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Page 1: kpmg KPMG Corporate Tax Rate Survey — January … · KPMG Corporate Tax Rate Survey — January 2000 ... u Philippines 33 32 ... Dividends from resident corporations are tax-exempt

kpmgKPMG Corporate Tax Rate Survey — January 2000

The KPMG International Tax and Legal Centre is pleased to present its annual survey ofcorporate tax rates. This authoritative survey (incepted in 1993) covers 61 countries, includingthe 29 member countries of the Organisation for Economic Co-operation and Development(OECD) and most countries in the Asia Pacific and Latin American regions.1

Findings

Tax cutting in developed countries continues, albeit at a slower pace.

The move towards lower corporate tax rates in the industrialised countries of the OECD, hassteadied somewhat with the average corporate income tax rate falling to 34.1% (1999 average34.8%).

There were still tax cuts in France, Germany, Ireland, Japan, Poland, Czech Republic, and theUK in the past year, although several of these reductions represented a continuance of taxcutting policies rather than any new initiatives. Looking ahead, the Irish corporate tax rate isscheduled to fall again over the next few years and it is also expected that the GermanCorporate Tax system will be reformed, potentially leading to rates of under 40%. Finland wasthe only OECD country surveyed which reported a rise in corporate tax rates.

As observed last year, there does appear to be a consistent downward trend in corporate taxrates. Table 2 demonstrates that the average corporate tax rate among OECD and EUcountries has fallen by nearly 3.5% (from 37.6% to 34.1% and 39% to 35.44% respectively)since 1996.

OECD and EU concentrate fire on perceived “harmful” tax practices.

The last twelve months have seen the continuing concentration by both the OECD and the EUon perceived “harmful” tax practices and alleged “tax havens.” It is likely that pressure will bebrought to bear upon alleged tax havens and other jurisdictions to alleviate harmful taxpractices. Whether this will have a substantive impact in terms of reducing tax shelters etcremains to be seen. Coinciding with this action by the OECD and EU is the continueddownward trend in average corporate tax rates. This may well continue over the next fewyears if jurisdictions opt to compensate for the loss of perceived harmful measures by loweringtheir headline rates of tax.

Average tax rate differences begin to narrow in the territories surveyed.

Last year’s survey noted that in general, countries in less developed regions of the world levylower tax rates compared to the more developed nations, and this remains the case into 2000.But the difference is narrowing. As noted above, the developed countries in the OECD have anaverage corporate income tax rate of about 34.1%. which represents reduction on the 1999average of 34.8%. The comparatively less developed nations in the Asia Pacific that weresurveyed have an average rate of 32.1% which represents a slight increase on the 1999 averageof 31.7%. At 29.3% the average rate among Latin American countries has also increased froma 1999 level of 28.5% (see Table 1).

1 Due to the slight differences in the countries surveyed, 1999 comparison averages have beenadjusted.

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kpmgCorporate tax rates only part of the equation

Whilst the survey shows an interesting “snap shot” of the corporate tax rates around theworld, it should be remembered that a low tax rate does not necessarily mean a low taxburden. For individual countries, the tax rate must be applied to the tax base in order tomeasure tax burdens, and indeed in order to secure tax revenues, a cut in one tax can lead toan increase in others. That said, in the absence of harmonised tax bases, a comparison of taxrates can give a useful impression of international corporate tax burdens.Other factors to consider when comparing tax burdens include indirect taxes, other financialinducements to inwardly invest, and the sophistication of the tax law.

Table 1 — Average Corporate Tax Rates at 1 January 2000O

EC

DC

ount

ries

EU

Cou

ntrie

s

Latin

Am

eric

anC

ount

ries

Asi

a-P

acifi

cC

ount

ries

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

OE

CD

Cou

ntrie

s

EU

Cou

ntrie

s

Latin

Am

eric

anC

ount

ries

Asi

a-P

acifi

cC

ount

ries

Table 2 — OECD and EU Average Corporate Tax Rates –1995-2000

32

33

34

35

36

37

38

39

1995 1996 1997 1998 1999 2000

EU Member Countries OECD Member Countries

KPMG is the global professional advisory firm whose aim is to turn knowledge into value forthe benefit of its clients, its people and its communities. With more than 100,000 peoplecollaborating worldwide, the firm provides consulting, tax and legal, financial advisory andassurance services from more than 820 locations in 159 countries.

For enquiries, please contact: Adam Bainbridge, partner, KPMG International Tax and LegalCentre, Amsterdam, The Netherlands. Phone: +31 20 656 6740 © 2000 KPMG International

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KPMG Corporate Tax Rates Survey — January 2000

Asia LatinOECD EU Pacific America Country 1 Jan 1999 1 Jan 2000 Notesu u u u (%) (%)

u Argentina 35 35 1u u Australia 36 36 2u u Austria 34 34 3

u Bangladesh 35 35 4u u Belgium 40.17 40.17 5

u Belize N/A 25 áá 6u Bolivia 25 25u Brazil 33 37 áá 7

u Canada 44.6 44.6 * 8u Chile 15 15

u China 33 33 9u Colombia 35 35 10

u Czech Republic 35 31 ââu u Denmark 32 32 11

u Dominican Republic 25 25u Ecuador 15 25 áá 12u El Salvador 25 25 13

u Fiji 35 35 14u u Finland 28 29 ááu u France 40 36.66 ââ 15u u Germany 52.31/43.60 51.63/42.80 * 16u u Greece 35/40 35/40 17

u Guatemala 27.5 25 ââ 18u Honduras 25 25 19

u Hong Kong 16 16 20u Hungary 18 18 21u Iceland 30 30 22

u India 35 38.5 áá 23u Indonesia 30 30 24

u u Ireland 28 24 ââ 25u Israel 36 36 ** 26

u u Italy 41.25 41.25 27

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Asia LatinOECD EU Pacific America Country 1 Jan 1999 1 Jan 2000 Notesu u u u (%) (%)u u Japan 48.0 42 ââ 28u u Korea, South 30.8 30.8u u Luxembourg 37.45 37.45 * 29

u Malaysia 28 28 30u u Mexico 35 35 31u u Netherlands 35 35 32u u New Zealand 33 33u Norway 28 28 33

u Pakistan 35 43 ááu Panama 37 37 34

u Papua New Guinea 25 25 35u Paraguay 30 30 36u Peru 30 30

u Philippines 33 32 ââu Poland 34 30 ââ 37u u Portugal 37.4 37.4 38

u Singapore 26 26 39u u Spain 35 35

u Sri Lanka 35 35 40u u Sweden 28 28 41u Switzerland 25.1 25.1 * 42

u Taiwan 25 25 43u Thailand 30 30 44

u Turkey 33 33 45u Uruguay 30 30 46

u u United Kingdom 31 30 ââ 47u United States 40 40 * 48

u Venezuela 34 34 49u Vietnam 30 - 35 14.5-32.5% ââ 50

Note:

• A simple comparison of tax rates is not sufficient for assessing the relative tax burdens imposedby different governments. The method of computing the profits to which the tax rates will beapplied (“the tax base”) should also be taken into account.

• The above rates do not reflect payroll taxes, social security taxes, net wealth taxes, turnovertaxes and other taxes not levied on income.

• Arrows signify an increase (áá) or decrease (ââ) in a country’s corporate income tax rate at1 January 2000 as compared with that country’s rate at 1 January 1999.

* = approximate rate

While every effort is made to ensure that this survey’s contents are accurate, no action should be taken

without first contacting your KPMG adviser. For enquiries please contact your local KPMG adviser or

KPMG's International Tax and Legal Centre, Amsterdam. Copyright © KPMG International 2000. All

rights reserved.

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1 Argentina (2000 rate = 35%): Dividends from resident corporations are tax-exempt. Corporations,

including subsidiaries of foreign companies are taxed at a flat 35% rate. There is a 1% tax on acompany’s assets (excluding liabilities) which serves as a presumed minimum income tax.

2 Australia (2000 rate = 36%): The corporate income tax rate applies to a year of income 1 July to30 June. If a company has approval to use a different year-end for tax purposes the period approvedwill still relate to a 30 June year (ie 31 December 2000 in lieu of 30 June 2000). For the year 1 July1999 to 30 June 2000 the company income tax rate is 36%. For the year 1 July 2000 to 30 June2001 the company income tax rate will be 34%. Thus for a company with an approved substitutedaccounting period of 1 January 2000 to 31 December 2000 in lieu of 1 July 2000 to 30 June 2001the new rate applies from 1 January 2000. For the year 1 July 2001 to 30 June 2002 the companyincome tax rate will be 30%.

3 Austria (2000 rate = 34%): Due to restrictions on expenses, the tax base for corporations usuallydiffers from financial statement profits.

4 Bangladesh (2000 rate = 35%): Publicly traded companies are taxed at the rate of 35%. Howeverbranches of banks, financial institutions and other organisations incorporated by or under the laws ofa country outside Bangladesh are taxed at 40%.

5 Belgium (2000 rate = 40.17%): A lower rate applies to companies owned more than 50% byindividuals. The tax rate incorporates a “crisis” levy of 3%.

6 Belize (2000 rate = 25%): A monthly business tax on gross revenues was enacted in July 1998 andat the same time corporate income tax was abolished. For most companies business tax wasestablished at the rate of 1.5%. In April 1999, corporate income tax was re-enacted at a reducedrate of 25% (previously 35%) and business tax was reduced to 1.25%. Business tax assessed duringthe year is credited against corporate income tax liability, and at the end of the tax year, any excesscorporate tax liability is cancelled provided a corporate income tax return is filed. Business taxremains as the final tax, and any excess over the corporate tax liability is claimed as an expense inthe following year’s corporate tax filing. Approved losses, based on corporate tax filings can beoffset against 20% of the monthly assessment to business tax.

7 Brazil (2000 rate = 37%): The 37% rate is the sum of Corporate Income Tax and SocialContribution Tax on Profits. The corporate income tax rate is 25%, which comprises a 15% basicrate plus a surtax of 10% on annual income over BRL 240,000. There is also a Social ContributionTax of 12% on corporate income, although this latter rate will be reduced to 9% from February2000 onwards.

8 Canada (2000 rate = 44.6%): Includes federal tax of 29.1% (including surtax) plus provincial tax.Depending on the province, the total effective rate ranges from 38.0% to 46.1% (24.6% to 39.1%for manufacturers).

9 China (2000 rate = 33%): This rate (30% state tax rate plus 3% local tax rate) applies to foreigninvestment enterprises and foreign enterprises. The state tax rate is reduced to 15% or 24% if thesaid enterprise is located in one of the specially designated zones in China, and/or engaged inprescribed industries: the 3% local tax may be waived or reduced by the local government. Foreignbanks deriving income from RMB business are also taxed at the 30% state tax rate.

10 Colombia (2000 rate = 35%): In addition to the 35% corporate tax rate, a municipal industrial andcommerce tax applies (based on turnover) which oscillates between 0.3% and 1% depending on thecompany’s activities.

11 Denmark (2000 rate = 32%): Corporations must either pay corporation tax on account during theincome year or pay a surcharge. There are no local taxes on corporations.

12 Ecuador (2000 rate = 25%): For 2000 the corporate income tax rate is 25%. In accordance withthe Labour Law, all companies are obliged to distribute 15% of income before income tax betweentheir employees, which increases the effective tax rate to 36.25%.

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13 El Salvador (2000 rate = 25%): The 25% corporate tax rate is the maximum rate in a progressive

rate structure. The rate is applicable on profits in excess of SVC 75,000. Legislation may beintroduced to apply the 25% rate to all profits.

14 Fiji (2000 rate = 35%): The corporate tax rate is 45% for companies operating in Fiji as a branch ofa non-resident company.

15 France (2000 rate = 36.66%): For a financial year closed in 1999 the 40% rate is made up of thecurrent income tax rate of 33.33% plus a 10% additional contribution applicable to all companies,and a 10% temporary additional contribution except for companies that satisfy the two followingconditions (i) at least 75% of the share capital must be continuously owned by individuals or bycompanies and (ii) the company realises a maximum turnover of FF 50,000,000. For a financialyear closed in 2000 the 36.66% rate is made up of the current income tax rate of 33.33% plus a 10%additional contribution applicable to all companies and a 3.3% social contribution on companies’profits (this contribution is defined by the Law for the financing of social security for the year 2000and is subject to ratification).

16 Germany (2000 rate = 51.63%/42.8%): The first rate quoted applies to retained profits and thesecond to distributed profits. Both include corporate tax at 40% (retained profits), 30% (distributedprofits) and trade tax on income. The trade tax varies from 12.78% to 20.48%, with an average of16.32%. From 1 January 1998, the corporate tax rates for both retained and distributed profits wereincreased by a solidarity surcharge of 5.5% on the corporate income tax.

17 Greece (2000 rate = 35%/40%): The 35% rate applies to listed A.E. companies (corporations) andto E.P.E. entities (limited liability companies). The 40% rate applies to domestic unlisted A.E.companies, banks and credit instructions operating as co-operatives and branches of foreign entities.Discounts of 2.5% are allowed to companies which pay their corporate tax in full when they filetheir tax returns. A 3% surcharge applies to gross rental income but the surcharge may not exceedthe primary corporate tax.

18 Guatemala (2000 rate = 25%): For tax periods starting on or after 1 July 1999, tax rate is 25% andno surcharge applies.

19 Honduras (2000 rate = 25%): Income tax ranges from 15% on the first HNL 200,000 of taxableincome to 25% on any excess over this amount. A tax of 0.5% (0.25% for 2001 and 0% for 2002)applies on the monetary value of assets that appear on the balance sheet less allowances for doubtfulaccounts and accumulated tax depreciation. The amount of income tax paid in the prior fiscal yearmay be used as a credit against this tax.

20 Hong Kong (2000 rate = 16%): The 16% rate applies to Hong Kong sourced profits that arederived by companies carrying on a business in Hong Kong. Profits derived from qualifying debtinstruments, or profits derived from the business of reinsurance of offshore risks as a result of thecarrying on of a business as a professional reinsurer, are subject to 8%, which is one half of thestandard rate of 16%.

21 Hungary (2000 rate = 18%): The tax rate on a corporation’s taxable profits is 18%. The localbusiness tax of 2% is deductible from the corporation’s tax base. A 20% withholding tax is imposedon dividends paid to foreign companies unless the recipients re-invest the dividends directly in aHungarian company. However, most of Hungary’s tax treaties reduce the domestic withholding taxto 5 - 15%. Dividends paid to Hungarian companies are not subject to withholding tax.

22 Iceland (2000 rate = 30%): This rate applies to limited liability companies. The rate forpartnerships registered as taxable entities is 38%.

23 India (2000 rate = 38.5%): Minimum alternate tax is levied at the rate of 30% of the adjustedprofits of those companies whose taxable income is less than 30% of their book profits (i.e., theeffective tax rate is 10.5%). Domestic companies are also liable to pay a surcharge @ 10% of thetax liability in respect of the financial year commencing from 1 April 1999 (making the effective taxrate 11.55%). Dividend paying companies pay additional income tax at 10% of the dividend

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amount (now 11% after surcharge with effect from 1 April 1999). Foreign companies are taxed at48%. Non-residents and foreign companies engaged in shipping, air transport, and oil and gas andturnkey power projects are taxed on a deemed profit basis of 7.5%, 5% and 10% respectively (i.e.,the effective tax rate for these companies is 3.6%, 2.4% and 4.8% respectively).

24 Indonesia (2000 rate =30%): This rate applies to a resident’s income over IDR 50 million. Incomebetween IDR 0 - 25 million is taxed at 10% and income between IDR 25 - 50 million is taxed at15%. Certain income received by non-residents is taxed at 20%. An additional 20% branch profitstax is imposed on the after-tax profits of a permanent establishment (subject to treaty relief).

25 Ireland (2000 rate = 24%): A 25% rate applies to the passive income and income frommining, petroleum activities and certain dealings in land. A 20% rate applies in the caseof companies whose profits from the sale of residential land would otherwise be taxable at25%. A 12.5% rate is applicable where companies total trading income for an accountingperiod does not exceed £50,000. Marginal relief will apply where the total of suchincome is between £50,000 and £75,000. These limits will be proportionately reducedwhere: a) a company has one or more associated companies and b) in the case of anaccounting period of less than twelve months in duration. A 10% rate applies tomanufacturing companies and qualifying income of IFSC and Shannon companies. As of1 January 2003, a standard corporation tax of 12.5% will apply.

26 Israel (2000 rate = 36%): Financial institutions are subject to a profits tax at the rate of 17% and apayroll tax at the rate of 17%, both of which are deductible for income tax purposes. The effectiverate of tax on such corporations is 45.39%. Companies with an approved enterprise enjoy reducedrates of company tax which vary accordingly to location in a national priority zone, incentive routeapplied for and level of foreign ownership in the company.

27 Italy (2000 rate = 41.25%): The rate comprises a 37% federal rate and a 4.25% IRAP rate. As of 1January 1998, the local income tax (ILOR) has been replaced by IRAP, the regional tax onproductive activities. IRAP is applied on a broader tax base than that considered for corporateincome tax purposes. As such, the effective rate is generally higher than indicated. For banks andinsurance companies, the rate will be 4.75% in 2000.

28 Japan (2000 rate = 42%): Includes corporate income tax (30%), business, prefectural andmunicipal taxes. The rate shown is the effective tax rate after taking into account a deduction forbusiness tax. The effective tax rates are reduced to 42% as from 1 April 1999.

29 Luxembourg (2000 rate = 37.45%): The corporate income tax rate (excluding a 4% surcharge) is30%. The 37.45% rate includes municipal business tax at an effective rate of 9.09% (although ratesvary among regions). Municipal tax is deductible from the (national) corporate tax on income.

30 Malaysia (2000 rate = 28%): Profits from inward reinsurance and offshore insurance are taxed at5%. Income from a life fund is taxed at 8%. A non-resident is taxed either on 5% of gross shippingor air transport income derived from Malaysia or, on that part of the Malaysian gross incomecomputed in the proportion of world-wide profits to world-wide gross income. Income derived byresidents from the transportation of passengers or cargo on board Malaysian ships is exempt.Companies engaged in petroleum operations are subject to petroleum income-tax at 38% of netprofits. Leasing income received by a non-resident without a permanent establishment in Malaysiafor use of movable property is taxed at 10%; if leasing income constitutes business income of apermanent establishment, it will be taxed at 28%.

31 Mexico (2000 rate = 35%): For 1999 it is possible to defer 3% of the tax. The tax deferral will bepaid when profits are distributed to shareholders. For year 2000 the deferred tax is 5%, payablewhen profits are distributed to shareholders.

32 Netherlands (2000 rate = 35%): For 1997, the fist NLG 100,000 of taxable profits is taxed at 36%(37% for 1996). Effective from 1 January 1998 there has been a flat corporate tax rate of 35%.

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However, on the first NLG 50,000 of taxable profit a rate of 30% will apply as from 1 January2000.

33 Norway (2000 rate = 28%): For 2000, the rate comprises a 21.25% tax equalisation plus 6.7%municipal tax.

34 Panama (2000 rate = 37%): This rate includes a dividend tax at a rate of 10%.

35 Papua New Guinea (2000 rate = 25%): Resident large scale mining companies pay tax at 35%.Petroleum companies pay tax at 50%. Gas companies pay tax at 30%. Non-resident miningcompanies pay tax at 48%. A branch of a foreign company is taxed at 48%. Non-residents aretaxed on deemed profit basis: 5% (shipping: 2.4%) and 10% (insurance: 4.8%). Foreign contractorsengaged in civil works, installation, leasing of equipment etc. can elect to be taxed on a deemedprofit basis of 25% (i.e., the effective tax rate works out to 12% of gross income).

36 Paraguay (2000 rate = 30%): Since Paraguay does not levy personal income tax, certain paymentsto non-taxpayers are not fully deductible for corporate income tax purposes. As such, the effectiverate is higher than 30%. Profits remitted to non-resident shareholders are subject to an additional 5%rate of tax. Special tax rates exist which range from 0.5% to 10% depending on a company’sactivities.

37 Poland (2000 rate = 30%): Income from dividends is taxed at 20% and is excluded from thetaxable base at the normal rate.

38 Portugal (2000 rate = 37.4%): Includes municipal tax at 3.4%. Municipal tax at a maximum of10% of the national tax rate is levied in most municipalities.

39 Singapore (2000 rate = 26%): The concessionary tax rate of 10% applies to entities engaged incertain offshore activities including offshore banking, offshore leasing, offshore insurance andreinsurance, offshore oil trading and offshore commodity trading, finance and treasury centres andoperational headquarters companies. Shipping enterprises transporting outbound passengers, mail,livestock or goods from Singapore are exempt from tax.

40 Sri Lanka (2000 rate = 35%): Exporters or deemed exporters (other than those dealing withtraditional products) the tourism and agricultural industry and construction activity carried on byresident persons enjoy a concessionary tax rate of 15%. Remittance of profits by a non-residentcompany attracts a remittance tax of 33 1/3%, to a maximum of 11.11% of taxable income in thefiscal year in which the remittance is made.

41 Sweden (2000 rate = 28%): An optional provision for untaxed income is available. The provisionmust not exceed 20% of the tax base and must be dissolved within the following six years.

42 Switzerland (2000 rate = 25.1%): The effective corporate tax rate comprises federal, cantonal andmunicipal taxes. The rates shown are the maximum statutory (after-tax) rates for an ordinarycompany in the city of Zurich. These rates are fairly typical. The effective tax rate, based on pre-tax income, is lower than the statutory rate and amounts to 25.1%. Most cantonal income tax ratesare progressive, which is determined on the basis of the ratio of income to shareholder's equity.

43 Taiwan (2000 rate = 25%): The corporate tax rate of 25% is the maximum rate in a progressiverate structure. The rate is applicable on income in excess of NT$100,000.

44 Thailand (2000 rate = 30%): Foreign companies are subject to tax on the remittance of profits outof Thailand at the rate of 10%. Foreign companies carrying on the business of internationaltransport in Thailand are subject to tax on income from such business at the rate of 3% on the fares,fees and other benefits collectible in Thailand in respect of the carriage of passengers and at the rateof 3% on the freight, fees and any other benefits collectible whether in Thailand or elsewhere inrespect of the transport of goods from Thailand. The net profits derived by a company from theoperation of an international banking facility are subject to income tax at the rate of 10%.Companies that are granted a concession to explore for and produce petroleum are subject topetroleum income tax at the rate of 50% of net profits. A company may be granted exemption from

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corporate income tax under the investment promotion privileges granted by the Board ofInvestment.

45 Turkey (2000 rate = 33%): The corporate tax rate is 33% which is composed of 30% on corporatetax base plus 10% on mainstream corporation tax. If there is income which is exempt fromcorporate tax then this income will be subject to withholding tax irrespective of whether it isdistributed or retained. The withholding taxes on such income vary between zero and 16.5%including a 10% surcharge.

46 Uruguay (2000 rate = 30%): Corporate income tax is not deductible from taxable profits forpurposes of applying the 30% rate.

48 United Kingdom (2000 rate = 30%): A small companies rate of 20% at 1 January 2000 (21% at 1January 1999) applies to companies with profits up to GBP 300,000. Marginal relief applies onprofits up to GBP 1,500,000. From 1 April 2000 a 10% rate will apply to companies with taxableprofits up to GBP 10,000 with marginal relief up to GBP 50,000. Companies with profits betweenGBP 50,000 and GBP 300,000 will continue to pay tax at the small companies rate, which will notnecessarily remain at 20% (although the full rate will remain at 30% for the year from 1 April2000). All these limits are reduced where there are associated companies.

Bermuda, Gibraltar, Guernsey, Jersey and the Isle of Man

These countries are Dependent Territories or Crown Dependencies of the United Kingdom, whichhas formally confirmed that the OECD Convention applies to these countries. Details of theircorporate tax rates are provided here, but these countries are not included in calculating the averagesand ranges indicated above.

Bermuda: Bermuda levies no tax on profits, dividends or income, nor is there any withholding tax,capital gains tax, gift tax, or any personal tax. Exempt companies can apply for legal protectionagainst the possibility of future taxes up to the year 2016.

Gibraltar: Resident companies are subject to corporate tax at the rate of 35%. Special rules applyto qualifying and exempt companies. Qualifying companies pay corporation tax at a rate agreedwith the tax authorities, which may be between 0% and 35%. Exempt companies are liable to afixed payment of GBP 225 per annum if resident, and GBP 200 if non-resident.

Guernsey: Resident companies are subject to the standard income tax rate of 20%. Special rulesapply to banks, captive insurance companies, investment funds and certain other entities which maypay tax at rates as low as 2%. Certain companies may also become exempt and pay only GBP 600per annum. International Companies may agree a rate of tax from just above 0% to 30%.

Jersey: Resident companies are subject to the standard rate of income tax of 20%. Certaincompanies may also become exempt or gain the status of “International Business Company” (IBC).Exempt companies pay GBP 600 per annum. IBC’s pay tax at 2% or less on profits frominternational activities and 30% on Jersey-source income.

Isle of Man: Resident companies are now taxed at only 15% on the first £100,000 of income, and20% on the balance. Banks which carry on "international loan business" are taxed at an effectiverate of 2% on the profits from such business. Insurance companies which do not insure local (ieIOM) risks qualify for complete exemption, as do "managed banks", and managers of IOMregulated funds (except exempt schemes) qualify for an effective 5% rate. The tax exemption fee(for companies wholly owned by non-residents which carry on no local business and are notregulated activities) is £400 per annum, and the international company tax (qualifying conditionsbroadly the same as for exempt companies) is a minimum of £1,200 and a maximum of 35%.

48 United States (2000 rate = 40%): The federal tax rate is 35%. State and local income tax ratesgenerally range from less than 1% to 12%. A corporation may deduct its state and local income taxexpense when computing its federal taxable income, generally resulting in an effective rate ofapproximately 40%. The effective rate may vary significantly depending on the locality in which acorporation conducts business.

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49 Venezuela (2000 rate = 34%): The effective tax rate depends on the application of investment tax

credits for investments in fixed assets, which are currently 20% for corporations (exceptcorporations in the hydrocarbons industries). Corporations engaged in the exploitation ofhydrocarbons and related activities are generally subject to a 67.7% rate of tax on their income,including income from other sources. The rate indicated does not include municipal business taxeswhich apply at rates ranging from 0.3% - 9.4% of gross income, depending on the district and thebusiness activity. VAT, corporate registration fees and a 1% business asset tax also apply.

50 Vietnam (2000 rate = 14.5%-32.5%): A 25% tax rate applies to resident joint venture companies.Vietnamese companies and non-resident companies are taxed at rates from 32% to 45%. Oil and gascompanies are taxed at a rate of 50%. Tax holidays or tax incentives for preferred projects canreduce the rate below 25%.