draining development.pdf - Khazar University

Accounting for the Missing Billions 277Table 9.2. Summary Data: Corporate Tax Rate, Excluding SecrecyJurisdiction Locations, 2008percentDescriptionRateNotional simple average of corporate tax rates 26.77Corporate tax rate weighted by GDP 32.10Corporate tax rate weighted by population 29.90Source: Author compilation based on data of Jurisdiction Centre (database), OCRA Worldwide,Isle of Man, United Kingdom, http://www.ocra.com/jurisdictions/index.asp; TaxTools and Resources (database), KPMG, Zug, Switzerland, http://www.kpmg.com/Global/en/WhatWeDo/Tax/tax-tools-and-resources/Pages/default.aspx; World DevelopmentIndicators (database), World Bank, Washington, DC, http://data.worldbank.org/data-catalog/world-development-indicators/ (for GDP).The secrecy jurisdictions all have 0 percent tax rates. They thereforedo not change the weighted data, but they do significantly reduce thesimple average data. It is obvious that excluding secrecy jurisdiction datafrom a sampling of average corporate tax rates, as has been conventionalin most academic reviews to date, makes a substantial difference in thepresentation of information. If the simple averaging method is used andsecrecy jurisdictions are excluded from review, a quite misleading perspectiveon current likely effective tax rates is presented.There is one computation to note. For several of the jurisdictions in theKPMG data set, OCRA notes that a differential tax rate is available forforeign source income. For these jurisdictions alone and only if OCRAcould indicate the alternative rate that was available, we have undertakenfurther analysis using this rate for foreign source income. The jurisdictionsfor which this has been done are Hong Kong SAR, China; Hungary; Iceland;Israel; Luxembourg; the United Kingdom, where limited liabilitypartnerships are tax transparent; and the United States, where limited liabilitycompanies offer the same fiscal transparency. Singapore and Switzerlandoffer differential rates, but we do not restate them here becauseOCRA does not indicate the alternative rate, which varies according to thecircumstances. Our results are shown in table 9.3.The resulting tax rate data weighted by GDP look much closer to thetax rate actually found if one examines effective corporate tax ratesdeclared by companies, as noted by Murphy (2008), than to any tax ratedata one may present by undertaking calculations weighted simply by