Corporate income tax rate reductions are slowing down and wide disparities in revenue shares from the tax persist across countries, according to an OECD report for 2024.
The ‘Tax Policy Reforms 2025 – OECD and Selected Partner Economies’ report was published today, September 11.
It was produced by the tax policy and statistics division of the OECD’s Centre for Tax Policy and Administration.
The report is an annual publication that provides comparative information on tax reforms across countries, with this year’s edition focusing on tax reforms introduced or announced during the 2024 calendar year in 86 jurisdictions.
CIT rate reductions showed further signs of halting in 2024, the report stated.
“For the second consecutive year, CIT rate increases were more common than decreases, further suggesting that the downward trend in CIT rates has halted or is showing signs of reversing,” it said.
Revenue mobilisation was a key driver of CIT reform in 2024, alongside efforts to stimulate growth and investment – the report also highlighted.
Wide disparities in CIT revenue shares persist across countries, according to the report.
In low-income countries, the average CIT share rose from around 13.2% in 2000 to over 22% in 2022. Similarly, middle-income countries saw an increase from 11.3% to nearly 20% over the same period.
There was a more modest increase in high-income countries, with the CIT share rising from 11.2% in 2000 to 13.3% in 2022.
However, this still represents a noticeable uptick compared to 2019 levels, the report added.
The disparity across countries and income groups in CIT revenues as a share of total tax revenues can be attributed to several factors, it claimed.
This includes differences in statutory CIT rates, the size of the CIT base, the prevalence of corporate entities within a jurisdiction, and the degree to which countries raise revenues from alternative taxes.
Meanwhile, the report also claimed that, despite the rise in CIT rates, CIT base narrowing measures remain more prevalent.
Countries continued to adopt base narrowing measures to provide preferential tax treatment for certain types of investment, it claimed.
This, according to the report, was particularly true in R&D, emission-reducing technologies, and sectors considered important for national security.
Elsewhere, the report highlighted that, while many VAT reductions occurred during the pandemic and subsequent period of energy price pressures, 2023 appeared to mark a turning point.
That year, and 2024, saw VAT-increasing reforms, the report noted.
“In 2022 and 2023, many countries temporarily reduced fuel excise taxes in response to surging energy prices and broader inflationary pressures.
“In 2024, however, the rollback of temporary fuel and energy tax reductions, along with the introduction of fuel and carbon tax increases, marked a clear change in direction,” the report said.
