As a reminder of which countries might be most suitable to domicile a business, an annual barometer shows that two North European nations are at the top of the tree, while the figures will make uncomfortable reading for the UK and US, and even more so for France and Italy.

An annual report on the tax competitiveness of OECD countries puts Estonia at top of the tree in 2023, with its Baltic republic neighbour - Latvia - in second spot. New Zealand, Switzerland the Czech Republic are in third, fourth and fifth place, respectively. The US remains at 21st and the UK has fallen to 30th from 27th following a hike to the country’s corporate tax rate.

Turkey has risen to seventh from 10th, France remains stuck at 36th – despite some tax changes – and only one Asia-Pacific jurisdiction is in the top 10 of rankings – Australia – as provided by the US-headquartered Tax Foundation. (The rankings don't appear to include the traditional low-tax centres of Hong Kong, Singapore and Dubai.)

Germany is in 18th place, Canada is at 15th and Japan is at 24th for tax competitiveness. Ireland – even though it has one of the lowest corporate tax rates – stands at 28th, while Italy is at 38th, the organisation said in an annual study. 

While for much of the past three decades marginal rates on corporate and income taxes have fallen in major developed countries, there has been some pushback and reversal, a process that appears to have become more pronounced since the 2008 financial crash. The costs to states of handling the pandemic has also interrupted a drive for lower tax rates, at least temporarily.

The foundation’s International Tax Competitiveness Index compares OECD countries’ tax systems with respect to competitiveness and neutrality. By “competitive,” the foundation means that marginal rates are low – an important consideration when capital is highly mobile. The foundation cited the OECD’s view that corporate taxes harm economic growth, more so than consumption and income taxes; taxes on immovable property, such as homes, are the least harmful, by this measure. As for neutrality, this measures tax systems that aim to raise revenue and cause the least distortions to economic activity.

In its remarks on Estonia, a former Soviet state and now an independent nation, it has a 20 per cent corporate income tax that only applies to distributed profits; it has a flat income tax of 20 per cent on income, and its property tax only applies to land values, rather than the value of real property and capital. Its tax code is territorial – foreign profits owned by domestic businesses aren’t taxed.