A three per cent reduction in corporate tax during this year helped India remarkably improve its ranking by five notches in the KPMG Corporate Tax Rate Survey 2006.
India finished 11th as against 6th last year in the survey, which ranked 86 countries in three regions on the basis of 'lower the rank, better the tax structure' and greater possibility of attracting investments.
According to KPMG Corporate Tax Rate Survey 2006, 19 countries levy higher corporate tax than India.
Interestingly, last year, India stood sixth with an effective tax rate of 36.5925 per cent.
"For the year ending March 31, 2006 the basic corporate tax rate for domestic companies was reduced to 30 per cent, and the surcharge was increased to 10 per cent. The effective tax rate for domestic companies is 33.66 per cent," the survey said.
In its pursuit to usher in lower tax rates, India is moving towards the average statutory rate of Asia-Pacific which is 29.99 per cent.
Japan led the list with the highest corporate tax rate of 40.69 per cent, followed by United States at 40 per cent. China was a tad below India with a corporate tax rate of 33 per cent.
The Cayman Island was at the bottom of the list with a corporate tax rate of zero per cent.
Among other Asian countries, the tax rate of Malaysia was 28 per cent and Hong Kong 17.5 per cent.
"A low tax rate does not necessarily means a low tax burden. An apparently high tax jurisdiction can be attractive for investment if its effective rate is significantly lower than the statutory rate," it said.
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