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Corporate Tax Rate Survey 2006 15
financial institutions is 43.59 percent (for the year 2005). Companies with an “approved enterprise” are taxed at a reduced rate that varies depending on the national priority zone in which the company is located, the type of incentive scheme applied for and the level of foreign ownership in the company. It should be noted that significant changes were enacted in this area in 2005. Capital gains are subject to 25 percent tax. Special terms apply to assets purchased prior to December 31, 2002. Dividends from foreign sources are subject to a 25% tax, with a credit for foreign withholding tax, or, in certain circumstances, the corporate tax rate with an underlying tax credit for tax paid by the distributing company.
39 Italy (2006 rate = 37.25%) This rate consists of a 33 percent corporate income tax (the so-called IRES) and a basic 4.25 (5.25 for banks and finance institutions) percent regional tax (IRAP). Certain expenses are not deductible for tax purposes and increase the taxable income. Italian regions have the right to amend (up to one percent either way) the basic 4.25 percent IRAP rate on a yearly basis. Lombardy, Sicily, and Veneto have already exercised that right.
40 Japan (2006 rate = 40.69%) Japanese corporate income taxes consist of corporation tax (national tax), business tax (local tax) and prefectural and municipal inhabitant taxes (local tax). The corporation tax rate is 30 percent (22 percent on the first 8 million yen for companies with paid-in capital of JPY 100 million or less). Local tax rates vary depending on the locality, the amount of paid-in capital of the company, etc.. The tax rate shown is the illustrative effective tax rate for a company in Tokyo with paid-in capital of more than JPY 100 million after taking into account a deduction for business tax (the business tax itself is tax deductible). Size-based business tax is also levied on a company with paid-in capital of more than JPY 100 million, in addition to the income-based business tax. So the overall tax rate for such companies can be higher than 40.69 percent. The size-based business tax rates in Tokyo are 0.504 percent on the “added value component” tax base (total of labor costs, net interest payments, net rent payments and income/loss of the current year) and 0.21 percent on the “capital component” tax base (total paid-in capital and capital surplus). For small and medium-sized companies with paid-in capital of JPY 100 million or less, the effective tax rate in Tokyo is 42.05 percent and no size-based business tax is imposed.
41 Jamaica (2006 rate = 33.3%) Companies must declare their income and make prepayments of the corporate tax in four installments (March 15, June 15, September 15 and December 15) during the taxable year. If the final tax exceeds the prepayments, the balance is payable by the due date of filing the income tax return (March 15 of the year following the year of assessment).
42 Kazakhstan (2006 rate = 30%) The regular rate of corporate income tax is a flat rate of 30 percent. Branches of foreign companies operating in Kazakhstan are subject to an additional branch profits tax of 15 percent of their after-tax income resulting in an overall tax rate of 40.5 percent for branch offices. Income Tax Treaties may produce a lower branch profits tax.
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