A recent study has found that the average corporate tax rate for major economies fell to a new low of 25.1 percent in 2020-21, from 25.2 percent in 2019-20, Accounting Today reported. But the study, issued by the UHY international accounting firm network, predicts that the downward trend in corporate rates will not continue much longer, as countries grapple with the economic fallout from the pandemic.  

The United Kingdom, for example, plans to raise corporate tax rates from 19 percent to 25 percent as of April 2023, and Argentina has increased its corporate tax rate from 30 to 35 percent in 2021. President Biden has said that he plans to increase the U.S. corporate income tax to 28 percent after the Tax Cuts and Jobs Act of 2017 cut it down to 21 percent. His tax proposals, however, are opposed by Republicans and some Democrats in Congress, and he was unable to pass the Build Back Better Act last year, which included a corporate tax increase.

The UHY study focused on 33 countries whose corporate tax rates range from 12.5 percent (Ireland) and 16 percent (Romania) to 35 percent (Malta) 38.2 (Japan). The European average was 22.6 percent, and the G7 average was 25.7 percent, down from 32 percent in 2014-2015. Account Today explained that several countries have sought to lure companies to invest in their economies by offering low tax rates. France, for example, lowered its  tax rate from 31 to 26.5 percent in the past three years. Similarly, the Netherlands has reduced its corporate tax rate to 16.5 percent for companies with taxable income under $450,000, and the corporate tax rate in Croatia is now just 10 percent for companies with a profit of less than $1,125,000. 

In October, leaders of 136 countries agreed to a deal that imposes a 15 percent global minimum corporate tax, a move intended to discourage venue shopping by firms looking for lower rates. According to Accounting Today, the deal, brokered by the the Organization for Economic Cooperation and Development (OECD),  will allow countries to tax multinationals that make sales within their jurisdictions even if they lack a physical presence there.  

Treasury Secretary Janet Yellen has been advocating for a global corporate minimum tax since April of last year.  But Republicans and some Democrats in Congress are opposed to the OECD deal. Approving it may require the Senate to ratify new tax treaties, which remains only a remote possiblity.