OECD ranking: The award for the country with the world’s most competitive tax system goes to…
Estonia tops the rankings in a new report by the Organisation for Economic Co-operation and Development (OECD) that was published today by the Tax Foundation, a tax policy non-profit in the U.S. The ranking zooms in on the the most competitive tax regimes around the world.
Estonia’s top score is driven by a 20 per cent percent tax rate on corporate income that is only applied to distributed profits and also by property tax that only applies to the value of land, rather than to the value of real property or capital, the authors of the International Tax Competitiveness Report wrote.
Responding to the news, Andres Sutt, the Estonian Minister of Entrepreneurship and Information Technology, told City PM this afternoon that the country’s is increasingly attracting foreign entrepreneurs.
“In a globalised world, a transparent and fair tax system is one of the most important factors for companies thinking of international expansion or entering the European market,” he explained.
“Estonia’s tax system constitutes a strong competitive advantage because it supports free entrepreneurship and minimal bureaucracy allows businesses to focus on the development of their products and services” Sutt explained.
The minister also pointed out that competition is ramping up among countries worldwide who are looking for ways to attract businesses to contribute to their economies.
“The Covid-19 pandemic has underscored the possibilities and limitations of physical space in business. In the intensifying global competition for talent, Estonia boasts two major advantages, the digital solutions offered by Estonia provide convenient tools for responding to unexpected events, and a simple and uniform taxation of personal income at a competitive rate.”
“As a result, Estonia’s tax system and public digital services are noticed by entrepreneurs around the world,” Sutt boasted.
Nation brand
The OECD’s findings were supported by a report published by Brand Finance that has deemed Digital Estonia as the world’s fastest-growing ‘nation brand’ of 2021.
Compared to last year, Estonia’s brand value increased by 38% per cent. According to the report, Estonia’s infrastructure has helped it succeed in the context of the Covid-19 pandemic.
The report also highlights Estonia’s e-Residency programme as one of the main contributors to the high value and rapid growth of the national brand, allowing anyone around the world to access the country’s public e-services, as well as set up and run an EU-based company online.