Foreigners are attracted chiefly by Malta's tax system, which allows income tax on dividends to be offset against corporate tax, reducing the effective tax rate on dividends from 35% to 5%.
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The effective corporate tax rate was brought down by about 12%.
But with the corporate income tax rate being what it is, the second highest effective tax rate in the world, according to the Organization for Economic Cooperation and Development, or OECD, then companies are doing what is logically sane for them to do.
And if you tack on their shares of the corporate income tax and the estate tax, their effective tax rate hit 24.5 percent.
For example, China provides tax holidays or rulings reducing the effective tax rate on certain corporate income to 15% or 20%.
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The average effective U.S. corporate tax rate the amount of tax corporations actually pay is far lower than 35 percent, roughly 20 percent to 25 percent by some estimates.
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Next year in California the effective top marginal tax rate on corporate dividends rises to 74%.
The effective rate of its federal and local corporate tax will fall only to 32.7% (from 38.7%), still a hefty bite out of profits.
When it comes to the effective rate, U.S. corporate tax burdens are not the highest in the advanced economies within the Organization of Economic Cooperation and Development, or OECD.
Effective tax rates can also be affective for analyzing corporate taxes because the statutory rate does not reflect who ultimately bears the burden of the tax.
Effective January 2013, Slovakia, with a 19% flat income tax system, raised its corporate tax rate to 23%, and introduced a second 25% tax bracket for higher personal incomes.
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