Corporate Tax Rates 7 Countries 2026

Corporate income tax is the most-discussed (and often most-misunderstood) factor when choosing a jurisdiction. Headline rates vary widely; effective rates after deductions, credits, and pass-through structures vary even more. This 2026 comparison covers headline rates, the layering of national plus subnational tax, and the typical effective rates for companies in the United Kingdom, France, Sweden, Australia, New Zealand, Canada, and the United States.

Important note: Tax rates change frequently. Always verify with current official sources before relying on figures for planning. The figures here reflect the 2026 fiscal year, sourced from official tax authorities as of May 2026.

Quick comparison table

United Kingdom

Headline rate (2026): 25% for companies with taxable profits over £250,000.

Small Profits Rate: 19% for taxable profits under £50,000. Marginal relief between £50,000-£250,000 produces an effective gradient.

No state/subnational corporate income tax.

Diverted Profits Tax (DPT): 31% on profits artificially diverted from the UK; rare in practice for legitimate business.

National Insurance contributions apply for employers on payroll (separate from CT).

R&D tax credit: Significantly enhanced relief for SMEs and large companies under Corporation Tax Act 2010.

Effective rate for typical SME: 19-25% depending on profit level.

Source: HMRC Corporation Tax rates and reliefs.

France

Headline rate (2026): 25% standard.

Reduced rate: 15% on first €42,500 of taxable profit for SMEs (turnover under €10 million).

Cotisation sur la Valeur Ajoutée des Entreprises (CVAE): Local tax on value added, 0.0%-0.625% depending on revenue. Phased out for some sectors.

Cotisation Foncière des Entreprises (CFE): Local property-based tax, varies by municipality.

Total effective rate: Typically 25-28% depending on local taxes and value-added situation.

Tax credit research (Crédit d’Impôt Recherche, CIR): 30% of R&D spending up to €100M, 5% above. Generous and globally competitive.

Source: Direction générale des Finances publiques (DGFiP).

Sweden

Headline rate (2026): 20.6%. Reduced from 22% in stages 2019-2021.

No state/subnational corporate income tax.

No alternative minimum tax (unlike US).

Group taxation: Through “koncernbidrag” (group contribution), profitable Swedish entities can transfer income to loss-making affiliates.

Sweden has very low effective rates for international groups using Swedish IP holding structures, especially with EU directives reducing withholding on cross-border dividends.

Source: Skatteverket — Bolagsskatt.

Australia

Headline rate (2026):

• 30% standard for companies with aggregated turnover ≥ AU$50 million.
• 25% “base rate entity” for companies with aggregated turnover < AU$50 million.

The “base rate entity” status requires:

• Aggregated turnover under AU$50M.
• Less than 80% of assessable income from passive sources (interest, dividends, rent).

No federal-state corporate income tax split in Australia. Single federal corporate tax.

Petroleum Resource Rent Tax (PRRT): Sector-specific, applies to oil and gas projects.

R&D tax incentive: Available with specific eligibility criteria.

Source: Australian Taxation Office (ATO).

New Zealand

Headline rate (2026): 28% flat.

No state/subnational corporate income tax.

No capital gains tax at the corporate level (with some exceptions for property speculation under the Bright-line test).

Imputation credits: Dividends carry imputation credits for resident shareholders, eliminating double taxation domestically.

R&D Tax Credit: 15% available with specific eligibility.

Source: Inland Revenue Department (IRD).

Canada

Headline federal rate (2026): 15% federal corporate income tax (CCPC and other corporations).

Small Business Deduction (SBD): Reduces federal rate to 9% on first CA$500,000 of active business income for Canadian-Controlled Private Corporations (CCPCs).

Provincial rates:

• Alberta: 8% (general); 2% (SBD).
• British Columbia: 12% (general); 2% (SBD).
• Ontario: 11.5% (general); 3.2% (SBD).
• Quebec: 11.5% (general); 3.2% (SBD).
• Other provinces vary 11-16%.

Combined rate (federal + provincial):

• Active business income (general): typically 23-27%.
• Small business income (SBD): typically 11-13%.

Source: Canada Revenue Agency.

United States

Headline federal rate (2026): 21% flat (post-TCJA 2017).

State corporate income tax:

• Delaware: 8.7%.
• California: 8.84%.
• New York: 6.5%-7.25%.
• Texas, Wyoming, Nevada, South Dakota, Washington: 0% (other taxes apply).

Combined federal + state: typically 21-29% depending on states of operation.

Net Investment Income Tax (NIIT): Additional 3.8% on investment income for high earners.

Pass-through entities (S-Corp, LLC, partnership) avoid corporate-level federal tax. Income taxed once at shareholder level under IRC § 1366.

Qualified Business Income (QBI) Deduction: Up to 20% deduction for pass-through income under IRC § 199A.

Qualified Small Business Stock (QSBS) Exclusion: Up to 100% exclusion of capital gains on small business C-Corp stock under IRC § 1202.

State pass-through entity tax (PTET): Allows pass-through owners to deduct state taxes despite SALT cap. Available in most states.

Source: Internal Revenue Service (IRS).

Effective rate considerations

Headline rate vs effective rate: Most companies pay less than the headline rate due to:

• Allowable deductions (depreciation, R&D credits, charitable contributions).
• Loss carry-forwards / carry-backs.
• Foreign tax credits.
• Group / consolidated taxation in some jurisdictions.
• Tax holiday regimes for specific activities.

For multinational companies, effective tax rate (ETR) can vary from headline by 5-15 percentage points downward.

Pillar Two (OECD Global Minimum Tax): A 15% minimum effective tax rate for multinational groups with revenue >€750M is being implemented in most countries (including UK, France, Sweden, Australia, Canada). Effective from 2024-2025 in most jurisdictions. Designed to limit aggressive cross-border tax structuring.

Practical decision framework

For a profit-stable mid-market business:

• Sweden (20.6%) and UK SBR (19%) offer the lowest headline rates.
• Canada CCPC with SBD (9% federal) is competitive for first CA$500k.

For a US-VC-backed startup:

• US Delaware C-Corp with 21% federal + Delaware 8.7% = 29.7% combined. QSBS is the offset at exit.
• Operating losses in early years offset later income (loss carry-forward).

For a French innovation-heavy startup:

• France SAS with 15% reduced rate on first €42,500 + CIR research credit at 30% of R&D spending. Effective rate can be very low for R&D-heavy companies.

For an Australian or NZ resource-focused business:

• NZ flat 28% with imputation credit benefits for domestic distribution.
• Australian base rate entity 25%, scales to 30% at AU$50M turnover.

Tax holiday regimes

Some countries offer reduced rates for specific activities:

• Cyprus — 2.5% IP Box for qualifying IP income.
• Ireland — 12.5% standard, 6.25% IP Box.
• Singapore — 17% headline with various incentives.
• UAE — 9% for federal corporate tax (introduced 2023).
• Switzerland — typically 12-21% depending on canton.

These regimes are not in our 7 countries but are relevant context for international structuring decisions.

Withholding taxes

Beyond corporate income tax, withholding taxes apply to:

• Dividends to foreign shareholders.
• Interest on cross-border loans.
• Royalties for IP licensing.

Treaty rates typically reduce these to 0-15%. Without treaty, withholding can be 25-30%.

Dialogue: a founder runs the numbers

🐣 Chick: “We expect $1M profit. Where to incorporate for lowest tax?”

🐮 Cow: “Single number is misleading. Where are you operating? Where are your customers? Where do you want to live?”

🐣 Chick: “Tech startup. Customers global. Founder in Tokyo. Likely VC-backed.”

🦉 Owl: “Delaware C-Corp. 21% federal + 8.7% DE state = 29.7%. Operating losses offset early income. QSBS at exit.”

🐮 Cow: “Compare to Sweden AB at 20.6% — but Swedish payroll tax (~31% employer side) makes employment expensive.”

🦉 Owl: “And Canada with SBD at ~11% effective for first CA$500k of active business income.”

🐣 Chick: “But VC compatibility forces Delaware.”

🐮 Cow: “Right. The optimal headline-rate jurisdiction is rarely chosen on tax alone. VC, banking, customers, and lifestyle all matter.”

Common mistakes

Comparing headline rates only. Effective rates differ significantly from headline. Run a model with deductions, credits, and your actual profit profile.

Ignoring withholding tax. Cross-border dividends and royalties can erode effective rates significantly. Treaty planning matters.

Missing the small-profit reductions. UK SBR (19% under £50k), France 15% (under €42,500), Canada SBD (9% under CA$500k), Australia 25% (under AU$50M) — all reduce effective rates for SMEs.

Forgetting Pillar Two. Multinational groups with revenue >€750M are subject to the 15% global minimum effective tax rate. Structuring around it is complex.

Confusing pass-through with corporation. US LLCs and partnerships pay no entity-level federal tax but owners pay tax on K-1 income at marginal rates (up to 37% federal + state).

Forgetting payroll tax. Sweden’s high employer payroll tax (~31%) and France’s social charges can dwarf corporate tax differences.

Closing notes

Corporate tax rates are one factor among many in jurisdiction choice. Headline rates of 20-30% across developed countries are within a 10-percentage-point band. The bigger drivers of total tax cost are:

• Specific deductions and credits available to your business type.
• Withholding tax on cross-border distributions.
• Payroll tax on employees.
• Indirect taxes (VAT, sales tax).
• Tax compliance complexity.

For most founders, the practical question is “where can we operate effectively at acceptable cost?” rather than “what is the lowest headline rate?” A US Delaware C-Corp with 29.7% combined rate may be optimal for VC-backed startups despite the higher headline because of QSBS and Delaware incorporation simplicity.

A Gyoseishoshi (行政書士) prepares bilingual tax-comparison memoranda. Locally-qualified tax advisors (UK chartered tax adviser, French expert-comptable, Swedish skatterådgivare, Australian tax agent, NZ chartered accountant, Canadian CPA, US CPA or tax attorney) should run your specific after-tax model.

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Disclaimer

Legal information, not legal advice. Tax information is general and not a substitute for professional tax advice. Tax rates change. MmowW Scrib🐮 is operated by a licensed Gyoseishoshi (行政書士) office in Japan. We are not US CPAs, UK chartered tax advisers, French expert-comptables, Swedish skatterådgivare, Australian tax agents, NZ chartered accountants, or Canadian CPAs. Consult locally-qualified tax advisors for binding advice.

Sources

• HMRC, Corporation Tax rates — https://www.gov.uk/corporation-tax-rates
• France DGFiP, Impôt sur les sociétés — https://www.impots.gouv.fr/professionnel/impot-sur-les-societes
• Sweden Skatteverket, Bolagsskatt — https://www.skatteverket.se/foretag/skatterochavdrag/foretagsformer/aktiebolag/foretagetsskatter
• Australia ATO, Company tax rates — https://www.ato.gov.au/business/income-and-deductions-for-business/business-tax/changes-to-company-tax-rates/
• New Zealand IRD, Income tax — https://www.ird.govt.nz/income-tax/income-tax-for-businesses-and-organisations/types-of-business-income
• Canada Revenue Agency, Corporate tax rates — https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/corporation-tax-rates.html
• IRS, Corporations — https://www.irs.gov/forms-pubs/about-form-1120