Picture yourself in a country where the government takes more than half of your income in taxes – one of the places with the highest taxes. How would that make you feel? Would you be happy, mad, or think it’s fair or unfair?
Taxes are a big deal that people argue about a lot. They touch everyone – whether you’re a person or a business, rich or not-so-rich, living in a fancy place or somewhere still growing.
Taxes are how governments get most of their money and have a big effect on the economy and society.
We will explore the highest-taxed countries in the world, based on their income tax rates, corporate tax rates, and sales tax rates.
Also, Read Most Powerful Countries in the World Ranked on Their GDP in 2024
The highest personal income tax rates in the world
Personal income tax is a kind of tax that the government puts on the money individuals or families make, like their wages, salaries, dividends, interest, or earnings from investments.
The rates for personal income tax can be very different in various countries and areas. It all depends on things like what’s being taxed, the income levels, the deductions allowed, exemptions, and any credits available.
1. Ivory Coast:-
Personal Income Tax Rate: 60%
In 2018, one of the countries with high taxes added a new tax bracket for incomes over 100 million CFA francs (equivalent to $180,000). The goal was to increase the money the government gets and reduce the fiscal deficit.
Even though a high personal income tax rate can help lessen income inequality by spreading wealth around and supporting social welfare programs, it might also slow down economic growth. This is because it could discourage people from working, saving money, and investing, causing problems in how resources are used efficiently.
Finland
(Personal Income Tax Rate: 56.95%)
The personal income tax rate is often high due to a progressive tax system. This means that people with higher incomes face higher tax rates. Additionally, substantial social security contributions also play a role in contributing to this high personal income tax rate.
Although this approach may reduce income inequality and strengthen social welfare by providing strong public services, it has the potential to hinder economic growth.
The high tax lowers the money people have left after taxes, weakens their motivation to pay taxes, and creates inefficiencies in how resources are distributed.
Denmark
(Personal Income Tax Rate: 56%)
The personal income tax rate is often high because of a progressive tax system, where higher incomes face higher tax rates. Additionally, significant social security contributions also contribute to this elevated personal income tax rate.
While this approach helps reduce income inequality and supports a strong welfare state, it has the potential to slow down economic growth. This is because it reduces the money people have left to spend, weakens their motivation to contribute through taxes, and leads to inefficiencies in how resources are allocated.
Belgium
(Personal Income Tax Rate: 53.7%)
The graduated taxation system, which imposes higher rates on higher incomes, combined with significant social security contributions, plays a crucial role in promoting income equality and maintaining a strong welfare state.
Nevertheless, the high personal income tax rate might hinder economic growth by reducing disposable income, discouraging taxpayer incentives, and introducing inefficiencies in resource allocation.
Sweden
(Personal Income Tax Rate: 52.5%)
The tiered tax structure, marked by higher rates for larger incomes, along with substantial social security contributions, leads to a higher personal income tax rate.
Even though it tackles income inequality and supports a strong welfare state, it could slow down economic growth by reducing disposable income, dampening taxpayer incentives, and causing inefficiencies in resource allocation.
The highest corporate tax rates in the world
Corporate tax is a type of tax levied on the profits of businesses or legal entities, including companies, partnerships, or trusts.
Corporate tax rates vary widely among different countries and regions. These differences depend on factors like the tax base, deductions allowed, credits available, and tax treaties.
According to Tax Guru, the highest corporate tax rate in 2023 is projected to be as follows.
Puerto Rico
(Corporate Tax Rate: 37.5%)
Puerto Rico’s financial challenges since 2006 led to changes in taxes and the implementation of austerity measures to tackle the issue of public debt.
The elevated corporate tax rate hinders business competitiveness by reducing after-tax profits and giving corporations less incentive to remain in the area.
This might lead companies to move to places with lower tax rates, affecting investment and innovation. Lower returns on capital and reduced support for research and development could result from this shift.
Suriname
(Corporate Tax Rate: 36%)
Suriname, consistently listed among the countries with high taxes, is undergoing a prolonged economic downturn. This downturn was sparked by a significant drop in commodity prices, especially in oil and gold, posing challenges to the competitiveness of businesses.
The elevated tax rate in Suriname reduces after-tax profits, potentially leading corporations to consider moving to places with lower rates. This could affect Suriname’s attractiveness for foreign direct investment and hinder innovation by discouraging research and development efforts.
Chad
(Corporate Tax Rate: 35%)
Chad’s dependence on oil, making up 70% of the government budget and 90% of exports, is the driving force behind this tax rate
The elevated taxation in Chad could impede business competitiveness, decrease after-tax profits, and discourage corporations from operating in the country.
Moreover, it might discourage foreign direct investment and hinder innovation by discouraging research and development activities.
Congo
(Corporate Tax Rate: 35%)
Congo is expected to have the fourth-highest corporate tax rate in 2023, mainly due to enduring political instability and corruption.
Decades of these problems have weakened the rule of law and the business environment. The elevated tax rate poses a risk of reducing business competitiveness, discouraging investment, and hindering innovation by cutting into after-tax profits and corporate incentives.
It might also encourage corporations to think about moving to places with lower tax rates, adding to the challenge of attracting foreign direct investment to Congo.
Equatorial Guinea
Corporate Tax Rate: 35%
Equatorial Guinea encounters challenges in business competitiveness due to its high corporate tax rate. This elevated rate, influenced by a strong dependence on oil revenues, affects after-tax profits, discourages corporate activities, and could result in relocations to areas with lower tax rates.
Moreover, it hinders investment and innovation, reducing the country’s attractiveness for foreign direct investment and impeding research and development activities.
The highest sales tax rates in the world
Sales tax is an additional tax included in the price of goods or services sold to consumers, like food, clothing, electronics, or entertainment.
Sales tax rates differ significantly among various countries and regions. These differences depend on factors like the tax base, exemptions, thresholds, and categories.
Bhutan
Sales Tax Rate: 50%
In 2023, Bhutan is expected to have the world’s highest projected sales tax rate, mainly due to high import duties on most goods.
Essential items such as food and medicine are exempt from this high sales tax rate. While the elevated rate helps generate revenue and promotes environmental protection by reducing the consumption of imported goods, it may impede consumer spending, increase living costs, and contribute to inflation.
Hungary
Sales Tax Rate: 27%
Hungary projects the world’s second-highest sales tax rate. This stems from its value-added tax (VAT) system, applying a uniform rate to most goods and services, with exceptions for basics like food and medicines.
While advantageous for revenue and fiscal consolidation. The high rate may hinder consumer spending by inflating prices and living costs, potentially contributing to inflation in the economy.
Croatia
(Sales Tax Rate: 25%)
Croatia, driven by a value-added tax (VAT) system, imposes a standard tax on most goods and services.
Though advantageous for revenue and fiscal consolidation, as it focuses on consumer spending, there’s a downside: higher prices, increased living costs, and the possibility of inflation due to the elevated sales tax rate.
Denmark
Sales Tax Rate: 25%
Denmark relies primarily on the value-added tax (VAT) system. This consistent tax, with exceptions for certain items like education and health services, boosts revenue and supports the nation’s strong welfare state.
While Denmark’s high sales tax reflects its status as one of the highest-taxed countries. It supports quality public services. However, this elevated tax may impede consumer spending by raising prices and living costs, potentially contributing to inflation.
Norway
(Sales Tax Rate: 25%)
In 2023, Norway is expected to have the fifth-highest sales tax rate. This is influenced by the value-added tax (VAT) system. Which imposes a standard rate on most goods and services.
Even though the high tax in Norway is beneficial for revenue and sustains a generous welfare state. It might impede consumer spending, raise living costs, and contribute to inflation.
