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Corporate Tax Rate Survey 2006 21

72 Sri Lanka (2006 rate = 32.5%) For the assessment year 2005/6 (April 1, 2005 to March 31, 2006), the corporate income tax rates, inclusive of 2.5 percent contribution to the Human Resource Endowment Fund, are as follows: Companies with a taxable income exceeding SLRS 5 million, are taxed at 32.5 percent (quoted companies at 30 percent). This is supposed to be increased to 35 percent with effect from year of assessment 2006/07. Companies with a taxable income of SLRS five million or less (including Venture Capital Funds and Specialized Housing Banks) are subject to tax at a rate of 20 percent. It is proposed to reduce this to 15 percent. Priority sectors, i.e. exports (other than traditional products), tourism, agriculture and construction activity carried on by resident companies, enjoy a concessionary corporate income tax rate of 15 percent. A non-resident company is subject to 10 percent tax on profits remitted. The general rate of Economic Service Charge (ESC) levied under the Finance Act is one percent on turnover, but available for set-off from the corporate tax liability. A new levy called the Social responsibility levy was introduced under the Finance Act, at 0.25 percent on income tax and other specified taxes, with effect from January 1, 2005. The rate is supposed to be increased to one percent with effect from January 1, 2006.

73 Sweden (2006 rate = 28%) An optional provision for untaxed income is available. The provision must not exceed 25 percent of the tax base and must be dissolved within the following six years. Starting January 1, 2005, a taxable interest charge is levied on such

provisions.

74 Switzerland (2006 rate = 21.3% (12.97 percent - 29.07 percent)) All 26 cantons apply different tax rates and in all except two cantons (Basel-Stadt, Obwalden) the statutory tax rate needs to be multiplied by communal and/or cantonal coefficients that may vary from tax period to tax period. The rates shown above comprise federal, cantonal and municipal taxes. As corporate income taxes are deductible when computing the tax basis, the Swiss effective corporate income tax rates are lower than the statutory rates published in the tax codes. The above tax rates apply a to company domiciled in (1) the city of Zurich where the corporate income tax rate of 21.32 percent is representative for most cantons, (2) the canton of Zug and the city of Zug with one of the lowest corporate income tax rates (12.97 percent), and (3) in the canton of Graubünden and the city of Chur which have the highest applicable corporate income tax rate in Switzerland (29.07 percent). Some cantonal income tax rates, like that of Zug and Graubünden, are progressive, and the tax basis is usually determined on the ratio of income to the company’s equity. Others, like Zurich, have recently changed to a flat statutory rate. As of January 1, 2006, the canton of Obwalden no longer applies multipliers; their statutory tax rate is set at 6.5 percent flat for all municipalities. Thus profit before tax of a company subject to tax in the Canton of Obwalden is taxed at an effective rate of 13.12 percent.

75 Taiwan (2006 rate = 25%) The corporate income tax rate of 25 percent is the maximum rate in a progressive rate structure. The rate is applicable on income in excess of TW$100,000.

© 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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