Corporate tax rates around the world are coming down. For instance, India had a tax rate of 55% which it revised to 48% and now 41.8%. Singapore similarly has revised from 26% to 20%, at present, said Rohan Phatarphekar, Head of taxation at Grant Thornton.
But inadvertently, the dividend distribution tax of 14% when clubbed with domestic tax of 33% in India becomes higher than the corporate tax rate of 41.8%.
Denmark, Sweden and Netherlands offer a corporate tax rate of 28%, 28% and 29.6%, respectively.
The OECD serves as a global tax administrators and is coming down heavily on countries like Cyprus, Panama, Cayman Islands which offer zero or negligible tax regimes, forcing companies to register there.
Cyprus had a tax rate of 4.2% which it increased to 10% after pressure from OECD. Mauritius and Bahamas are other such tax havens.
The IRS in US has also reproached companiesforcing other firms to route their cash flows through entities registered in these tax havens. According to the Australian Promoter Penalty Regime, persons who promote or assist such tax schemes face a penalty of over $2.5 million.