A new OECD report reveals that countries have used recent tax reforms to lower corporate income tax.
Tax Policy Reforms 2018 highlights the continuation of a trend toward corporate income tax rate cuts, which has been largely driven by significant reforms in a number of large countries with traditionally high corporate tax rates.
The average corporate income tax rate across the OECD has dropped from 32.5 percent in 2000 to 23.9 percent in 2018.
While the declining trend in the average OECD corporate tax rate has gained renewed momentum in recent years, corporate tax rate reductions are less pronounced than before the crisis, the OECD noted.
Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration, said: “Among the countries that introduced significant corporate tax reforms were a number with high corporate tax rates, where tax reform was long overdue. While these corporate tax cuts have created some concerns of a ‘race to the bottom,’ most of these countries appear to be engaged in a ‘race to the average,’ with their recent corporate tax rate cuts now placing them in the middle of the pack. We will be closely watching how other countries respond to this trend in the future.”