Global Indirect Tax Rates Rose In 2010 With More Increases On The Horizon: KPMG Report

Global Corporate Tax Rates Fell in 2010; U.S. Companies Face Compliance Challenges

Oct 14, 2010, 09:33 ET from KPMG LLP

NEW YORK, Oct. 14 /PRNewswire/ -- Global indirect tax rates increased slightly in 2010 and additional upticks are on the horizon as governments look to increase revenue, according to KPMG International's 2010 Global Corporate and Indirect Tax Report released today.

The average global indirect tax rate increased slightly from 15.41 percent in 2009 to 15.61 percent in 2010, while the average global corporate tax rate decreased slightly from 25.44 percent in 2009 to 24.99 percent in 2010, according to the KPMG report.  

"It seems clear that governments worldwide plan to use indirect taxes as one route to help create a more stable tax base and raise revenue to fund stimulus packages or tackle government debt," said Rodney Lawrence, principal-in-charge of KPMG LLP's (U.S.) International Corporate Services practice.  "Broadening the corporate tax base to offset the corporate rate reductions is another.  Tax planning will remain critical for companies with international operations as they deal with various jurisdictions' efforts to broaden the tax base as this has clear cash flow and effective tax rate implications."

Indirect Tax Rate Hikes on the Horizon

According to the KPMG report, countries with established Value-Added Tax (VAT) or Goods and Services Tax (GST) systems such as the United Kingdom, Spain, Greece, Finland, Poland, Romania, New Zealand, and Portugal have already confirmed plans or begun to increase indirect tax rates.  In addition, two of the world's major developing economies, China and India, have made significant progress toward implementing national VAT/GST systems.

"Managing the reporting and compliance systems required to address this global shift to indirect tax may prove to be a significant challenge for U.S. companies, given that the burden of collecting the tax falls on individual companies rather than the revenue authorities," said Sam Guevara, principal-in-charge of KPMG LLP's U.S. Indirect Tax practice.  "However, companies that proactively and strategically manage their indirect tax performance can positively impact the bottom line."

Lower Corporate Tax Rates Aim to Increase Competitiveness

According to the KPMG report, corporate tax rate decreases were seen in most regions of the world during 2010.  The exception was Latin America, which recorded an increase from 26.82 percent in 2009 to 27.87 percent in 2010 -- largely due to an increase in the Mexican corporate tax rate from 28 percent in 2009 to 30 percent in 2010.

Several countries have announced plans to reduce corporate tax rates in the future, according to the KPMG report.  In the United Kingdom, the corporate tax rate will decrease one percentage point each year over the next four years, bringing the rate down to 24 percent in 2014 from the current rate of 28 percent.  In New Zealand, the corporate tax rate will be reduced to 28 percent effective in the beginning of 2012 from the current rate of 30 percent.

"Many countries are lowering their corporate tax rates to position themselves as competitive places to do business in the global marketplace," said Lawrence.  "Companies operating in multiple jurisdictions need to be up-to-date on the various changes, as they can impact decisions on where and how to invest.  But these decisions increasingly must be made in the context of many jurisdictions' focus on enforcement, disclosure and penalties in the area of cross-border investment and transactions."  

KPMG International's Corporate and Indirect Tax Report -- conducted every year since 1993 -- covers 114 countries. The 2010 report compares corporate income tax rates as of July 1, 2010 with their equivalent year back to 2000.  The report also includes information on VAT or GST in 114 countries, going back six years.  Tax professionals from across KPMG's global network of member firms contributed to the report.

About KPMG International

KPMG is a global network of professional firms providing Audit, Tax and Advisory services.  We operate in 146 countries and have 140,000 people working in member firms around the world.  The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.


KPMG LLP, the audit, tax and advisory firm (, is the U.S. member firm of KPMG International Cooperative ("KPMG International").  KPMG International's member firms have 140,000 professionals, including more than 7,900 partners, in 146 countries.


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