The Hindu Business Line : India Inc pays highest taxes in Third World

At an average corporate tax rate of 35.875 per cent, Indian industry, however, pays among the highest tax in comparison to industry in many of the developing countries, including China, the ASEAN countries and SAARC nations, according to the latest KPMG Corporate Tax Rates Survey.

According to the report, which point to corporate tax rates moving downwards in most countries, the tax squeeze on industry in most developed nations is comparatively higher.

The highest corporate tax is levied by Japan, at an average rate of 42 per cent as on January 1, 2004.

The United States comes in second, with industry having to shell out corporate taxes at a 40 per cent rate.

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.

The much-vaunted Chinese industry, the biggest threat to Indian industry, pays an average corporate tax rate of 33 per cent.

Russia and Brazil, the two countries that were included with India and China in Goldman Sachs' BRIC classification, also levy a lower tax on industry, with Russia levying just a 24 per cent corporate tax, as against Brazil's 34 per cent corporate tax rate.

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.

Our SAARC neighbours also levy a 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.