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14 Corporate Tax Rate Survey 2006

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(MAT) is levied at 7.5 percent (plus a surcharge of 10 percent of the tax, plus an education cess of two percent on the tax plus surcharge) of the adjusted profits of companies where the tax payable is less than 7.5 percent of book profits. This adds up to an effective 8.415 percent minimum tax rate. Foreign companies are taxed at 41.82 percent (40 percent, plus a surcharge of 2.5 percent of the tax, plus education cess of two percent on the tax and its surcharge). Income of domestic shipping companies can be computed under the tonnage tax scheme. Non-residents and foreign companies engaged in shipping/aviation, oil/gas and turnkey power projects are taxed on a deemed profit basis of 7.5 percent, five percent and 10 percent respectively, resulting in effective tax rates for these companies, including surcharge and education cess, of 3.1365 percent, 2.091 percent and 4.182 percent respectively. Dividend Distribution Tax (DDT) is levied at 14.025 percent (12.5 percent, plus surcharge of 10 percent of the tax, plus education cess of two percent of tax and surcharge) on dividends distributed by a domestic company and by a domestic mutual fund to individual unit holders of non-equity mutual funds. The DDT is levied at 22.44 percent (20 percent, plus surcharge of 10 percent of the tax, plus education cess of two percent on tax and surcharge) on the income distributed by domestic mutual funds to corporate unit holders of non-equity mutual funds. Securities Transaction Tax (STT) is levied at varying rates on the value of specified taxable securities transactions through a recognized stock exchange, or on the sale of units of equity-oriented mutual funds to the mutual fund. Fringe Benefit Tax (FBT) is levied on certain fringe benefits provided to employees at 33.66 percent for domestic companies and 31.365 percent for foreign companies. The budget proposing rates of tax effective from 1 April 2006 was issued on 28 February 2006.

36 Indonesia (2006 rate = 30%) This rate applies to a resident corporation’s income over IDR 100 million. Income between IDR 0 – 50 million is taxed at 10 percent and income between IDR 50 – 100 million is taxed at 15 percent. Certain income received by non- residents is taxed at 20 percent. An additional 20 percent branch profit tax is imposed on the after-tax profits of a permanent establishment (subject to treaty relief).

37 Ireland (2006 rate = 12.5%) The current corporate tax rate on the active income of new operations is 12.5 percent. A 25 percent rate applies to passive income and income from certain land dealing, mining and petroleum activities. A 20 percent tax rate applies to dealing in undeveloped residential land in Ireland. A special 10 percent rate applies to active trading income earned by certain existing manufacturing companies, qualifying income of International Financial Services Centres (IFSCs) and Shannon companies. This special rate will expire between 2003 and 2010 (depending on the type of company in question and when it received approval for its project qualifying for the 10 percent rate) and will be replaced by the standard 12.5 percent rate. Capital gains are taxed at 20 percent, but the disposal of a substantial interest in certain offshore funds attracts capital gains tax at 40 percent.

38 Israel (2006 rate = 31%) The corporate rate will be gradually reduced: 31 percent in 2006, 29 percent in 2007, 27 percent in 2008, 26 percent in 2009 and 25 percent in 2010. Financial institutions are subject to a profit tax and a payroll tax at a 17 percent rate, both of which are deductible for income tax purposes. The effective tax rate of

© 2006 KPMG International. KPMG International is a Swiss cooperative of which all KPMG firms are members. KPMG International provides no services to clients. Each member firm is a separate and independent legal entity and each describes itself as such. All rights reserved.

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