Tax Rates Around the World

Statutory corporate tax rates have fallen from a global average of 40% (1980) to 23% (2024). Personal top marginal rates have moved similarly. VAT and consumption taxes have grown to fill the gap. The OECD's 15% global minimum corporate tax (Pillar Two) entered force in 2024 across more than 50 countries, capping the bottom of the corporate rate race.

23%
Global average statutory corporate tax rate
15%
OECD Pillar Two global minimum (effective 2024)
19%
Average VAT/GST rate across countries with one
46%
OECD top personal marginal rate (median)

Key insights

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The race to the bottom slowed, then stopped

Average statutory corporate tax rates fell ~17 percentage points from 1980 to 2020. Mobile capital pushed rates down; effective tax rates fell less than statutory rates (depreciation, R&D credits, debt deductibility filled gaps). The 2021 OECD/G20 Pillar Two agreement, implemented from 2024, sets a 15% effective floor on multinational corporate income. Whether it holds depends on US uncertainty and emerging-market participation.

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Personal income tax: progressive, with a cap

OECD top marginal personal income tax rates average 46% and range from 13% (Hungary, flat tax) to 57% (Sweden). High-rate countries fund larger welfare states; their pre-tax-and-transfer Ginis are not unusually low, but post-tax Ginis are. The tax wedge (employer plus employee social contributions plus income tax as % of labour cost) is more comparable across countries than headline income tax rates.

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VAT is the workhorse of modern revenue

Value-added taxes were invented in 1950s France and now exist in over 170 countries. The US is the only major developed economy without one. Average VAT rates have crept up from 16% (2000) to 19% (2024). VAT is broadly regressive on its own — but tied to progressive spending it forms the backbone of most welfare-state finance.

Average statutory corporate income tax rate 1980–2024

Simple average across countries with available data

Key Finding: Average rate fell from 40% (1980) to 23% (2024). The OECD Pillar Two minimum is the first multilateral floor.

Source: Tax Foundation, OECD Tax Database

Headline tax rates — selected OECD economies (2024)

Statutory corporate tax, top personal marginal tax, standard VAT/GST (%)

Key Finding: Nordic countries top the personal tax league; the US and UK sit near the OECD median on corporate tax but well below on VAT.

Source: OECD Tax Database, KPMG Global Tax Rates

Methodology & caveats

Statutory vs effective rates

Statutory rates are the headline number in tax law. Effective rates account for deductions, credits, depreciation schedules and base differences. Effective corporate tax rates are typically 5–10pp below statutory rates and vary widely by sector. The OECD's Pillar Two minimum is defined on an effective basis, not statutory.

Tax wedge for labour

OECD measures the 'tax wedge' as total taxes (income tax + employee SSC + employer SSC) divided by total labour cost. The OECD-average wedge is ~35%; Belgium and Germany top 47%; Chile and Colombia are below 10%. The tax wedge is a better comparison than headline income tax rates.

VAT, GST, sales tax

Value-added tax (VAT) is collected at each production stage with credits for inputs — administratively cleaner than a single-stage sales tax. Sales taxes (US states) are collected only at final sale. Goods and Services Tax (GST) in Canada, Australia, NZ, India is the same concept as VAT. The US federal lack of any consumption tax is internationally exceptional.