Estonia is the most competitive tax system in the world, largely thanks to its 20-percent income tax and a “well-structured” personal income tax system.
The third annual International Competitiveness Fund measures how well the country’s tax system contributes to sustainable economic growth and investment. The report looks at 40 variables of tax policy in five categories, including corporate income taxes, individual taxes, consumption taxes, property taxes, as well as the treatment of foreign exchange earnings.
According to the Fund, Estonia’s position at the beginning of 2016 the list of the year is mainly the result of four factors, including “its low percentage of corporate tax, well-structured, 20 percent tax rate on personal income tax, property tax is only applied to the cost of land, rather than the real value of the property or capital, as well as a well thought out territorial tax system.”
New Zealand and Latvia take the next two places in the list.
In contrast, France is at the end of the table due to its high corporate rate – 33.33 per cent of the taxes, “high and poorly structured” property taxes, and “progressively higher individual tax rates.”
The United States this year is the fifth from the end as a whole because of its high corporate tax rate, worldwide tax system, as well as relatively high and poorly structured tax on personal income, dividends and capital gains.