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US falls behind Europe and China in globalization

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“One key factor hampering the US from fully harnessing globalization is that it levies the highest tax charge on repatriated profits of all countries, potentially acting as a significant barrier to domestic companies looking to expand overseas.

“In the past Canada, Mexico, Japan and the EU have been some of our most important and most co-operative trading partners, but it is perhaps time for policy makers to look at how we can improve relationships with emerging economies in Africa and Southern and South East Asia as they become bigger consumers and larger importers as their incomes grow.”

Would-be Chinese and American multinationals held back by tax policy

While China did far better overall than the USA, with an overall score of 4.6 out of 10, both of the world’s two largest economies’ scores were brought down by the high taxes their governments impose on corporates “repatriating” overseas profits. 

UHY says that these taxes reduce the incentive for businesses to set up subsidiaries overseas, particularly for SMEs for whom the costs of setting up international operations would be proportionately more expensive.  Just under half of the countries in the study imposed no tax on repatriated dividends at all.

David added: “American firms are often household names around the world but actually our taxation system is very poorly geared towards encouraging US companies from growing overseas, with the highest tax rate on ‘repatriated’ profits of any country in the study.”

 

Rankings showing 27 countries’ ability to take advantage of future globalization of trade.

Ranking  Country          Marks out of 10

1             Germany                6.4

2             Slovakia                 6.3

3             Netherlands           6.0

3             New Zealand         6.0

3             United Kingdom    6.0

6             Denmark                5.4

7             France                    5.3

8             Czech Republic     5.1

8             India                       5.1

8             Croatia                    5.1

8             UAE                       5.1

12           Romania                 5.0

12           Brazil                      5.0

12           Ireland                    5.0

15           Russia                     4.7

15           Australia                 4.7

17           China                      4.6

17           Uruguay                 4.6

17           Spain                      4.6

20           Mexico                   4.4

21           Canada                    4.3

21           Austria                   4.3

23           Israel                       4.1

24           Nigeria                   4.0

25           Italy                        3.7

25           United States         3.7

27           Japan                      3.0

 

 

 

 

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