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India Inc pays less tax than global peers
Debjoy Sengupta in Kolkata |
August 18, 2004 09:02 IST
A recent KPMG survey showed that India Inc pays considerably lower taxes against their counterparts in the developed world. Corporate rate structure in India which was 35.875 per cent on an average, was however the highest rates in comparison to industries in developing nations including China, the ASEAN countries and SAARC nations, according to the KPMG Corporate Tax Rates Survey.
KPMG pointed out that the global trend of decreased tax rates however persists and that the tax squeeze on industry in most developed nations was comparatively higher.
Among nations that changed their rates from 2003 to 2004, the overwhelming majority reduced their rates, continuing the trend of corporate rate reductions.
The trend was most pronounced in Europe where Poland, the Slovakia Portugal and the Ukraine reduced their rates by 29.6 per cent, 24 per cent, 16.7 per cent and 16.7 per cent, respectively.
The highest tax is paid by the Japanese corporate which on an average according to KPMG stands at 42 per cent as on January 1, 2004, followed by United States at 40 per cent. Other OECD nations such as Germany, Canada and Italy also have high corporate taxes.
Indian corporate tax rates are definitely much lower, but when compared to the tax rates levied in most of the developing world, Indian companies seem a highly taxed lot.
India's main competitor, and its biggest threat -- Chinese, pays an average a corporate tax rate of 33 per cent which was 2 per cent lower than India. The ASEAN countries, the tiger economies of yore, also seem lenient in taxing industry.
While Malaysia has only a 28 per cent corporate tax rate, Indonesia and Thailand levy a slightly higher tax of 30 per cent on industry. SAARC neighbours of India also are forced to shell out lower tax, with Pakistan (at a corporate tax rate of 35 per cent) coming in closest to Indian tax rates.
Among developed countries, countries like South Korea, UK and Singapore are among those taxing industry the least. South Korea has a corporate tax of 29.7 per cent, UK at 30 per cent and Singapore at 22 per cent.
The least taxing country, according to the survey, is Cyprus, which has two rates of 10 per cent and 15 per cent levied on industry.