International taxation for manufacturing: A comparative review

The corporate tax burden represents an ever-increasing concern for companies facing decisions over where to locate operations. Many countries interested in encouraging foreign direct investment have recently cut corporate tax rates to make themselves more attractive to businesses. As globalization increases, debate is growing over how the tax burden in different countries is affecting the ability of manufacturers to compete.

This report examines the corporate taxation of a hypothetical manufacturer as if it were located and doing business entirely in 19 countries. The study goes beyond statutory tax rates to include the effect of permanent differences in the book and tax treatment of items such a manufacturer is likely to experience.

Companies look to a number of factors when deciding where to locate a manufacturing facility, including corporate strategy, the respective country’s infrastructure, workforce, employment laws and geopolitical stability. Tax may not be the top issue but, increasingly, it is moving up the list in importance, particularly in light of tax burden competition to attract foreign direct investment.

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