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Mapped: International Tax Competitiveness by Country

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International Tax Competitiveness

International Tax Competitiveness

This infographic is available as a poster.

Mapped: International Tax Competitiveness by Country

Many multinational companies, such as Google and Facebook, have their European headquarters in Ireland. Why? Ireland has low corporate taxes.

In fact, a countryโ€™s tax structure can have a significant impact on its economic performance. Countries with low marginal tax rates encourage business investment, while countries with high taxes may drive investment elsewhere.

This Markets in a Minute from New York life Investments looks at international tax competitiveness among countries within the Organization for Economic Co-operation and Development (OECD).

How is Tax Competitiveness Measured?

The Tax Foundation measured international tax competitiveness using two aspects of tax policy: competitiveness and neutrality.

Competitiveness measures how low a countryโ€™s marginal tax rates are. On the other hand, a neutral tax code raises the most revenue with the fewest economic distortions. This means that it doesnโ€™t favor consumption over savings, which is what happens with investment or wealth taxes. It also means there are few or no tax breaks for specific business or individual activities.

With these two aspects in mind, the Tax Foundation looked at five types of taxes:

  • Corporate taxes
  • Individual income taxes
  • Consumption taxes
  • Property taxes
  • Cross-border taxes

According to research from the OECD, corporate taxes are most harmful for economic growth while taxes on immovable property (real estate) have the smallest impact.

International Tax Competitiveness, Ranked

Here is how the OECD countries rank on their international tax competitiveness. A low score means the countryโ€™s taxes are relatively less competitive, while a score of 100 indicates the most competitive tax code among OECD countries.

CountryOverall RankOverall Score
๐Ÿ‡ช๐Ÿ‡ช Estonia1100.0
๐Ÿ‡ฑ๐Ÿ‡ป Latvia285.1
๐Ÿ‡ณ๐Ÿ‡ฟ New Zealand381.3
๐Ÿ‡จ๐Ÿ‡ญ Switzerland478.4
๐Ÿ‡ฑ๐Ÿ‡บ Luxembourg576.5
๐Ÿ‡ฑ๐Ÿ‡น Lithuania676.5
๐Ÿ‡จ๐Ÿ‡ฟ Czech Republic775.5
๐Ÿ‡ธ๐Ÿ‡ช Sweden872.9
๐Ÿ‡ฆ๐Ÿ‡บ Australia971.3
๐Ÿ‡ณ๐Ÿ‡ด Norway1070.6
๐Ÿ‡ธ๐Ÿ‡ฐ Slovak Republic1169.3
๐Ÿ‡ณ๐Ÿ‡ฑ Netherlands1269.2
๐Ÿ‡ญ๐Ÿ‡บ Hungary1369.0
๐Ÿ‡ฎ๐Ÿ‡ฑ Israel1467.6
๐Ÿ‡ซ๐Ÿ‡ฎ Finland1567.4
๐Ÿ‡ฉ๐Ÿ‡ช Germany1667.2
๐Ÿ‡น๐Ÿ‡ท Turkey1766.7
๐Ÿ‡ฆ๐Ÿ‡น Austria1865.7
๐Ÿ‡ฎ๐Ÿ‡ช Ireland1964.7
๐Ÿ‡จ๐Ÿ‡ฆ Canada2064.6
๐Ÿ‡บ๐Ÿ‡ธ United States2162.4
๐Ÿ‡ฌ๐Ÿ‡ง United Kingdom2261.8
๐Ÿ‡ง๐Ÿ‡ช Belgium2361.6
๐Ÿ‡ฏ๐Ÿ‡ต Japan2461.5
๐Ÿ‡ธ๐Ÿ‡ฎ Slovenia2561.3
๐Ÿ‡ฐ๐Ÿ‡ท Korea2660.6
๐Ÿ‡จ๐Ÿ‡ฑ Chile2758.2
๐Ÿ‡ฉ๐Ÿ‡ฐ Denmark2857.9
๐Ÿ‡ฌ๐Ÿ‡ท Greece2957.5
๐Ÿ‡ช๐Ÿ‡ธ Spain3057.1
๐Ÿ‡จ๐Ÿ‡ด Colombia3155.0
๐Ÿ‡ฎ๐Ÿ‡ธ Iceland3253.7
๐Ÿ‡ฒ๐Ÿ‡ฝ Mexico3352.5
๐Ÿ‡ต๐Ÿ‡น Portugal3449.0
๐Ÿ‡ซ๐Ÿ‡ท France3548.7
๐Ÿ‡ต๐Ÿ‡ฑ Poland3645.7
๐Ÿ‡ฎ๐Ÿ‡น Italy3744.6

Costa Rica joined the OECD in 2021 and was not included in the ranking due to data availability.

For the eighth year in a row, Estonia has the most competitive taxes. The country has a 20% corporate tax that only applies to profits when they are distributed to shareholders, and property tax that only applies to the land value. Switzerland, one of the worldโ€™s biggest tax havens, ranks fourth. It boasts a low, broad-based consumption tax of 7.7% and an individual income tax that partially excludes capital gains from taxation.

Meanwhile, the U.S. falls in the middle of the pack for international tax competitiveness. It allows for full expensing for business investments in machinery. However, a weakness is that the statesโ€™ sales taxes apply to only a third of the potential tax base on average. This is largely due to the fact that most personal services are exempt from sales tax.

Italy has the least competitive taxes. The country has a wealth tax on financial assets and real estate assets held abroad, and a financial transaction tax on assets when they are sold. Not only that, it takes businesses an estimated 169 hours to comply with the individual income tax.

Balancing Budget and Competition

While many factors contribute to economic performance, tax structure does play a role. Governments face the task of collecting sufficient revenue to meet their budgetary requirements, while also maximizing their international tax competitiveness. These tax structures are constantly evolving.

Starting in 2023, 137 countriesโ€”including Irelandโ€”have agreed to a global minimum tax rate of 15% on large multinational firms. The agreement aims to stop a โ€œrace to the bottomโ€ on corporate taxation in order to attract foreign investment. Notably, the OECD estimates this could raise $150 billion in additional global tax revenues every year.

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Markets in a Minute

Visualizing Historical Oil Prices (1968-2022)

The real price of oil reached a seven year high amid the Russia-Ukraine war. How have other major events impacted historical oil prices?

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Historical Oil Prices (1968-2022)

Amid Russiaโ€™s invasion of Ukraine, the inflation-adjusted price of oil reached a seven-year high. Russia is one of the worldโ€™s largest producers of crude oil, and many countries have announced a ban on Russian oil imports amid the war. This has led to supply uncertainties and, therefore, rising prices.

How does the price increase compare to previous political and economic events? In this Markets in a Minute from New York Life Investments, we look at historical oil prices since 1968.

The Fundamentals Behind Oil Prices

Before diving into the data, itโ€™s worth explaining why historical oil prices have seen so much volatility. This mainly stems from the fact that the supply and demand of oil tends to have a low responsiveness to price changes in the short term.

  • On the supply side, oil production capacity can be challenging to change quickly. Drilling a new oil well is a lengthy and complex process.
    • On the demand side, it can be quite difficult to change equipment that uses petroleum products. For instance, in the short term, people will keep driving their cars to work despite higher gas prices.

    For these reasons, in order to re-balance supply and demand, it takes a sufficiently large price change to occur. For example, if gas prices were to double, only then may enough commuters consider taking public transit or changing behavior in other ways.

    What kind of events can shock the system enough to drive big price changes?

    A large portion of the worldโ€™s oil is located in regions that are prone to political conflict. Political events can disrupt the actual or perceived supply of oil, and drive prices upwards. On the other hand, an economic downturn reduces energy demand and can depress prices.

    Looking Back at Historical Oil Prices

    To compare how events have influenced historical oil prices, we used data from the U.S. Energy Information Administration. It should be noted that the data extends to March 31, 2022, and does not reflect the recent price dips in response to Shanghai lockdowns and U.S. rate hikes.

    Here is the inflation-adjusted price of a barrel of crude oil during select events.

    DateEventCrude Oil Price per Barrel
    Real 2010 Dollars
    Q1 1971U.S. spare capacity exhausted$13.47
    Q1 1973Arab Oil Embargo$15.90
    Q1 1974Embargo lifted$42.00
    Q1 1978Iranian Revolution$39.65
    Q3 1980Official start of Iran-Iraq war$76.93
    Q1 1986Saudis abandon swing producer role$32.90
    Q2 1990Trough price prior to Iraq's invasion of Kuwait$26.72
    Q3 1990Iraq invades Kuwait$39.37
    Q4 1990Peak price during invasion$47.15
    Q2 1991Iraq accepts UN resolution to end conflict$30.18
    Q4 1996Peak price prior to Asian financial crisis$31.88
    Q3 1997Asian financial crisis begins$25.35
    Q1 1999OPEC cuts production target by 1.7M b/d$16.41
    Q4 2000Peak price prior to 9/11$38.73
    Q3 20019/11 attacks$31.76
    Q4 2001Trough price after 9/11$24.22
    Q1 2005Low spare capacity$54.71
    Q2 2008Peak price before global financial collapse$125.21
    Q1 2009OPEC cuts production targets by 4.2M b/d$42.89
    Q2 2014Peak price prior to supply gut price collapse$95.07
    Q1 2015OPEC production quota unchanged despite low prices$44.41
    Q4 2019Price immediately prior to global pandemic$50.38
    Q1 2020COVID-19 declared a pandemic$40.34
    Q2 2020Trough price during global pandemic$24.65
    Q1 2022Russia invades Ukraine$77.94

    From the first quarter of 1968 until the second quarter of 1986, data reflects the reporter refiner acquisition cost. From the third quarter of 1986 to the first quarter of 2022, data reflects the West Texas Intermediate cost.

    In 1973, the Organization of the Petroleum Exporting Countries (OPEC) announced an embargo (ban) on oil exports to the United States. The move was in response to the U.S. providing military aid to Israel. By the time the embargo ended in March 1974, the inflation-adjusted price of crude oil had risen 164%. The embargo also led to a selloff in the stock market, with the recovery taking almost six years.

    Historical oil prices rose rapidly from 2004-2008. During that time, economic growth was fueling oil demand but there was little spare production capacity. By the second quarter of 2008, inflation-adjusted oil prices hit a high of $125 per barrel. They crashed by 66% shortly thereafter due to the global financial crisis.

    Most recently, the COVID-19 pandemic and associated containment measures caused historical oil prices to drop by nearly 40% in three months. Oil prices have since risen 216% from their pandemic low, as of the first quarter of 2022. This is due to the economic recovery and Russiaโ€™s invasion of Ukraine.

    Oil as an Investment

    Investorsโ€™ interest in oil as an alternative investment has risen in recent years. Given the high volatility in historical oil prices, investors may want to consider their comfort with this level of risk. Of course, an investorโ€™s sustainability goals may also be a factor when choosing whether to invest in oil.

    However, oil also presents opportunities. It has had low-to-negative correlation with U.S. bonds in recent years and may help investors diversify their portfolios. Not only that, it may help investors manage rising interest rates. An economic recovery typically leads to rising interest rates, but also more energy demand. Oil prices have historically climbed during these periods.

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Markets in a Minute

Mapped: Interest Rates by Country in 2022

For the vast majority of countries, interest rates are marching upward. Hereโ€™s how they break down in 2022.

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Interest Rates

This infographic is available as a poster.

Mapped: Interest Rates by Country

Soaring inflation, the war in Ukraine, and strengthening economies are spurring interest rate increases around the world. At the same time, central banks are unwinding record monetary stimulus from COVID-19.

In this Markets in a Minute from New York Life Investments, we show interest rates by country in 2022. Interest rates are based on short-term benchmark policy rates set out by central banks.

Interest Rates Around the World in 2022

While the vast majority of countries saw a decline in interest rates over recent years, this trend is reversing for many in 2022.

After hovering at 0.0%, the U.S. increased its short-term interest rate to 0.5%. Experts project up to seven interest rate hikes this year, with interest rates rising as high as 1.9% by year-end.

For many countries in Europe, interest rates climbed out of negative territory for the first time since 2014. Interest rates now sit at 0.0% across the European Union.

Country/ Region
Short-Term Interest Rate (%)
๐Ÿ‡ฆ๐Ÿ‡ฑ Albania1.0
๐Ÿ‡ฆ๐Ÿ‡ฒ Armenia9.3
๐Ÿ‡ฆ๐Ÿ‡บ Australia 0.1
๐Ÿ‡ฆ๐Ÿ‡น Austria0.0
๐Ÿ‡ฆ๐Ÿ‡ฟ Azerbaijan7.8
๐Ÿ‡ง๐Ÿ‡ธ Bahamas4.0
๐Ÿ‡ง๐Ÿ‡ฉ Bangladesh4.8
๐Ÿ‡ง๐Ÿ‡ง Barbados2.0
๐Ÿ‡ง๐Ÿ‡พ Belarus12.0
๐Ÿ‡ง๐Ÿ‡ช Belgium0.0
๐Ÿ‡ง๐Ÿ‡ฟ Belize2.3
๐Ÿ‡ง๐Ÿ‡ด Bolivia 3.9
๐Ÿ‡ง๐Ÿ‡ผ Botswana3.8
๐Ÿ‡ง๐Ÿ‡ท Brazil11.8
๐Ÿ‡จ๐Ÿ‡ฆ Canada0.5
๐Ÿ‡น๐Ÿ‡ฉ Chad3.5
๐Ÿ‡จ๐Ÿ‡ฑ Chile7.0
๐Ÿ‡จ๐Ÿ‡ณ China3.7
๐Ÿ‡จ๐Ÿ‡ด Colombia5.0
๐Ÿ‡จ๐Ÿ‡ฌ Congo7.5
๐Ÿ‡จ๐Ÿ‡ท Costa Rica2.5
๐Ÿ‡จ๐Ÿ‡บ Cuba2.3
๐Ÿ‡จ๐Ÿ‡ฟ Czech Republic5.0
๐Ÿ‡ฉ๐Ÿ‡ฐ Denmark-0.6
๐Ÿ‡ฉ๐Ÿ‡ด Dominican Republic5.5
๐Ÿ‡ช๐Ÿ‡จ Ecuador7.2
๐Ÿ‡ช๐Ÿ‡ฌ Egypt9.3
๐Ÿ‡ซ๐Ÿ‡ฏ Fiji0.3
๐Ÿ‡ซ๐Ÿ‡ฎ Finland0.0
๐Ÿ‡ซ๐Ÿ‡ท France0.0
๐Ÿ‡ฌ๐Ÿ‡ช Georgia11.0
๐Ÿ‡ฉ๐Ÿ‡ช Germany0.0
๐Ÿ‡ฌ๐Ÿ‡ท Greece0.0
๐Ÿ‡ฌ๐Ÿ‡พ Guyana5.0
๐Ÿ‡ญ๐Ÿ‡ฐ Hong Kong0.8
๐Ÿ‡ญ๐Ÿ‡บ Hungary4.4
๐Ÿ‡ฎ๐Ÿ‡ธ Iceland2.8
๐Ÿ‡ฎ๐Ÿ‡ณ India4.0
๐Ÿ‡ฎ๐Ÿ‡ฉ Indonesia3.5
๐Ÿ‡ฎ๐Ÿ‡ช Ireland0.0
๐Ÿ‡ฎ๐Ÿ‡ฑ Israel0.1
๐Ÿ‡ฎ๐Ÿ‡น Italy0.0
๐Ÿ‡ฏ๐Ÿ‡ฒ Jamaica4.5
๐Ÿ‡ฏ๐Ÿ‡ต Japan-0.1
๐Ÿ‡ฏ๐Ÿ‡ด Jordan2.8
๐Ÿ‡ฐ๐Ÿ‡ฟ Kazakhstan13.5
๐Ÿ‡ฐ๐Ÿ‡ช Kenya7.0
๐Ÿ‡ฐ๐Ÿ‡ฌ Kyrgyzstan10.0
๐Ÿ‡ฑ๐Ÿ‡ฆ Laos3.0
๐Ÿ‡ฑ๐Ÿ‡ป Latvia0.0
๐Ÿ‡ฑ๐Ÿ‡ง Lebanon7.8
๐Ÿ‡ฑ๐Ÿ‡ธ Lesotho4.0
๐Ÿ‡ฑ๐Ÿ‡พ Libya3.0
๐Ÿ‡ฑ๐Ÿ‡น Lithuania0.0
๐Ÿ‡ฑ๐Ÿ‡บ Luxembourg0.0
๐Ÿ‡ฒ๐Ÿ‡พ Malaysia1.8
๐Ÿ‡ฒ๐Ÿ‡ป Maldives7.0
๐Ÿ‡ฒ๐Ÿ‡ฑ Mali4.0
๐Ÿ‡ฒ๐Ÿ‡ฝ Mexico6.5
๐Ÿ‡ฒ๐Ÿ‡ณ Mongolia9.0
๐Ÿ‡ฒ๐Ÿ‡ฆ Morocco1.5
๐Ÿ‡ณ๐Ÿ‡ต Nepal7.0
๐Ÿ‡ณ๐Ÿ‡ฑ Netherlands0.0
๐Ÿ‡ณ๐Ÿ‡ฟ New Zealand1.0
๐Ÿ‡ณ๐Ÿ‡ฌ Nigeria11.5
๐Ÿ‡ณ๐Ÿ‡ด Norway0.8
๐Ÿ‡ต๐Ÿ‡ฐ Pakistan12.3
๐Ÿ‡ต๐Ÿ‡พ Paraguay6.3
๐Ÿ‡ต๐Ÿ‡ช Peru4.5
๐Ÿ‡ต๐Ÿ‡ญ Philippines2.0
๐Ÿ‡ต๐Ÿ‡ฑ Poland4.5
๐Ÿ‡ต๐Ÿ‡น Portugal0.0
๐Ÿ‡ถ๐Ÿ‡ฆ Qatar2.5
๐Ÿ‡ท๐Ÿ‡ด Romania3.0
๐Ÿ‡ท๐Ÿ‡ผ Rwanda5.0
๐Ÿ‡ธ๐Ÿ‡ฆ Saudi Arabia1.3
๐Ÿ‡ท๐Ÿ‡ธ Serbia1.5
๐Ÿ‡ธ๐Ÿ‡ฑ Sierra Leone14.3
๐Ÿ‡ธ๐Ÿ‡ฌ Singapore0.3
๐Ÿ‡ธ๐Ÿ‡ฐ Slovakia0.0
๐Ÿ‡ฟ๐Ÿ‡ฆ South Africa4.3
๐Ÿ‡ฐ๐Ÿ‡ท South Korea1.3
๐Ÿ‡ธ๐Ÿ‡ธ South Sudan12.0
๐Ÿ‡ช๐Ÿ‡ธ Spain0.0
๐Ÿ‡ฑ๐Ÿ‡ฐ Sri Lanka13.5
๐Ÿ‡ธ๐Ÿ‡ฟ Swaziland4.0
๐Ÿ‡ธ๐Ÿ‡ช Sweden0.0
๐Ÿ‡จ๐Ÿ‡ญ Switzerland-0.8
๐Ÿ‡น๐Ÿ‡ผ Taiwan1.4
๐Ÿ‡น๐Ÿ‡ญ Thailand0.5
๐Ÿ‡น๐Ÿ‡ณ Tunisia6.3
๐Ÿ‡น๐Ÿ‡ท Turkey14.0
๐Ÿ‡บ๐Ÿ‡ฌ Uganda6.5
๐Ÿ‡บ๐Ÿ‡ฆ Ukraine10.0
๐Ÿ‡ฆ๐Ÿ‡ช United Arab Emirates1.8
๐Ÿ‡ฌ๐Ÿ‡ง United Kingdom0.8
๐Ÿ‡บ๐Ÿ‡ธ United States0.5
๐Ÿ‡ป๐Ÿ‡ณ Vietnam4.0
๐Ÿ‡ฟ๐Ÿ‡ฒ Zambia9.0

*Australia, China, India, Pakistan, Peru, Poland, Serbia, Romania data as of April 2022.
Reflects data for March or February 2022 depending on latest available data.
Source: Trading Economics (Apr 2022)

In Latin America, several central banks are taking a hawkish stance as oil price shocks are causing inflation to accelerate.

Mexico raised its benchmark interest rate to 6.5% in March in response to inflation hitting 20-year highs. Even before the war in Ukraine, global factors such as rising oil and import prices were already having a greater impact on Latin American countries than advanced economies.

Unlike the U.S. and most countries located in Europe and Latin America, China is anticipated to potentially lower its interest rates.

A renewed COVID-19 wave has slowed growth, with the government requiring countless factories to close in order to combat the spread of the Omicron variant. Disruptions have cascaded across supply chainsโ€”from electric vehicles to iPhonesโ€” leaving goods in shorter supply. China is responsible for roughly one-third of global manufacturing.

High-Water Mark

Which countries have the highest interest rates in 2022?

Interest Rates

At an eye-watering 80%, Zimbabwe has the highest interest rate of any country.

In early April, the central bank raised rates by 20 percentage points to combat a 73% inflation rate. Small businesses, teachers, and analysts have been urging the government to adopt the U.S. dollar to boost economic and investor confidence amid currency woes.

With an interest rate of 44.5%, Argentina has the second-highest rate. To get closer to reaching the requirements for rescheduling its $40 billion loan to the International Monetary Fund (IMF), the central bank raised interest rates for the second time this year. The IMF requires having interest rates above the rate of inflation. As of February, Argentina’s inflation exceeded 50%.

Meanwhile, oil-rich countries such as Angola (20%), Iran (18%), and Russia (17%) all made it into the top 10 for highest rates globally.

Treading Water

What is the outlook for interest rates in 2022 and beyond?

In the short term, experts believe interest rates will likely rise to fight inflation. They could also play a role in slower economic growth, especially if raised too quickly. Recently, the World Bank revised global growth to 3.2% due to the war in Ukraine and rising food and energy pricesโ€”about a percentage point lower than its previous forecast of 4.1%.

The longer-term view may look different.

Structural factors, such as an aging population, will likely lead to an increase in savings rates for retirement. In theory, higher savings rates increases the total supply of funds, depressing the interest rate. By 2100, people over 50 are projected to rise from 25% to 40% of the global population.

The end of ultra-low interest rates may be over for now, but broader factors, including growing global debtโ€”which stands at 355% of the world’s GDPโ€”suggests it may be a short to medium-term adjustment.

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