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visit www.finance-monthly.com ACROSS TAX


In light of the recent economic crisis, the issue of tax is a hot topic across the globe. Affecting everyone from individuals to international corporations, tax rates and rules have an enormous effect on the entire world’s population, and can influence the economy considerably. This month, Finance Monthly takes a look at the issues of tax across the world.


Taxation has been around for thousands of years, dating back to the Ancient Egyptians. Although it is always an important and often controversial issue, tax is never more prominent in the minds of the world’s population than when it is experiencing a period of financial uncertainty and economic struggle, as it has during the last few years. Tax rates and rules differ greatly across the globe,


although wherever in the world you are, tax is always in integral feature of your financial life, placing a huge influence on the financial health of businesses, individuals and the economies of the countries themselves.


Tax around the World China is looking to increase its minimum personal income tax thresholds in an attempt to leave middle-income taxpayers with more disposable cash. According to some Chinese media sources, the State Council has agreed to a proposal that will lift the minimum personal income tax threshold from 2,000 yuan ($304) per month to 3,000 yuan ($456) per month. The move is part of a response to concerns regarding inflation.


Swiss Tax Many foreign businesses and investors are drawn to Switzerland due to its attractive tax system, as tax rates for both companies and individuals stand at a much lower level in comparison to other countries in the EU and beyond. For example, tax is between 30 per cent and 55 per cent in most other EU countries and the USA, whereas total taxes in Switzerland amount to approximately 25 per cent. In addition, taxes themselves can be deducted from the income as an expense, resulting in significantly lower tax rate. There are also several tax reliefs and incentives throughout the Swiss tax system, designed to attract foreign investors and buyers.


Corporation Tax Corporation tax is always a contentious issue in business, whatever country you are in. The rate of corporation tax levied on firms can vary significantly from country to country, meaning that this type of tax


fi MONTHLY MARCH 2011


has the tendency to be used as a financial weapon to be used in investment warfare – a way to entice foreign investors to a particular country or away from others. Over the last thirty years, rates have decreased from record highs, to record lows, and the percentage by which they have altered has varied across the globe, with some nations seeing huge decreases in rate and some only a relatively small change. For example, looking at the changes in the rates of


combined corporation tax across the world from 1981 to 2010, in Australia it fell from 46 per cent to 30 per cent, in Germany a considerable change from 60 per cent in to 30.17 per cent, in Austria, from 55 per cent to 25 per cent, in Greece, from 45 per cent to 24 per cent, and in Canada, it fell from 50.9 per cent to 29.5 per cent. More modest rate reductions can be seen in Spain where it fell from 33 per cent in 1981 to 30 per cent in 2010, in Italy where it fell from 36.25 per cent to 27.5 per cent, and in the USA where it decreased from 49.69 per cent to 39.20 per cent. The UK saw a fairly hefty change from the early eighties to 2010, with a drop in rates from 52 per cent in 1981 to 28 per cent in 2010. The issue of tax is a complex and ever-changing


story. As the world continues to recover from the global economic crisis that has shaken everyone – individually and in the business world – all eyes are on the global tax rates as the world’s governments use them to try and speed up their nation’s recovery. All we can do is watch, and wait. fi


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