5: General business tax issues

Chart 5.1 Trend in corporate tax rates in selected economies

Source: Organisation for Economic Co-operation and Development (OECD) 2014, Tax DatabaseTaxation of Corporate and Capital Income, OECD, Paris, viewed 5 December 2014; KPMG 2014, Corporate tax rates table, viewed 5 December 2014: and KPMG 2007, Hong Kong Tax Competiveness Series: Corporate Tax Rates, viewed 5 December 2014; KPMG 2006, KPMG’s Corporate Tax Rate Survey, An international analysis of corporate tax rates from 1993 to 2006, viewed on 21 January 2015.

This chart shows the trend in corporate tax rates in Australia, Canada, Singapore, the United Kingdom, the United States of America, China and the OECD, from 2000-2014. It shows that the corporate tax rate in Australia and the United States has remained the same since 2001, while the corporate tax rate in the United Kingdom, Canada, Singapore, China and the OECD has fallen over this period.

Trend in corporate tax rates in selected economies
OECD countries corporate tax rate (per cent)
Country 2000 2001 2002 2003 2004 2005 2006
Australia 34 30 30 30 30 30 30
Singapore 26 26 25 22 22 20 20
Canada 42 40 38 36 34 34 34
China 33 33 33 33 33 33 33
United Kingdom 30 30 30 30 30 30 30
OECD - average 33 32 31 30 29 28 28
United States 39 39 39 39 39 39 39
Trend in corporate tax rates in selected economies
OECD countries corporate tax rate (per cent)
(continued)
Country 2007 2008 2009 2010 2011 2012 2013 2014
Australia 30 30 30 30 30 30 30 30
Singapore 20 18 18 17 17 17 17 17
Canada 34 31 31 29 28 26 26 26
China 33 25 25 25 25 25 25 25
United Kingdom 30 28 28 28 26 24 23 21
OECD - average 27 26 26 26 25 25 25 25
United States 39 39 39 39 39 39 39 39

Chart 5.2 Corporate tax rates, selected trading partners, 2014

Note: Corporate tax rates in this chart are estimates as the effective tax rate can vary depending on the specific tax rules applied in each jurisdiction. Chart 5.2 uses a different data source to Chart 5.1 which may result in slight differences in the estimates. For example, the United States’ corporate income tax rate is approximately 40 per cent. The estimate of this rate can vary depending on how corporate income taxes applied at the sub-central level (by state and local governments) are measured.

Note: The Indian Government announced in their 2015-16 budget that they would introduce a company tax cut from a base rate of 30 to 25 percent over four years, coupled with some reductions in tax concessions. The rate of 33.99% shown above includes various surcharges over the base rate.

Source: KPMG 2014, Corporate tax rates table, viewed 10 December 2014.

This chart compares the corporate tax rate in Australia in 2014 with selected trading partners, including the world’s 10 largest economies. It shows that Australia has a higher corporate tax rate in 2014 than the majority of these countries.

Corporate tax rates, selected trading partners, 2014 (per cent)
Largest 10 countries
Russia 20
United Kingdom 21
China 25
Germany 30
Italy 31
France 33
India 34
Brazil 34
Japan 36
United States 40
Average 30
Corporate tax rates, selected trading partners, 2014 (per cent)
Other countries
Ireland 13
Hong Kong 17
Singapore 17
Switzerland 18
Thailand 20
Chile 20
Sweden 22
Korea 24
Indonesia 25
Malaysia 25
Netherlands 25
Canada 27
Norway 27
New Zealand 28
South Africa 28
Australia 30
Average 23

Chart 5.3 Corporate tax revenue

Source: OECD 2014, Revenue Statistics 2014, OECD, Paris.

This chart shows corporate tax revenue as a percentage of GDP in Australia and the OECD, over the period 1981 to 2012. It shows that Australia has raised significantly more corporate tax revenue as a percentage of GDP than the OECD average since the late 1980s.

Corporate tax revenue as a percentage of GDP
Year Australia OECD Average
1981 3.0 2.4
1982 2.7 2.4
1983 2.3 2.3
1984 2.6 2.5
1985 2.6 2.6
1986 2.6 2.6
1987 2.9 2.6
1988 3.0 2.6
1989 3.6 2.6
1990 4.0 2.6
1991 3.8 2.7
1992 3.8 2.4
1993 3.4 2.5
1994 3.9 2.5
1995 4.2 2.7
1996 4.3 2.8
1997 4.2 3.0
1998 4.3 3.0
1999 4.6 3.1
2000 6.1 3.4
2001 4.3 3.2
2002 4.9 3.1
2003 5.0 3.1
2004 5.5 3.2
2005 5.8 3.5
2006 6.4 3.7
2007 6.8 3.7
2008 5.8 3.4
2009 4.8 2.7
2010 4.7 2.8
2011 5.2 2.9
2012 5.2 2.9

Chart 5.4 Corporate tax revenue as a percentage of total tax revenue

Source: OECD 2014, Revenue Statistics 2014, OECD, Paris.

This chart shows corporate tax revenue as a percentage of total tax revenue in Australia and the OECD, over the period 1983 to 2012. It shows that Australia raises more corporate tax revenue as a percentage of total tax revenue than the OECD average over this period.

Corporate tax revenue as a percentage of total tax revenue
  Corporate tax rate (per cent) Corporate tax revenue (per cent of total tax) OECD average corporate tax revenue (per cent of total tax)
1983 46 9 7
1984 46 9 8
1985 46 9 8
1986 49 9 8
1987 49 10 8
1988 39 11 8
1989 39 13 8
1990 39 14 8
1991 39 14 8
1992 39 14 7
1993 33 13 7
1994 33 14 8
1995 36 15 8
1996 36 15 8
1997 36 15 9
1998 36 15 9
1999 36 16 9
2000 34 20 10
2001 30 15 9
2002 30 17 9
2003 30 17 9
2004 30 18 9
2005 30 19 10
2006 30 22 11
2007 30 23 11
2008 30 22 10
2009 30 18 8
2010 30 18 9
2011 30 20 9
2012 30 19 9

Chart 5.5 Resident company income tax by company size, 2011-12

Note: Total income is used as a measure of company size. ‘Other’ includes companies classified as a cooperative, registered organisation, non-profit, strata title, pooled development fund, limited partnership, corporate unit trust or a public trading unit trust.

Source: ATO 2014, Taxation Statistics 2011-12, ATO, Canberra.

This chart illustrates the proportion of company income tax collected by company size. This pie chart shows that companies in the highest income bracket (earning $250 million or more) pay the most company income tax. Companies earning $250 million or more (of which there are 960 companies) pay 58.7 per cent of total company income tax.

Resident company income tax by company size, 2011-12
Category Resident company net tax ($) % of resident and non resident company net tax
Less than $2m
675,235 companies
10.8% of tax
6,951,197,795 10.8
$2m to $10m
53,070 companies
9.8% of tax
6,280,878,957 9.8
$10m to $100m
14,150 companies
11.7% of tax
7,494,520,715 11.7
$100m to $250 m
1,130 companies
4.4% of tax
2,825,716,660 4.4
$250m or more
960 companies
58.7% of tax
37,632,331,946 58.7
Other
71,135 companies
3.4% of tax
2,212,896,059 3.4
Total company net tax (resident and non resident companies) 64,151,821,806 98.8

Chart 5.6 Overall taxation (percentage) of resident individuals who receive dividends from domestic corporations in OECD countries, 2014

Note: Overall taxation comprises corporate and personal taxation of dividends. Assumes that the dividend is paid by a domestic company to a resident individual on the highest marginal rate. These rates do not include the Temporary Budget Repair Levy of 2 per cent or the 0.5 percentage point increase in the Medicare Levy Surcharge which took effect on 1 July 2014.

Source: OECD 2014, Tax Database, Corporate and capital income taxes, OECD, Paris, viewed 9 December 2014.

This chart compares the total tax (combined personal and corporate tax) applying to company profits distributed as dividends in OECD countries in 2014. It assumes that the dividend is paid by a domestic company to a resident individual on the highest personal marginal tax rate. The chart shows that the total level of tax is similar across many countries, and Australia is in the middle of the range.

Overall taxation (percentage) of resident individuals who receive dividends from domestic corporations in OECD countries, 2014
Country Tax rate of dividends (per cent)
Estonia 21
Slovak Republic 22
Czech Republic 31
Hungary 32
New Zealand 33
Greece 33
Turkey 34
Poland 34
Iceland 36
Switzerland 37
Slovenia 38
Chile 40
Finland 42
Mexico 42
Italy 42
Luxembourg 43
Netherlands 44
Austria 44
United Kingdom 45
Sweden 45
Australia 46
Norway 47
Israel 49
Germany 49
Spain 49
Japan 50
Belgium 50
Portugal 51
Korea 51
Canada 51
Ireland 55
Denmark 56
United States 58
France 64