Commercial profit taxes are charged to businesses across the globe, assigned and levied on them after the deduction of the expenses and the contributions payable by the businesses as a share of commercial profits to be collected by the government. Other taxes, such as personal income tax, value added taxes, goods and service taxes, and sales taxes, are excluded from these. Many countries in the world pay the lowest commercial profit taxes that are even less than 1% of profits earned.
Countries Paying the Lowest Rates on Profit Taxes
There are few countries across the globe where business are paying a lower amount of taxes, which is less than 1%, than France, Brunei, and Sri Lanka. In France, the businesses have to pay 0.5% of Commercial Profit Tax Rate. In Brunei, the business houses pay 0.8% of Commercial Profit Tax Rate and in Sri Lanka, the Commercial Profit Tax Rate payable is 1.1%.
In France, the taxes paid by the companies on their capital structures and turnover of the businesses in the taxation year are markedly low. The taxation graph for the following years also shows a sudden decrease in the taxes in the recent years due to change in taxation policies of the government. The taxes in France are levied at both local and state levels, and that imposed on the companies are corporate income tax, business tax, social surcharges, and registration duties.
In Brunei, the tax rate charged from the companies is the lowest in the Asian trade community. The government states that with the lowest amount of taxes charged from the companies, the investments will increase and as a result, it will help in the development of the economy. The deductible expenses include tax losses, capital allowances, and interest on loans, and this has paved the way for the foreign companies wishing to invest in Brunei.
In Sri Lanka, the companies that are based out of the country have to pay taxes based on the income earned on a worldwide basis, whereas the non-resident companies are required to pay only on the income derived from activities in Sri Lanka. Even some tax incentives are provided to the companies that are listed on the foreign stock exchange for a three-year period.
Socioeconomic and Trade Implications
In France, with the lower tax rate that is charged to the companies by the government, businesses are in a better position to earn a significant amount of fiscal revenue every year, and the income generation of French companies have increased across the board as a result. There are many schemes introduced for the companies in the form of income securities. In Brunei, where the commercial profit tax rate is low and the income generation has increased as a result, the Gross Domestic Product (GDP) growth has improved and various tax brackets are maintained according to the income generated by the companies. In Sri Lanka, most of the income come from agriculture-related products and the manufacturing companies as well, and with low tax rates the economy is now able to perform well and is moving towards achieving its development models.
Inferences from the Data
It can be seen from the above data that with lower amount of tax rates charged by the government from the businesses, it has helped the economies of these nations to grow, and sufficient amounts can be paid to the employees. Even the foreign investors have shown their interest in investing in these countries.