On 8 July 2020 the OECD released the second edition of the annual Corporate Tax Statistics publication. This edition contains statistics on corporate tax revenue and tax rates; information based on the country by country reporting by large multinationals; forward looking effective tax rates; R&D and intellectual property regimes; CFC rules and interest limitation rules.
Corporate income tax
For the 93 jurisdictions included in the survey the corporate tax revenue represented on average 14.3% of total tax revenues in 2017. Corporate income tax was more important in Africa (an average of 18.6% of total tax revenue) and Latin America (an average of 15.5% of total tax revenue) than in OECD countries where corporate tax revenue represented on average 9.3% of total tax revenue.
In eight of the jurisdictions surveyed, including Egypt, Kazakhstan, Malaysia, Nigeria and Singapore, the corporate tax revenues represented more than 25% of total tax revenues in 2017.
Country by Country Reporting
The statistics relating to 2016 submitted by multinationals to member countries of the OECD’s Inclusive Framework have been anonymised and aggregated for the publication.
The statistics highlight the mismatch between the jurisdictions where profits are reported and the jurisdictions where the economic activities take place. In investment hubs a relatively high share of the profits of multinationals are reported in comparison to the share of employees and tangible assets located in those hubs. The revenues earned by these groups per employee are higher in jurisdictions with a zero corporate income tax rate and in investment hubs.
The share of related party revenues in the total revenues of multinational groups is higher in investment hubs than in other locations.
In the investment hubs the main business activity is categorised as “holding shares and other equity instruments”.
The OECD observes that these are indications of base erosion and profit shifting (BEPS) while conceding that there could be some commercial considerations involved in the strategies of the multinationals. The OECD points out that the continuance of BEPS behaviour shows that there is a need for countries to press on with remaining BEPS issues such as Pillar 2 of the work on tax challenges of the digital economy which would implement a global minimum tax on multinational groups.
The statistics also show that corporate income tax remains an important source of revenue for governments and accounted for 14.6% of total tax revenues in 2017 in the 93 jurisdictions surveyed.
CFC statistics
This edition contains information on controlled foreign company (CFC) rules which aim to counter certain offshore structures that result in no or indefinite deferral of taxation by taxing income in the jurisdiction of the parent company. The OECD gathers information on progress on the implementation of BEPS Action 3 including whether a jurisdiction has CFC rules in place; the definition used in the legislation for CFC income in the jurisdiction; whether the rules contain a substantial economic activity test; the nature of that test; and any exceptions applying.
