and basic groceries. certain types of insurance premiums; services of finance and insurance,
Also, certain goods and services are remuneration for services provided by hotels, restaurants, catering, tourist,
exempt from GST, for example some persons who are neither domiciled non- rental, leasing, advertising, the sale of
supplies of residential property, resident in Chile and who are subject intangible assets, transferring immovable
financial and insurance services, to income withholding tax; certain kind property (5 percent), and entertainment
educational, and health care services. of interests on financial and credit (5 percent to 20 percent).
transactions and instruments; services
In addition, all provinces, except for provided to persons neither domiciled There are 14 categories of goods
Alberta, impose a value-added tax or a nor resident in Chile and which are that are subject to consumption tax,
retail sales tax on the sales of taxable qualified as export services by the including tobacco, liquor, cosmetics,
goods and services. National Customs Service; radio jewelers, firecrackers, refined oil, motor
broadcasters and concessionaires vehicle tires, motorcycles, motor
The provinces of New Brunswick, of television channels (except for vehicles, golf balls and clubs, luxury
Nova Scotia, and Newfoundland apply advertising income); educational watches, yachts, disposable wooden
a harmonized value-added tax, the establishments and universities chopsticks, and wooden floor panels.
harmonized sales tax (HST), at a rate of on educational activities and Normally, consumption tax is charged
13 percent (decreased from 14 percent public hospitals. at an ad valorem (value) rate that
as of 1 January 2008) or 0 percent for ranges from 3 percent to 45 percent,
zero-rated supplies. The HST applies to while exports are zero-rated. Some
the same base of goods and services goods such as refined oil are levied at
as the GST. quantum (unit/volume) basis.
38 KPMG’s Corporate and Indirect Tax Rate Survey 2008

As for tobacco and some types of 23 Costa Rica 25 Cyprus


liquor, compound rate calculations, The standard rate of value-added tax The standard rate of value-added tax
at both an ad valorem and quantum (impuesto general sobre las ventas; (Foros prostithemenis axias; FPA) is
rate are applied. IGV) is 13 percent. There are two 15 percent. There are reduced rates of
reduced rates: wood is subject to 8 percent, 5 percent, and 0 percent,
22 Colombia a 10 percent rate and residential which apply to, for example, certain
The standard rate of value-added tax electricity is subject to a 5 percent rate. passengers transportation services,
(impuesto sobre las ventas) is 16 Zero-rated supplies include: basic food hotel accommodation, restaurant and
percent. The reduced rate of 1.6 and other basic necessities (basic similar catering services excluding
percent applies to certain cleaning and basket or canasta básica) and exports. alcohol (8 percent), non-bottled water,
security services and certain services Exempt goods are defined in Article books, newspapers, magazines, and
rendered by the cooperatives and 9 of the Sales Tax Law including: tires similar publications, gas, aid to disabled
pre-cooperatives of associated work. for agricultural equipment, veterinary persons, animal feed, fertilizers and
The reduced rate of 10 percent applies supplies defined by the Ministry of insecticides, waste treatment (5
to (among others): coffee, cereals, Agriculture and the Ministry of Finance, percent), exports of goods, drugs and
chocolate, prepaid health services, medicines, kerosene, diesel for fishing medicines, and most food items for
accommodation services in hotels, activities (others than sport fishing), human consumption (0 percent).
and commercial real property leasing. books, musical compositions, paintings Supplies of certain goods and services
The increased rate of 20 percent created within Costa Rica by Costa are exempt from VAT, for example
applies to mobile telephone services Rican or non-Costa Rican painters, financial services, postal services,
and certain motor vehicles and ships. coffins, the monthly consumption of education, and health care and welfare
The increased rates 25 percent and 35 electric energy when it does not services, and cultural services by public
percent apply to certain motor vehicles exceed 250 kW/h, the re-importation bodies or non-profit organizations.
and motorcycles. Zero-rated supplies of merchandise of Costa Rican origin,
(referred to as exempt supplies in occurring within the three years 26 Czech Republic
Colombia) include: exports of goods, following their exportation. The standard rate of value-added tax
certain foods items, school notebooks, (daň z přidané hodnoty; DPH) is 19
fuel alcohol destined to be mixed with 24 Croatia percent. There is a reduced rate of 9
gasoline, books and magazines of a The standard rate of value-added tax percent which apply to, for example,
scientific and cultural nature, and (Porez na dodanu vrijednost; PDV) is 22 food products, books, brochures,
services that are rendered within the percent. There are reduced rates of 10 newspapers and magazines, public
country and used exclusively abroad percent and 0 percent which apply to, transport services, social residential
by enterprises or individuals without for example, tourist accommodation, housing construction, and transfer of
business or activities in Colombia full or half board services and tourist residential houses unless exempt.
(exports of services). Exempt supplies agents’ commission with regards to Exports and intra-Community supplies
(referred to as non-taxable or excluded those services, daily and periodic of goods, international transport of
supplies in Colombia) include basic newspapers and magazines (10 percent), goods relating to exports or imports of
food items, certain export services, exports of goods, bread, milk, certain goods are zero-rated. Certain supplies
passenger public transportation to books, certain medicines, medical of goods and services are exempt
some municipalities within Colombia, implants, and orthopedic devices from VAT, for example, insurance and
cargo transportation, certain financial and scientific magazines (0 percent). financial services, postal services,
transactions, public services of energy, Certain supplies of goods and services education, health and welfare services,
water, sewer, public cleaning, garbage are exempt from VAT, for example transfer of land including financial
collection, domestic gas, building rental financial transactions, insurance and leasing of land, transfer and financial
service used for residential purposes, reinsurance services, rent of residential leasing of immovable property in
certain agricultural services, certain life, property, supplies by medical practices certain conditions, and renting of land
health, and education insurances and and institutions, supplies by social, and immovable property.
items, medicines, chemical, and children and youth care institutions,
mineral fertilizers, crude oil for its supplies by schools and other 27 Denmark
refining, natural gas, butanes and educational institutions, supplies by The standard rate of value-added tax
natural gasoline, wood, newspapers, cultural public institutions, transfer of (merværdiafgift; MOMS) is 25 percent.
certain arms of war, and purchase of securities, shares, and receivables. There is a reduced rate of 0 percent
goods for human and animal which applies to, for example, exports
consumption from specific of goods, newspapers, and sale and
neighboring states.
KPMG’s Corporate and Indirect Tax Rate Survey 2008 39

leasing of ships and aircrafts until 2010. 30 Egypt goods placed in free zone, free
Supplies of certain goods and services The standard rate of general sales tax warehouse, or VAT warehouse, (0
are exempt from VAT, for example (GST) is 10 percent. There are other percent). Supplies of certain goods
health and welfare services, education, rates that vary from 0 percent to 45 and services are exempt from VAT, for
certain sport and cultural activities, percent. The reduced rates apply to, example immovable property, financial
land, financial and insurance services, for example, coffee, all products made and insurance services, postal services,
postal services by Post Denmark, of flour, soap, fertilizers, gypsum, and education, and health and welfare.
passenger transport services (excluding iron bars (5 percent), and exports of
transport of tourists by bus), and travel goods (0 percent). The increased rates 32 Fiji
agency services. apply to, for example, national and The standard rate of value-added tax
international telecommunication is 12.5 percent. There is a reduced
28 Dominican Republic services using mobile phones, motor rate of 0 percent which applies to, for
The standard rate of value-added tax vehicles of a cylinder capacity less example, exports of goods and certain
(impuesto sobre transferencia de than 1600 cc (15 percent), some services, prescribed medication, some
bienes industrializados y servicios; colored televisions, refrigerators or basic food items (such as rice, flour,
ITBIS) is 16 percent. Exports of deep freezes, sound recorders, air- locally produced eggs, tea, edible oil,
goods and services are zero-rated. conditioning units, cameras, perfumery, tinned fish, and powdered milk) and
Exempt supplies include: basic cosmetics or toilet preparations and kerosene. Supplies of certain goods
consumption items, educational products prepared for the care of hair and services are exempt from VAT, for
materials, medicines, services of and skin (25 percent), motor vehicles example financial and insurance
health, financial, utilities, and inland of a cylinder capacity of 1600 cc up services, residential accommodation,
transport of persons and cargo. to 2000 cc, motor vehicles for the and education.
transport of goods and persons, jeep
29 Ecuador motor vehicles, camping trailers (30 33 Finland
The standard rate of value-added tax percent), motor vehicles of a capacity The standard rate of value-added tax
(impuesto al valor agregado; IVA) is 12 of more than 2000 cc, and vehicles for (arvonlisävero; ALV) is 22 percent.
percent. Exports are zero-rated, with trips and camping (45 percent). GST is There are reduced rates of 17 percent,
certain exceptions. Exempt supplies imposed on some commodities 8 percent, and 0 percent which apply
include: natural food products, milk, according to their collection unit (ton, to, for example, food and animal feed
and certain industrialized food products liter, or value) for example, tea, beet, (17 percent), accommodation, books,
for human consumption, medicines and cane sugar, soda water, petroleum pharmaceuticals, passenger transport,
and drugs of human use, seeds, bulbs, products, medicaments, and water and cultural and sporting services
plants, live roots, fish flour, animal feed, cement. Certain supplies of commodities (8 percent), newspaper subscriptions,
fertilizers, insecticides, pesticides, are exempt from GST, for example, and the sale and hire of certain
herbicides, and veterinarian products, dairy products, vegetable oils transport vessels and exports of goods
tractors with tires up to 200 HP and (subsidized), conserves, processed or (0 percent). Supplies of certain goods
other agricultural implements, paper, prepared meat and fish items (with and services are exempt from VAT,
newspaper, magazines, and books, some exceptions), natural and butane for example immovable property
fluvial, maritime, and terrestrial gas, newsprint, paper, and macaroni (with some major exceptions), financial
transportation of passengers and made of ordinary flour. and insurance services, education,
cargo as well as, international air and health and welfare.
transportation of cargo and air cargo 31 Estonia
transportation from and to the province The standard rate of value-added tax 34 France
of Galapagos, financial and investment (käibemaks) is 18 percent. There are The standard rate of value-added tax
services for entities legally authorized reduced rates of 5 percent and 0 (taxe sur la valeur ajoutée; TVA) is 19.6
to provide them, the transfer of percent which apply to, for example percent. There are reduced rates of 5.5
securities, health and education books, certain periodicals, medicines, percent, 2.1 percent, and 0 percent
services, public services of electricity, cultural performances, accommodation which apply to, for example, food,
water, sewer and trash collection, (5 percent), international and passenger water, passenger transportation, some
leasing of residential property, book transport, exports of goods, supply pharmaceutical products, books, hotel
printing and aerial fumigation services, of aircraft operating on international accommodation (5.5 percent),
services provided by artisans, and routes, supply of sea-going vessels for newspapers and medicines for human
services of health and life insurance navigation on high seas, services on health when reimbursed by social
and reinsurance. board of such vessels or aircrafts, security (2.1 percent), and exports of
40 KPMG’s Corporate and Indirect Tax Rate Survey 2008

goods and intra-Community supplies which apply to, for example, fresh food 39 Hong Kong
(0 percent). Certain supplies of products, pharmaceuticals, passenger There is no value-added tax or goods
goods and services are exempt transport services, electricity, natural and services tax in Hong Kong.
from VAT, for example certain medical gas, and certain professional services
supplies, postal services, education, such as those which are provided by 40 Hungary
certain financial transactions, and hotels, restaurants, and coffee shops The standard rate of value-added tax
insurance services. (9 percent), newspapers, periodicals, (általános forgalmi adó; ÁFA) is 20
books, and theatre tickets (4.5 percent), percent. There are reduced rates of 5
35 Germany export transactions, international transit percent and 0 percent, which apply to,
The standard rate of value-added tax of goods and transactions in relation to for example, books, newspapers,
(Umsatzsteuer; USt) is 19 percent shipping (0 percent). VAT rates are medicines, some medical instruments
(increased from 16 percent as from 1 further reduced by 30 percent if goods (5 percent), and exports of goods (0
January 2007). There are reduced rates or services are supplied to or by percent). There are two special rates
of 7 percent and 0 percent which apply taxpayers established in the under the farmer's flat rate scheme;
to, for example, foods, plants and Dodecanese Islands and other Aegean a rate of 12 percent applicable to
animals, books and newspapers, Islands (that is 13 percent, 6 percent, supplies of agricultural products and a
entrance fees to cultural sites and and 3 percent, respectively). Certain rate of 7 percent applicable to supplies
passenger transport (journeys of not supplies of goods and services are of live animals and animal products.
more than 50 km) (7 percent), the exempt from VAT, for example used Supplies of certain goods and services
supply, import, repair, and maintenance immovable property, medical, are exempt from VAT, for example sale,
of certain ships and aircraft, cross- educational and cultural services and rental and leasing of land parcels other
boarder passenger transport by air, insurance, financing, and most banking than building land, rental and sale of
financial transactions rendered to a activities provided to EU residents. real property, postal services, financial
recipient resident outside the European services, certain education activities,
Union (EU), and exports of goods 37 Guatemala human health care services, social
(0 percent). There are two special rates The standard rate of value-added tax services, and recreational and amateur
under the farmer's flat rate scheme; (impuesto al valor agregado; IVA) is sports services.
a rate of 5.5 percent (increased from 12 percent. Exports are zero-rated.
5 percent as from 1 January 2007) Exempt supplies include: certain 41 Iceland
applicable to supplies of forestry imports, certain medicines, specified The standard rate of value-added tax
products which are not the products financial services, and specified (virdisaukaskattur; VSK) is 24.5 percent.
of saw mills and a rate of 10.7 percent supplies of real property. There are reduced rates of 7 percent
(increased from 9 percent as from 1 (reduced from 14 percent as from 1
January 2007) applicable to supplies of 38 Honduras March 2007) and 0 percent. The 7
typical agricultural goods and services The standard rate of sales tax percent rates apply to, for example,
as well as to specific supplies of (impuesto sobre ventas; ISV) is 12 accommodation, books and periodicals,
sawmill products. Certain supplies of percent. An increased rate of 15 licenses to use radio and television
goods and services are exempt from percent applies to imports and national broadcasting services, and certain
VAT, for example, the services of supplies of alcoholic beverages and food intended for human consumption.
transport agencies rendered as a result tobacco products. The goods and The 0 percent rate apply to, for
of statutory command to the German services exported abroad are subject example, exports of goods and
Federal Mail, financial transactions to 0 percent. Exempt supplies include: services, international transportation,
rendered to recipient resident within basic food items for human consumption, fuel and equipment delivered for use
the EU, insurance services, supplies livestock and certain agricultural in ships and aircraft engaged in
falling under the Real Estate Acquisition goods, and machinery, pharmaceutical international traffic, sales and rentals
Law, land (limited), health and welfare, products for humans and animals, of ships and aircraft, and repairs and
and education. books, magazines, newspapers, maintenance services rendered to
and school supplies, most financial ships and aircraft. Certain supplies of
36 Greece services, educational services, the goods and services are exempt from
The standard rate of value-added tax supply of water and electricity, VAT, for example, real estate and
(foros prostithemenis axias; FPA) is 19 professional and sports services, and parking space leases, health services,
percent. There are reduced rates of 9 terrestrial transportation of passengers. social services, educational and sport
percent, 4.5 percent, and 0 percent activities, passenger transport, postal
services, financial services, and
services of travel agencies.
KPMG’s Corporate and Indirect Tax Rate Survey 2008 41

42 India auxiliary and support services, Other manufactured products (excluding


India has a federal structure with both telecommunication, cargo handling, agricultural products) which may be
federal and state-specific indirect tax. intellectual property services, used as final consumable products
Intra-State sale of goods is subject to maintenance and repair services, shall be subject to tax and levy of 3
a VAT and sale of goods occasioning certain IT services, management percent of sale price. The list of such
movement across States is subject to consultation, scientific and technical products shall be approved by the
a central sales tax (CST). consultancy, renting of immovable Council of Ministers for each year.
property service, and works contract
In addition there is another indirect tax services. In budget 2008, certain Telecommunication services including
on supply of services, service tax. additional services such as information subscription fee of stationery and
technology software services, supply of mobile telephones, local, and
Prior to introduction of state specific tangible goods for use service, etc. international call fees (6 percent of
VAT regime in April 2005 in India, the have been proposed to be made liable service fees), and assignment of
average State sales tax rate was 16 to service tax from a date to be notified mobile telephone lines (20 percent of
percent. The standard rate of VAT is in the near future. transfer cost). Electricity, natural gas,
currently 12.5 percent. There are and water consumed by subscribers
reduced rates of 4 percent, 1 percent, 43 Indonesia (except for industrial, mining and
and 0 percent which apply to, for There are two types of indirect tax in agricultural proposes) within the
example, IT products, intangible goods Indonesia: a value-added tax (pajak borders of cities (3 percent of their
(such as patents and copyrights), pertambahan Nilai; PPN) and a sales consumption value), services rendered
capital goods, chemical fertilizers, tax on luxury goods (pajak penjualan by hotels, motels, and hotel apartments
cotton, drugs and medicines, iron and atas barang mewah; PPnBM). The (2 percent), and inter-city transport
steel, industrial inputs, sports goods, standard rate of PPN is 10 percent. (5 percent).
tractors (4 percent), gold, silver, The rates of PPnBM range from 10
precious stones (for example diamonds), percent to 75 percent. The reduced 45 Ireland
articles or ornaments made of the PPN and PPnBM rates of 0 percent The standard rate of value-added tax is
aforementioned (1 percent), and apply to exports of goods. Certain 21 percent. There are reduced rates
exports of goods (zero rated). There are supplies of goods and services are of 13.5 percent, 4.8 percent, and 0
increased rates of 20 percent and exempt from PPN, for example, percent which apply to, for example,
above, applicable to petroleum unprocessed minerals, agricultural immovable goods, building services,
products (such as diesel, petrol, products, basic necessities, banking hotel and holiday accommodation, hotel
lubricants, and aviation turbine fuel), and insurance services, finance leasing, and restaurant meals, newspapers and
natural and other gases used as fuel, hotel and restaurant activities, repair and maintenance services (13.5
liquor and beer. Certain supplies of employment and manpower services, percent), supply of livestock, live
goods are exempt from VAT, for various social services, and the supply greyhounds and hire of horses (4.8
example books, periodicals and of electric power and potable water. percent), exports of goods, most food
journals, electric energy, milk, fresh and drink suitable for human
plants, flowers, vegetables and fruits, 44 Iran consumption, oral medicines, medical
meat, fish, prawn, rice, and wheat. There is no VAT or GST in Iran at present. equipment, and appliances (0 percent).
However, a bill for introducing VAT is There is also a special farmer’s flat rate
CST is charged at the rate of 3 percent under review. There is sales tax and levy addition of 5.2 percent which applies to
or alternatively at the VAT rate applicable on certain finished products and certain sales by unregistered farmers.
in the originating State. (The said rate is services: locally manufactured beverage Supplies of certain goods and services
proposed to be reduced to 2 percent and carbonated drinks (excluding soft are exempt from VAT, for example
from subject to issue of relevant drink made of dairy products, certain lettings of immovable property,
notification by the Government). concentrated fruit syrups and mineral financial and insurance services,
water (15 percent of the factory sale passenger transport, education, and
The standard rate of service tax is price)), locally produced cigarettes (15 health and welfare services.
12.36 percent. Currently, more than percent of the factory sale price), petrol
100 taxable categories of services are (20 percent of approved sale price),
subject to service tax, for example kerosene and diesel oil (10 percent of
advertising services, financial and approved sale price),and fuel oil (5
insurance services, business percent of approved sale price).
42 KPMG’s Corporate and Indirect Tax Rate Survey 2008

46 Israel telephone services. Zero-rated supplies are exempt from VAT, including leases
The standard rate of value-added tax include: exports, agricultural equipment or sales of residential buildings, leases
(mas erech musaph; Ma'am) is 15.5 and material, health supplies, and or sales of land plots, financial and
percent. There is a reduced rate of 0 medication, and goods purchased by insurance services by companies
percent which apply to, for example, or services rendered to government licensed in Kazakhstan, geological
exports of goods, supply of intangible entities. Exempt supplies include: exploration work, contributions to
property to non-residents (with medical supplies and equipment, books the charter capital of legal entities,
exceptions), supply of services to and educational supplies, energy-saving assignments of rights under subsoil
non-residents in limited circumstances, devices and miscellaneous services use contracts, sales of ownership
international cargo transport services, including construction, health, public stakes in legal entities, medical
sale of assets in limited conditions, and utilities, and financial services. and veterinary services, and financial
supply of certain services in connection leases.
with the entry or departure of aircrafts 49 Japan
or vessels into or from Israel. Supplies The standard rate of consumption tax 52 Korea, Republic of
of certain goods and services are is 5 percent. There is a reduced rate The standard rate of value-added tax is
exempt from VAT, for example of 0 percent, which applies to, for 10 percent. There is a reduced rate of 0
residential (excluding hotels) leases example, export transactions, including percent which applies to, for example,
for a period not exceeding 25 years, the transfer or lease of goods, other the exports of goods, services rendered
and sale of an approved rental building export related activities such as outside the Republic of Korea,
under the Encouragement of Capital international transportation, services international transportation by ships
Investments Law (subject to certain provided to a non-resident (except and aircraft, other goods or services
conditions), deposit of funds by a transport or storage of assets in Japan, supplied to earn foreign exchange.
dealer with a financial institution or provision of accommodation and food Supplies of certain goods and services
the grant of a loan by a dealer to a in Japan, provision of services of a are exempt from VAT, for example
financial institution. similar nature in Japan). Supplies of unprocessed foodstuffs, medical and
certain goods and services are exempt health services, certain educational
47 Italy from consumption tax, for example services and passenger transport
The standard rate of value-added tax sale and lease of land, rental of services, books, newspapers and
(imposta sul valore aggiunto; IVA) is housing, sale of securities, and similar magazines, postage stamps, and public
20 percent. There are reduced rates of instruments, monetary transactions, telecommunication services.
10 percent, 4 percent, and 0 percent medical treatment under public
which apply to, for example, certain medical insurance law, social welfare 53 Kuwait
foods, hotel accommodation, public activities, school tuition, and There is no indirect tax in Kuwait at
transport, pharmaceuticals, water (10 examination services. this time.
percent), basic foodstuffs, books and
newspapers, main residence, medical 50 Jordan 54 Latvia
equipment, and aids for handicapped The sales tax rate is ranging 4 percent The standard rate of value-added tax
(4 percent), exports of goods and to 16 percent of the value of the goods. (pievienotās vērtības nodoklis; PVN)
intra-Community supplies, international The rate is fixed at 16 percent in case is 18 percent. There are reduced rates
transport services, and services directly of services. Sales tax is payable when of 5 percent and 0 percent which
connected with exports or imports. the sale is accomplished or the service apply to, for example, pharmaceuticals,
Supplies of certain goods and services is rendered. In the case of imported accommodation in hotels, books and
are exempt from VAT, for example goods, the sales tax is payable at the newspapers, water and heating,
financial and insurance services, customs clearance stage, before the passenger transport and entrance fees
lotteries, betting, and other games of release of such goods. to sport events (5 percent), supply,
chance, postal services, education import, repair and maintenance of
services, and welfare. 51 Kazakhstan certain ships and aircraft, passenger
The standard value-added tax rate is transport by air or sea, financial
48 Jamaica 13 percent (down from 14 percent in transactions outside the EU and
The standard rate of value-added tax 2007). A 0 percent VAT rate applies to exports (0 percent). Supplies of certain
(general consumption tax) is 16.5 exports of goods and international goods and services are exempt from
percent. The rate of 8.25 percent transportation of passengers, baggage, VAT, for example, land and used
applies to certain tourism services. and goods into or out of Kazakhstan. immovable property, financial and
The rate of 20 percent applies to Certain supplies of goods and services insurance services, education, and
health and welfare services.
KPMG’s Corporate and Indirect Tax Rate Survey 2008 43

55 Libya passenger transport services (0 percent). services, credit, banking, and other
There is no value-added tax applicable Supplies of certain goods and services related services, cultural, sporting and
in Libya. are exempt from VAT, for example religious services, postal services,
banking and financial services, education, and health and welfare.
56 Lithuania management of investments funds,
The standard rate of value-added tax SICAR, some pension funds and 61 Mauritius
(pridetines vertes mokestis; PVM) is 18 securitization vehicles, insurance and The standard rate of value-added tax is
percent. There are reduced rates of 9 reinsurance operations, supply and 15 percent. There is a reduced rate of 0
percent, 5 percent, and 0 percent letting of immovable property, postal percent which applies to, for example,
which apply to, for example, supplies of services, education, and certain exports of goods other than exempt
services relating to construction and medical supplies. goods, sugar, wheat flour, books,
reconstruction of residential houses booklets, brochures of specific customs
financed by state or municipality (9 58 Macau headings, the supply of electricity,
percent), passenger transport services, There is no value-added tax or good water, international transport of
books, newspapers and periodicals, and services tax in Macau. passengers and goods, supplies of
pharmaceuticals and certain medical services to non-residents. Supplies of
products, accommodation at hotels, 59 Malaysia certain goods and services are exempt
organic food products, chilled meat, There is no VAT or GST in Malaysia from VAT, for example rice, wheat,
live, fresh, and frozen fish (5 percent), at present. In its place, Malaysia has bread, butter, milk and cream, medical,
exports of goods, intra-Community sales tax and services tax. Sales hospital and dental services, certain
supplies and supply, modification, tax is imposed on taxable goods pharmaceutical products, educational
modernization, hiring of sea-going manufactured locally/imported, unless and training services, postal services,
ships and aircraft (0 percent). There is exempted. Service tax is charged on cargo handling, and certain residential
a special rate of 6 percent under the specific type of services (taxable buildings.
farmer's flat rate scheme. Supplies of service) provided by taxable persons.
certain goods and services are exempt The standard rate of sales tax and 62 Mexico
from VAT, for example health and service tax is 10 percent and 5 percent, The standard rate of value-added tax
welfare, social, educational (including respectively. A reduced sales tax rate (impuesto al valor agregado; IVA) is 15
professional education), culture, sports, of 5 percent is applicable to certain percent. The reduced rate of 10 percent
postal, financial, insurance services, items such as foodstuffs, alcoholic applies to the frontier region (defined
sale of real estate (older than 24 beverages, and tobacco products. as 20 kilometers parallel to the
months), and leasing of real estate. In addition certain services provided northern and southern international
within a group and services provided divisions of Mexico). Zero-rated
57 Luxembourg offshore are exempted subject supplies include: exports, non-
The standard rate of value-added tax to conditions. industrialized animals and vegetables
(taxe sur la valeur ajoutée; TVA) is 15 (except rubber), patent medicines and
percent. There are reduced rates of 60 Malta products intended for food, except
12 percent, 6 percent, 3 percent, and 0 The standard rate of value-added tax beverages other than milk, syrups or
percent which apply to, for example, (taxxa fuq il-valur miżjud) is 18 percent. concentrates for preparation of
certain wines, fuel (other than gas There are reduced rates of 5 percent beverages, ixtle, palm leaves and type
and electricity), safekeeping and and 0 percent which apply to, for of agave, tractors and agricultural
management of securities, management example, letting of or provision of implements, reinsurance, and supplies
of credit by persons not granting it accommodation in premises (in certain of water for domestic use. Exempt
(12 percent), electricity, gas (6 percent), conditions), the supply of electricity, supplies include: sales of land, books,
food (except drinks containing alcohol), medical accessories, printed matter, newspapers and magazines under
and animal feed, books, newspapers items for the exclusive use of the certain conditions, commissions on
and periodicals, passenger transport, disabled (5 percent), exports of goods, mortgages and retirement funds, public
hotel accommodation, certain sporting international transport and ancillary transport of persons by land (except by
and cultural services, and certain services, supplies of certain qualifying railway), international maritime
pharmaceutical products (3 percent), vessels and aircraft, the chartering transport, insurance and reinsurance,
exports and intra-Community supplies thereof and certain services provided certain interests, derived financial
of goods, supplies of goods and thereto, food, and pharmaceutical operations, professional medical
services used by airlines operating for goods (0 percent). Supplies of certain services, authors royalties, leasing of
reward chiefly on international routes, goods and services are exempt from residential property, books,
and services supplied for the needs of VAT, for example immovable property newspapers, and magazines.
seagoing vessels and international (with some exceptions), insurance
44 KPMG’s Corporate and Indirect Tax Rate Survey 2008

63 Montenegro and 0 percent which apply to, for of such services, the right to attend
The standard rate of value-added tax example, food, drink (excluding cinemas (8 percent), exports of goods,
(porez na dodatu vrijednost; PDV) is alcoholic beverages), medicines, books, supplies relating to ships and aircrafts,
17 percent. There are reduced rates daily newspapers and magazines, books, magazines, newspapers, and
of 7 percent and 0 percent which passenger transport, some labor construction services relating to public
apply to, for example, basic foodstuffs, intensive services, admission to roads (0 percent). Supplies of certain
medicines not listed on the Health Fund cultural, entertainment and sports goods and services are exempt from
list, textbooks and teaching aids, books events (6 percent), exports of goods, VAT, for example financial services,
and serial publications, daily and intra-Community supplies, and services real estate (with some major exceptions),
periodic press (with some exceptions), regarding goods not yet imported and education, health services, and
hotel and other accommodation, public supplies of sea-going vessels or social services.
transportation of passengers and their aircrafts (0 percent). Supplies of certain
personal baggage (7 percent), exports goods and services are exempt from 69 Oman
of goods, transport and other services VAT, for example immovable property There is no value-added tax or goods
in relation to export, goods and services (with some major exceptions), financial and services tax in Oman.
used in international air and maritime and insurance services, education, and
traffic, and medicines and medical health and welfare. 70 Pakistan
devices listed on Health Insurance Fund Indirect taxes in Pakistan include
list (0 percent). Supplies of certain 66 Netherlands Antillies a sales tax and a federal excise
goods and services are exempt from The standard rate of turnover tax is duty (FED).
VAT, for example financial and banking 5 percent in Curaçao and Bonaire
services, insurance and reinsurance (Omzetbelasting; OB) and 3 percent in The standard rate of sales tax is 15
services, the supply of immovable St. Maarten, St. Eustatius, and Saba percent; however certain goods are
property (except the first transfer), (Belasting op Bedrijfsomzetten; BBO). subject to sales tax at higher rates of
health and social security services, Exempt supplies include medical 17.5 percent and 20 percent. There is
cultural, sport, and religious services. services and certain fuels used for a reduced rate of 0 percent, which
business purposes. applies to, for example, all exports of
64 Mozambique goods, local supplies of raw materials,
The standard rate of value-added tax 67 New Zealand and supplies of specified export
(imposto sobre o valor acrescentado; The standard rate of goods and sectors, import, and local supplies of
IVA) is 17 percent. There is a reduced services tax (GST) is 12.5 percent. capital goods. Certain supplies of
rate of 0 percent which applies to, for The rate is reduced to 0 percent in goods and services are exempt from
example, exports of goods, services certain situations such as the export sales tax, for example agricultural
linked to exports of goods, international of goods and services, the supply products, unprocessed food items,
passenger transportation, and some of a business as a going concern, animals and their meat, fisheries,
basic foodstuffs. Supplies of certain and the supply of financial services diary products, construction materials,
goods and services are exempt from under the business-to-business regime. computer software, ships, navigation
VAT, for example medical and health Supplies of certain goods and services equipments, and the sale to hospitals
services, goods and services linked to are exempt from GST unless the supplies and educational non-profit organizations.
welfare and social security, education can be zero-rated. Exempt supplies FED applies to the import and
(with some exceptions), banking and include the supply of financial services, manufacturing of specified goods and
financial transactions, insurance and the supply by non-profit bodies of provision of specified services at
reinsurance transactions, leasing of donated goods and services, the different rates. The rate of FED on
immovable property for residence supply of residential accommodation, specified services ranges from 5 percent
or commercial and industry in rural and the supply of fine metals. to 15 percent. Special excise duty (SED)
zones, goods and services related to at uniform rate of 1 percent is applicable
agricultural, forestry, livestock and 68 Norway on import of goods and locally
fishing activities, and importation of The standard rate of value-added tax manufactured goods, except the
certain goods approved for mining (merverdiavgift; MVA) is 25 percent. goods specifically exempt from SED.
and industrial free-zone operations. There are reduced rates of 14 percent
(increased from 13 percent as from 71 Palestine
65 Netherlands 1 January 2007), 8 percent, and 0 The value-added tax rate is fixed at
The standard rate of value-added tax percent which apply to, for example, 14.5 percent.
(omzetbelasting; BTW) is 19 percent. food (14 percent), hotel accommodation,
There are reduced rates of 6 percent passenger transportation, communication
KPMG’s Corporate and Indirect Tax Rate Survey 2008 45

72 Panama items (cesta básica), loans and financial such as, educational services, services
The standard rate of value-added tax interests, commissions and surcharges, rendered pursuant to an employer-
(impuesto sobre la transferencia and supplies of pharmaceutical employee relationship, services
de bienes corporales muebles y la products. Exports are zero-rated. rendered by regional or area
prestación de servicios; ITBMS) is Exempt supplies include: certain headquarters established in the
5 percent. The increased rate of 10 diplomatic and investment imports, Philippines. There is a withholding
percent applies to the import, wholesale, farm products in their natural state, VAT at a rate of 5 percent applicable
and retail sale of alcoholic beverages foreign currencies, governmental or to payments made to contractors by
and the 15 percent increased rate private securities including shares the government or any of its political
applies to the import, wholesale, and of stock, goods received through subdivisions or instrumentalities.
retail of all kinds of cigarettes and inheritance, transfer of credits, books,
cigars. Zero-rate supplies include: magazines, and others of scientific, 77 Poland
exports and re-exports of goods and educational, and general interest, The standard rate of value-added tax
the sales of pharmaceutical and food interest on public or private shares (podatek od towarow i uslug; PTU) is
products when certain conditions are and securities, deposits in financial 22 percent. There are also reduced
met (that is, the taxable person is entities authorized by the Central Bank rates of 7 percent, 3 percent, and 0
engaged exclusively in such activities of Paraguay, services of cooperatives, percent which apply to, for example,
and its total output is sold within the home savings, and loans under the foods, medicines, books, and
Panamanian territory). Exempt supplies Sistema de Ahorro y Préstamo para newspapers (7 percent), agricultural
include (among others): the sales of la Vivienda. products, products of fishery, and
food and pharmaceutical products, animal feed (3 percent), supply, import,
sales of oil, lubricants, fuel, and similar 75 Peru repair, and maintenance of certain ships
products, newspapers, magazines, The standard rate of value-added tax and aircraft, international transport, and
educative magnetic media, notebooks, (impuesto general a las ventas; IGV) is intra-Community supplies of goods and
pencils, and other items for school 17 percent. The municipal promotion exports (0 percent). Certain supplies of
purposes, medicines and pharmaceutical tax (impuesto de promoción municipal; goods and services are exempt from
products, and payments (including IPM) of 2 percent is also added to the VAT, for example, supply of second-
interest paid and received) arising value of goods or services used to hand goods, land other than building
from financial services and financial determine the IGV, which results in a 19 land, supply of housing structures, and
leasing contracts. percent sales tax overall. Zero-rated services of management of investment
supplies include: the export of goods, funds.
73 Papua New Guinea the export of services detailed in the
The standard rate of goods and services sole arranged text of sales tax and the 78 Portugal
tax (GST) is 10 percent. There is a supplies in the Amazon region perform The standard rate of value-added tax
reduced rate of 0 percent which applies by companies located in the Amazon (imposto sobre o valor acrescentado;
to, for example, exports of goods and region. Exempt supplies include: fresh IVA.) is 21 percent for Portuguese
services, medical supplies, supplies of fish, vegetables, seeds, fruit, mainland and 15 percent for Madeira
goods and services to prescribed educational and cultural books, credit and Azores islands. There are reduced
foreign aid provider, supplies of goods services granted by banks, financial and rates of 12 percent (8 percent for
and services to a non-profit body. credit institutions, public transportation islands), 5 percent (4 percent islands),
Supplies of certain goods and services services within the country, cargo and 0 percent which apply to, for
are exempt from GST, for example transportation, cultural performances, example, restaurant services, fruit and
financial, medical, and educational and life insurance. vegetables (12 percent (8 percent
services, public road transport, postage for islands)), water supply, books
stamps and the retail supply of 76 Philippines and newspapers (5 percent (4 percent
newspapers. The standard rate of value-added tax is for islands)), exports, transport of
12 percent (increased from 10 percent goods and people between the
74 Paraguay as of 1 February 2006). A reduced rate mainland and the islands (0 percent).
The standard rate of value-added tax of 0 percent is imposed on specified Supplies of certain goods and services
(impuesto al valor agregado; IVA) is 10 transactions: such as, export sales or are exempt from VAT, for example
percent. The 5 percent rate applies to services rendered to persons/entities immovable property, financial, and
transfers of real state, transfers of the exempt from VAT. Certain specified insurance services.
right to use goods, certain basic food transactions are exempt from VAT
46 KPMG’s Corporate and Indirect Tax Rate Survey 2008

79 Qatar 83 Serbia supply, rental, repair, and maintenance


Qatar applies a customs duty rate of 5 The standard rate of value-added tax of seacraft and aircraft (0 percent).
percent on most imports to Qatar. (porez na dodatu vrednost; PDV) is 18 Supplies of certain goods and services
percent. There are reduced rates of 8 are exempt from VAT, for example
80 Romania percent and 0 percent which apply to, postal services, financial and insurance
The standard rate of value-added tax for example, basic foodstuffs, medicines, services, education and training,
(tax˘a pe valoarea ad˘augat˘a; TVA) is 19 textbooks and daily newspapers, hotel health and welfare, cultural services,
percent. A reduced rate of 9 percent services, public utility services, gas, and supply and rental of immovable
applies, for example, to accommodation, and first transfer of ownership on property (under certain conditions).
books, newspapers (except for residential buildings (8 percent),
newspapers and magazines for exports of goods, transport and other 86 Slovenia
advertising purposes), medicine, services in relation to export, supply, The standard rate of value-added tax
museum fees, and cultural and sporting repair, maintenance, charter and (davek na dodano vrednost; DDV) is
services. Intra-Community supplies and lease of aircraft and river vessels 20 percent. There are reduced rates of
exports of goods are exempt with predominantly operating in international 8.5 percent and 0 percent which apply
credit (zero-rated). Supplies of certain traffic, and international air and river to, for example, food products, water
goods and services are exempt without transport of passengers under a supplies, medicines, medical
credit from VAT, for example rental reciprocity rule (0 percent). Supplies of equipment, passenger transport and
and/or sale of immovable property certain goods and services are exempt their personal luggage, books and
(with some major exceptions), financial from VAT, for example financial and newspapers, apartments intended for
and insurance services, education, banking services, insurance and permanent residence, use of sports
and health and welfare. reinsurance services, supplies and facilities (8.5 percent), exports of goods,
renting of land, transfer of shares and certain services connected to export or
81 Russia securities, transfer of immovable import of goods and the purchase,
The standard rate of value-added tax property (except first transfer), medical repair, maintenance, lease, and rental of
(nalog na dabavlennuyu stoimosty; and welfare services, education and sea-going vessels and aircraft (0
NDC) is 18 percent. There are reduced professional retraining, cultural, percent). Supplies of certain goods and
rates of 10 percent and 0 percent scientific, sport, and religious services. services are exempt from VAT, for
which apply to, for example, food example financial and insurance
products, specific goods intended 84 Singapore services, supply of immovable
for children, books and periodicals, The standard rate of goods and properties (with some exceptions),
pharmaceutical and other medical services tax (GST) is 7 percent as from leasing and sub-letting of immovable
products (10 percent), exports of goods 1 July 2007. There is a reduced rate of properties, social security services, and
and related services, services related 0 percent which generally applies to education and cultural services.
to transit of goods through Russia, exports of goods and international
international passenger transportation, services. Supplies of certain financial 87 South Africa
and fuel for ships and aircraft (0 services and sale or lease of residential The standard rate of value-added tax is
percent). Supplies of certain goods properties are exempt from GST. 14 percent. There is a reduced rate of 0
and services are exempt from VAT, for percent which applies to, for example,
example lease of premises to foreign 85 Slovak Republic exports of goods and services, certain
companies accredited in Russia, The standard rate of value-added tax fuels and oils, foodstuffs (for example
medical services and certain medical (daň z přidané hodnoty; DPH) is 19 fresh fruit and vegetables), supply of
products, educational services, public percent. There are reduced rates of 10 an enterprise as a going concern,
transportation, the sale of securities, percent and 0 percent which apply to international transport services, and
banking and insurance services, the medicaments, certain other medical arranging of certain services for non-
rent of apartments, and the sale of and pharmaceutical products, contact residents. Supplies of certain goods
apartments and residential property. and spectacle lenses, certain hygienic and services are exempt from VAT, for
products, books and other printed example financial services, residential
82 Saudi Arabia products where advertisement does accommodation, certain transport
There is no value added tax or goods not exceed 50 percent of the content services (for example bus, train and taxi
and services tax in Saudi Arabia. of the product (10 percent), international fares), education, and training.
transportation, exports of goods,
KPMG’s Corporate and Indirect Tax Rate Survey 2008 47

88 Spain 91 Sweden The standard rate of value-added tax is


The standard rate of value-added tax The standard rate of value-added tax 5 percent. There is a reduced rate of 0
(impuesto sobre el valor añadido; IVA) (mervärdesskatt; MOMS) is 25 percent. percent which applies to, for example,
is 16 percent. There are reduced rates There are reduced rates of 12 percent, the export of goods, services rendered
of 7 percent, 4 percent, and zero-rated 6 percent, and 0 percent which apply which relate to the export of goods,
supplies which apply to, for example, to, for example, food and hotel vessels and aircraft used for
delivery of plants and animals, sport accommodation (12 percent), domestic international transportation, goods,
events, catering and hotel services, passenger transportation including ski and repair services supplied to ships
passenger transport (7 percent), lifts, books and newspapers, certain or aircraft used in international
books and newspapers, some basic sporting and cultural events (6 percent), transactions or ocean-going fishing
food products, medicines (4 percent), exports of goods, fuel to aircrafts, ships boats. Supplies of certain goods and
exports of goods and the supply, and aircrafts for commercial transport, services are exempt from VAT, for
import, repair, maintenance of ships and services related to them and example, the sale of land, supplies
and aircraft engaged in international pharmaceuticals (0 percent). Supplies of medical services, medicine,
navigation (zero-rated). Certain supplies of certain goods and services are education services, newspapers and
of goods and services are exempt exempt from VAT, for example health magazines, insurance policies, financial
from VAT, for example insurance and welfare, education, financial, and derivative products, corporate bonds,
and financial services, certain real insurance services, and the sale and currency call loans, and foreign
estate transfers, education, and health leasing of real property. exchange call loans.
and welfare.
92 Switzerland GBRT applies mainly to financial
89 Sri Lanka The standard rate of value-added tax institutions in banking, insurance,
The standard rate of value-added tax is (Mehrwertsteuer; MWST / taxe sur trust and investment, securities,
15 percent. There are reduced rates of la valeur ajoutée; TVA / imposta sul futures, and short-term commercial
5 percent and 0 percent which apply to, valore aggiunto; IVA) is 7.6 percent. papers industries. The GBRT rate is
for example, essential food items There are reduced rates of 3.6 percent, 2 percent applicable in respect of
including dhal, dry fish, chilies, 2.4 percent, and 0 percent which apply revenues generated from core
importation of potatoes, importation to, for example, hotel accommodation business. The GBRT rate for revenue
of sugar, importation of onions, and (3.6 percent), water in conduits, generated from non-core business is
other items such as hi-tech medical medication, books, newspaper, 5 percent.
equipment, and jewelry (5 percent), food and non-alcoholic beverages
exports of goods, and international (2.4 percent), exports of goods and 94 Thailand
transportation of goods or passengers renting or chartering-out of railway The standard rate of value-added tax
(0 percent). There is also a luxury rate locomotives and wagons and aircraft, is 7 percent (increased to 10 percent
of 20 percent which applies to certain if primarily used in foreign territory as from 1 October 2010). There is a
luxury items such as liquor, air (0 percent). Supplies of certain goods reduced rate of 0 percent which applies
conditioners, refrigerators, washing and services are exempt from VAT, to, for example, exports of goods or
machines, TV sets, cameras, and motor for example official postal service, services. Supplies of certain goods and
vehicles (with some exceptions). health and welfare, education, services are exempt from VAT, for
Supplies of certain goods and services insurance, finance, and supply of example domestic transportation,
are exempt from VAT, for example certain immovable property. health care, education, leasing of
pharmaceutical products and drugs, immovable property, the sale of
specified financial services, and 93 Taiwan agricultural products, newspapers,
educational services. Under the Taiwan value added and magazines and textbooks, services
non-value-added tax law, there are rendered by libraries, museums,
90 Sudan two systems, one being a value-added and zoos.
The standard rate of value-added tax is tax (VAT) system and the other being
10 percent. The rate has been changed the gross business receipts tax
as from July 2007 to be 12 percent (GBRT) system.
instead of 10 percent and 15 percent
as from 1 January 2008.
48 KPMG’s Corporate and Indirect Tax Rate Survey 2008

95 Tunisia cultural, educational, and health most states, and some local
The standard rate of value-added tax is services rendered by the government governments impose transactional
18 percent. There are reduced rates of and other related organizations. based taxes commonly referred to
12 percent and 6 percent which apply as sales and use taxes. Forty-five
to, for example, the transport of goods 97 Ukraine states and the District of Columbia
excluding agricultural and fish products The standard rate of value-added tax impose a state level tax on the sale
and goods used for their production, (podatok na dodanu vartist; PDV) is 20 or use of goods and some services.
services rendered to hotels, services percent. There is a reduced rate of 0 Local governments in thirty-four states
rendered by lawyers, notaries, legal percent which applies to, for example, are authorized to impose local sales
and tax counsels and other experts, exports of goods and related services, taxes. There are about 7,600
catering and IT services (12 percent), supplies for airplanes and ships used in jurisdictions across the country that
activities carried out by doctors, nurses, international traffic. Supplies of certain has chosen to impose a local sales tax.
masseurs, veterinarians and analytical goods and services are exempt from Which goods and services are subject
laboratories, the transport of persons VAT, for example certain financial to tax, along with the applicable tax
and agricultural products, the import, services, insurance services, sale of rates, vary according to the jurisdiction.
production, and sale of fertilizers, business as a going concern, royalties, All states and some localities
supplies of livestock concentrate food, subscriptions for and delivery of local with sales and use tax regimes
Soya beans, fish meal, products and newspapers, magazines and books, possess broad powers to determine
articles for the pharmaceutical industry prescribed pharmaceuticals, certain whether goods and services are fully
(6 percent). Supplies of certain goods transfers of immovable residential taxable, taxable at a special rate,
and services are exempt from VAT, for property and land, local passenger or are fully exempt.
example school education, imports, transportation (except for taxis),
the production and sale of aircrafts for education, and prescribed health 101 Uruguay
public transport, services rendered by and welfare. The standard rate of value-added tax
maritime transport and ship agencies, (impuesto al valor agregado; IVA) is
aircraft transport services, leasing of 98 United Arab Emirates 22 percent as from 1 July 2007. The
vessels and aircrafts for international There is no value-added tax or reduced rate of 10 percent (reduced
maritime and air transport, the goods and services tax in the from 14 as from 1 July 2007) applies
production and sale of flower, bread, United Arab Emirates. to specific consumer goods, lodging
pasta (normal quality), olive oil, Soya, services, and medicines. Exports are
Soya oil, and the production, refining, 99 United Kingdom zero-rated. Exempt supplies include
and conditioning of vegetable oil. The standard rate of value-added tax certain agricultural goods and
is 17.5 percent. There are reduced rates machinery, specified fuels, commissions,
96 Turkey of 5 percent and 0 percent which apply and interests on specific financial
The standard rate of value-added tax to, for example, children’s car seats, transactions and transport services.
(katma değer verisi; KDV) is 18 percent. certain contraceptive products, domestic
There are reduced rates of fuel and power, and renovations/ 102 Venezuela
8 percent, 1 percent, and 0 percent conversions of residential properties The standard rate of value-added tax
which apply to, for example, basic food (5 percent), food and animal feed, (impuesto al valor agregado; IVA) is 9
products, textile products (8 percent), books and newspapers, prescription percent (the rate was reduced from 14
overnight services/accommodation drugs and medicines, children’s clothes, percent to 11 percent as from 1 March
performed in the hotels, motels, passenger transport, and exports of 2007 and then further to 9 percent as
holiday villages, and similar goods (0 percent). Supplies of certain from 1 July 2007). The increased rate
accommodation facilities (8 percent), goods and services are exempt of 19 percent (which results from
agricultural products, and exports of from VAT, for example financial and adding 10 percent to the standard rate)
goods and services and international insurance services, education services applies to luxury goods. Certain goods
transportation (0 percent). Note that supplied by eligible bodies, certain and services (such as red meat, animal
Turkish VAT Law does not include cultural services, betting, gaming oil, or local plain tickets) have
directly a rate of 0 percent, but only and lotteries, subscriptions, and health temporary rate of 8 percent. Exports
an exemption with credit. Supplies of and welfare. are zero-rated. Exempt supplies include
certain goods and services are exempt basic food items, medicine, fertilizer,
from VAT, for example banking and 100 United States fuel, newspapers, books and
insurance transactions, services While the United States does not magazines, education, intangible
rendered in Free Trade Zones, social, impose a national value-added tax, assets, loans, banks, and financial
KPMG’s Corporate and Indirect Tax Rate Survey 2008 49

institutions operations except by kerosene, goods under an investment


leasing, insurance services, payroll, certificate, statutory fees, food, and
operations performed in specified duty agriculture.
free and tourist areas, national
electricity, water, and natural gas.

103 Vietnam
The standard rate of value-added tax
(gia tri gia tang; GTGT) is 10 percent.
There are reduced rates of 5 percent
and 0 percent which apply to, for
example, medical equipment and
instruments, printing of certain books,
fresh foodstuffs, scientific and
technical services, base chemicals,
manufacturing equipment and
machinery, processed metals,
and most transportation services
(5 percent), the exports of goods
and services (0 percent) – please note
that export services are subject to
a consumption in Vietnam test and
strict requirements. Supplies of certain
goods and services are exempt from
VAT, for example equipment, machinery
and means of transportation used
exclusively in technological chains,
construction supplies, transfer of land
use rights, credit services, investment
funds and securities trading activities,
certain insurance services, health
care services, computer software,
printing, publishing and distribution
of newspapers, magazines, and
certain books.

104 Zambia
The standard rate of value-added tax
was reduced from 17.5 percent to
16 percent effective 1 April 2008.
There is reduced rate of 0 percent
which applies to exports of goods,
supplies to privileged persons, building
supplies to charitable organizations,
hotel accommodation in Livingstone
district medical supplies etc. Supplies
of certain goods and services are
exempt from VAT, for example, water
supply services, health services,
educational services, books and
newspapers, transport services,
conveyance of real property, financial
services, relief at importation, domestic
Notes
© 2008 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.

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Publication name: KPMG’s Corporate and Indirect
Tax Rate Survey 2008
Publication number: RRD-96142
Publication date: August 2008
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