Corporate Income, Withholding, & VAT Tax Rates In Countries Along China’s Belt & Road Initiative

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Op/Ed by Chris Devonshire-Ellis

China has signed Belt & Road agreements with some 147 countries and territories globally. The majority of these are emerging economies, yet collectively useful to China as they present the future trading patterns China wishes to see develop. In this list therefore is ‘something for everyone.’

Yet assessing which of these 147 areas are more likely to produce rewards for investors, is to some extent, a tax question. In this article we have listed Corporate Income Tax rates, Withholding Tax rates and applicable Sales Tax rates.

Corporate Income Tax applies to all investors establishing a business. Rates can vary, dependent upon regional geography, types of business activity, and turnover. Yet all investors need to plan. However, these rates, especially for the services industries, can be reduced through deft application of royalties and other services charged from an overseas parent to its subsidiary, which is why we identify:

Withholding Taxes are charged on mainly services provided by a non-resident company to a resident company (which can be its own subsidiary). As a non-resident company cannot be charged for Corporate Income Tax (CIT), Withholding Taxes are applied instead. As can be seen, these are often lower than the prevailing CIT, and can be reduced still further according to the terms of any pertinent Double Tax Treaty (DTA) that exists. In this case we provide a list of Belt & Road countries with a China DTA. But others, for example between Armenia as a Belt & Road nation, and the United States may also be applicable – these two nations have a DTA between them. It pays to research when considering an investment into a Belt and Road nation whether a DTA between that country and your investing nation is applicable. Substituting a lower, DTA applied withholding tax for services between parent and subsidiary, such as royalties for trademark, patent and technology transfers can reduce the profits tax bill by between 10-25%. Applicable Withholding Tax rates are important.

Sales Taxes, VAT and GST are applicable on imported goods, and occasionally services, although these amounts can differ depending on the product. Obviously it pays to know what rates are applicable to the importer before they can resale your product to their domestic market. In circumstances where the goods are imported (maybe as component parts), finished and re-exported, claims may be made to reimburse some or all of the original tax. These taxes are identified per item by an internationally used ‘Harmonized System’ (HS) codes which all customs officials use to identify the actual product and subsequently determine local dutiable value. When looking at importing or exporting to these areas, it is important to know the pertinent HS code and applicable local import duty.

Minimum Wage Levels & Individual Income Taxes for an update on these as apply to all Belt & Road countries, together with a count of the available workforce, please refer to our earlier article here and our analysis of this from the Chinese competitive labor cost perspective here.

Note: the rates provided below apply to standard trading, processing and manufacturing businesses. In some cases, CIT rates may be staggered according to levels of income or types of industry. In certain mining, energy and financial sectors, higher CIT rates than illustrated may apply.

Withholding Tax rates apply to non-resident companies billing for services from overseas. Some are trade bloc specific. Rates can vary dependent upon service and be reduced under applicable DTA conditions. GST/VAT and Sales Tax rates can vary from service and product provided.

For specific clarifications please contact your professional advisers or email us at silkroad@dezshira.com

Country Corporate Income Tax Rate Withholding Tax Rate GST/VAT/Sales Tax
Albania 0-15 15 20
Angola 30 6.5 14
Armenia 20 5-20 20
Austria 25 25-27.5 20
Azerbaijan 20 10 18
Bahrain zero zero 5
Bangladesh 25 20 15
Belarus 18 6-15 20
Bolivia 25 12.5 15
Bosnia & Herzegovina 10 5-10 17
Brunei 18.5 10-15 zero
Bulgaria 10 5 20
Cambodia 20 10-15 10
Chile 25-27 35 19
Croatia 12-18 24 5-25
Cuba 15-22.5 10-37 2-10
Cyprus 12.5 5-10 9-19
Czech Republic 15-19 15-35 15-21
Ecuador 22-25 1-10 12
Egypt 22.5 10 14
Estonia 20 7 9-20
Ethiopia 30 5-10 15
Georgia 15 4-15 18
Greece 28 15 24
Country Corporate Income Tax Rate Withholding Tax Rate GST/VAT/Sales Tax
Hungary 9 zero 5-27
Indonesia 25 20 5-10
Iran 25 2-5 9
Israel 23 23-25 17
Italy 24 12.5-26 4-22
Kazakhstan 20 15-20 12
Kuwait 15 zero 5
Kyrgyzstan 10 5-10 12
Laos 20-35 5-10 10
Latvia 20 0-20 12-21
Lithuania 15 15 5-21
Luxembourg 17-25 15-20 3-15
Malaysia 25 10 6
Maldives 15 10 10-12
Malta 35 0-15 7-18
Moldova 12 6-15 20
Mongolia 10-25 20 10
Montenegro 9 9 7-19
Morocco 10-31 10 20
Nepal 25 0-15 13
New Zealand 28 20 13
Niger 45 7-20 19
North Macedonia 10 10 5-18
Country Corporate Income Tax Rate Withholding Tax Rate GST/VAT/Sales Tax
Oman 15 10 5 (from 2021)
Pakistan 28 0.3-0.6 13-17
Papua New Guinea 30 15 10
Philippines 30 1-2 12
Poland 19 19-20 5-23
Portugal 21 25-35 6-23
Qatar 10 5-7 5
Romania 16 16 5-19
Russia 20 10-20 10-20
Saudi Arabia 20 5-20 5
Serbia 15 20-25 10-20
Seychelles 25 15-33 15
Singapore 17 10-22 7
Slovakia 21 7-35 10-20
Slovenia 19 15 9.5-22
South Africa 28 7.5-15 15
South Sudan 10-20 10 18
South Korea 10-25 14-24 10
Sri Lanka 10-40 14 8
Sudan 35 10-20 18
Syria 28 7.5-15 1.5-40
Country Corporate Income Tax Rate Withholding Tax Rate GST/VAT/Sales Tax
Tajikistan 15 12-15 18
Thailand 20 1-15 7-10
Togo 29 20 18
Trinidad & Tobago 25 5-15 12.5
Tunisia 30 15 13-19
Turkey 22 15 18
Turkmenistan 8-20 6-15 15
Uganda 30 6 18
Ukraine 18 15 7-20
United Arab Emirates zero zero 5
Uzbekistan 14 5-10 15
Venezuela 34 34 16
Vietnam 20 5 10
Zambia 35 10 16
Zimbabwe 24.72 15 14.5

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About Us

Silk Road Briefing is written by Dezan Shira & Associates. The firm provides strategic analysis, legal, tax and operational advisory services across Eurasia and has done since 1992. We maintain 28 offices throughout the region and assist foreign governments and MNC’s develop regional strategies in addition to foreign investment advice for investors throughout Asia. Please contact us at asia@dezshira.com or visit us at www.dezshira.com

 

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