The relative weight of taxation on companies designated by the OECD varies widely across member countries. In some cases, the stage of a company’s economic cycle also plays a role.
Chile is the country in the OECD where corporate tax contributes the most to total tax revenue. According to 2020 data, it accounts for 24.3% of the total, followed by Colombia (23%) and Mexico (20.1%).
The Organization for Economic Co-operation and Development (OECD) notes in its annual report on tax reform that it is the only member country where corporate tax (taxing corporate profits) exceeds 20% of total tax revenue. .
The relative weight of taxes on companies is highly variable. Considering that the proportion is less than 5% of the organization’s member states in Estonia (4.9%), the United States (4.9%), Italy (4.8%), Germany (4.3%) and Hungary (3.6%). , Greece (3.1%) and Lithuania (2.3%).
The report’s authors say there are a number of factors that explain these differences, including the tax rates countries apply, the breadth of their tax bases, the degree of corporate consolidation, and the stage of the business cycle (when conditions worsen). are doing. That’s bad, and companies make less money and automatically pay out less money).
Another important explanatory factor is that other taxes account for a less important part of collections in Latin American countries. Especially income tax and social insurance premiums.
Additionally, you should consider: The relative weight of taxation as a percentage of gross domestic product (GDP) in these Latin American countries is among the lowest in the OECD. This is significantly lower than the average of 34.1% for all organizations in 2021.
In fact, the year with the lowest tax rate was Mexico at 16.7%, lower than 2020’s 17.8%.
In Colombia, this share was 19.5% of GDP in 2021, an increase of seven-tenths compared to the previous year. In Chile it was 22.2% (up 2.8 points) and in Costa Rica it was 24.2% (up 1.5 points).
Apart from four countries in Latin America, only two other countries failed to reach the 25% threshold. Ireland accounts for 21.1% of GDP and Turkey accounts for 22.8%.
