CBO examines corporate tax rates—the statutory rates, as well as average and effective marginal rates—and the factors that affect them for the United States and other G20 member countries in 2012.
How Do Average Corporate Tax Rates Differ by the Country of Incorporation?
A U.S.-owned foreign company is one that is incorporated outside the United States and has more than half of its shares (a controlling interest) owned by a single U.S. taxpayer. About 49,000 U.S.-owned companies were incorporated in G20 countries in 2012. CBO estimates that those companies faced average corporate tax rates in 2012 that were nearly always lower than the top statutory corporate tax rate in the country of incorporation. Two exceptions were Argentina and Indonesia, which had the G20 countries’ highest average corporate tax rates for U.S.-owned foreign companies. Average corporate tax rates in the G20 for those businesses ranged from a high of 37 percent in Argentina to a low of 10 percent in the United Kingdom—the G20 country with the greatest number of U.S.-owned foreign companies in 2012.
In this report, CBO compares average corporate tax rates for U.S.-owned foreign companies with the rates faced by foreign-owned companies incorporated in the United States. Those businesses have more than half of their shares owned by a single foreign taxpayer. If it were possible to calculate, the best measure for comparing new investments in a foreign country with those in the United States would be the average tax rate faced by the U.S.-located affiliates of U.S.-owned foreign companies. That rate, however, cannot be calculated with available information. Instead, the average tax rate faced by foreign-owned companies incorporated in the United States is used as an approximation because both types of companies operate outside of their domestic markets. In 2012, the average tax rate faced by foreign-owned U.S. companies was higher than the average rates that U.S.-owned companies faced in all but two other G20 countries.
Average corporate tax rates were lower in 2012 than they were in 2004 in the United States and eight other G20 countries, CBO estimates. Top statutory corporate tax rates fell in most G20 countries between those two years, but other changes in the tax system and the economy also affected average corporate tax rates.
Chosen excerpts by Job Market Monitor. Read the whole story at International Comparisons of Corporate Income Tax Rates | Congressional Budget Office