Corporate taxes rise in the OECD, but Portugal was one of three countries to buck the trend
In 2024, more OECD countries raised corporate taxes than reduced them. Portugal was one of only three countries to cut rates.
Signs that the downward trend in corporate taxes has stalled or even reversed increased in 2024, with more Organisation for Economic Co-operation and Development (OECD) countries raising taxes than lowering them for the second consecutive year. Portugal was one of only three countries that bucked this trend, reducing its tax burden last year.
“For the second consecutive year, increases in corporate taxes outpaced decreases, suggesting that the downward trend in these rates has stalled or is showing signs of reversal”, the OECD said in its annual report on tax reforms, published on Thursday.
The average rate applied to companies in the 143 countries and jurisdictions for which the OECD collects data was 21.1% in 2024, down from 28% in 2000, “but is no longer on a steady downward trend”, the report said.
“While the last two decades have been marked by a global decline in corporate taxes, 2023 and 2024 saw a reversal of this trend. More countries increased rates than reduced them, and the increases were more significant than the decreases”, the document also states, pointing out that “a number of countries also introduced or increased additional taxes (or surcharges) on corporate income to obtain more revenue for the general budget, taking into account the increase in government spending and, in particular, defence spending”.
The Czech Republic, Iceland, Slovenia, Slovakia and Lithuania were the five countries that decided to raise corporate taxes in 2024. These were significant increases, with three of the five raising the rate by at least two percentage points: the Czech Republic rose from 19% to 21%, while Iceland temporarily increased from 20% to 21%; in Slovenia, this increase was even more significant, rising three percentage points from 19% to 22% for a period of five years from 2024.
Portugal eases tax burden
Portugal ended up being an exception to this trend, being one of only three countries, along with Austria and Luxembourg, that decided to cut corporate taxes in 2024. Here, corporate income tax fell from 21% to 20%, a government proposal that was approved in Parliament.
Austria has already moved forward with a reduction to 23%, compared to 24% in 2023, while in Luxembourg the rate has fallen from 17% to 16%. In Italy, a reduction in this tax has been introduced, but only for companies that meet certain criteria related to reinvestment and employment, falling from 24% to 20%.
