There are few geographical drivers as powerful for a business as the corporate tax rate. Globally, corporate tax rates vary dramatically. For example, Comoros features a 50% rate while Brazil, Argentina, and Venezuela fluctuate between 34% and 35%. Contrast this with The Cayman Islands, Tokelau Islands, and The Bailiwick of Jersey – all 0% – the variations are notable. 

While a 0% corporate tax rate might sound ideal, firms must consider the local talent pool, costs of living, proximity/accessibility to larger markets, and quality of life. What follows are the top 5 most competitive countries in terms of their corporate tax rate while considering the previously mentioned factors.   

Bulgaria

This small European-Union nation (~ 7 million people) has a flat corporate income tax rate of 10%. Worldwide revenue is taxed on all local firms while nonresident companies are only taxed on revenue generated in Bulgaria. Due to this favorable environment, foreign investment has been a major driver in advancing economic growth. Bulgaria’s skilled workforce for such a small nation and strategic location is also worth mentioning – the country borders the Black Sea with Turkey to the southeast and Greece to its southwest.

Andorra

Bulgaria is small by European Union standards, but Andorra is small by any measure. With just 77,000 people, this landlocked nation between France and Spain is not part of the European Union but does enjoy eurozone membership. The corporate tax rate is 10% and companies are now obliged (as of January 2023) to pay an “object tax” on profits (a minimum of 3%). The 10% corporate tax may be reduced based on the tax on profits of income derived outside Andorra. 

Ireland

Ireland’s corporate tax rate is a tad higher than Bulgaria and Andorra at 12.5%. Yet, it’s an English-speaking nation with a highly educated and skilled workforce that has attracted large firms such as Google and Apple. Ireland boasts the world’s highest number of engineering and science graduates per capita and its access to the UK market makes it a desirable destination. 

Gibraltar

Also pegged at a 12.5% rate, tiny Gibraltar (2.58 square miles) is growing in popularity. Corporate taxes are paid on income generated in Gibraltar and traditional companies benefit from a further reduction. Gibraltar has a thriving banking and financial services sector and its close proximity to the UK also makes it an ideal place for companies seeking a European base of operations. 

Montenegro

From a purely aesthetic point of view, Montenegro tops the list. Beautiful beaches, an agreeable climate, and fantastic food, the corporate tax benefits are just one of a multitude of reasons to consider Montenegro. On profits up to 100,000 euros the tax is 9%. From 100,000 – 1,500,000 euros a 12% tax kicks in (plus 9,000 euros), and from $1,500,000 + a 15% tax is levied. The euro is Montenegro’s de facto currency and it is rumored to be considered for full European Union membership sometime between 2025 and 2030.