Countries Improve Tax Systems Through National Reforms: Key Findings from 2025 Index

Table of Contents

Key Findings

• On a consistent methodology basis, the largest overall improvers in the International Tax Competitiveness Index from 2016 to 2025 were Greece (+12), the United States (+10), and Hungary, Canada, and Mexico (+5 each).
• The past decade’s record suggests that countries have reliable legislative methods to improve their tax A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. systems through ordinary tax reforms, as these countries have done.
• However, much of the decade has been focused on multilateral approaches—from the OECD to the UN to global wealth tax A wealth tax is imposed on an individual’s net wealth, or the market value of their total owned assets minus liabilities. A wealth tax can be narrowly or widely defined, and depending on the definition of wealth, the base for a wealth tax can vary. proposals—with a mixed record at best.
• Countries should look to the international community on tax, but they should look for ideas, not mandates.
• The original BEPS project’s best actions—hybrid mismatch rules and permanent establishment tightening—addressed genuine cross-border arbitrage and were worth doing; subsequent multilateral efforts have faced diminishing returns.

Introduction

Over the 10 editions of the International Tax Competitiveness Index from 2016 through 2025, the largest improvements in tax system quality came chiefly from reforms made by national legislatures: lower tax penalties on new investment, simpler rate structures, broader and better-administered consumption taxes, and cleaner cross-border rules. This paper documents those improvements, examines what drove them, and draws lessons for countries that still have substantial room to improve and could do so right away by following peer best practices.

But the paper also seeks to make another point. These gains came during a decade dominated by a very different kind of tax policy effort—multilateral coordination that consumed significant policy energy and delivered results of decidedly mixed quality. The better outputs of that effort are worth acknowledging; so are its overreaches.

The OECD’s Base Erosion and Profit Shifting Profit shifting is when multinational companies reduce their tax burden by moving the location of their profits from high-tax countries to low-tax jurisdictions and tax havens. (BEPS) project restructured the global conversation around preventing profit-shifting by multinational enterprises. [1] Its successor, sometimes known as the Two-Pillar Solution, was an extraordinarily ambitious attempt at realigning taxing rights toward market countries and harmonizing corporate income tax A corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. rates. Its first pillar has thus far stalled in negotiation, while its second pillar, establishing a global minimum corporate income tax of 15 percent, has partly succeeded, but with significant struggle and drawbacks, like high compliance costs. [2] Some effort to scale back duplicative elements would be welcome. [3] Meanwhile, the UN has moved to establish a Framework Convention on International Tax Cooperation, but it may legitimize truly poor tax policy ideas, like gross-based taxation. [4] In academic circles and at the G20, proposals for global wealth taxes are in vogue, [5] with little attention to practical and theoretical problems. [6] Overall, these multilateral proposals have been hit or miss—and, this paper argues, probably declined in quality since the early BEPS work of the mid-2010s.

Perhaps it is time to look elsewhere.

The countries that improved most over the past decade did so by making nationally determined choices about their own tax systems, not by waiting for global consensus. The multilateral framework that absorbed so much policy energy produced its best work early, when it targeted genuine cross-border arbitrage, and has since moved into territory where the justification is weaker and the compliance costs are higher. Continued expansion of that agenda may displace attention from the kind of reforms that created reliable and genuine improvement over the last decade. Experimentation and sharing of national best practices are simply a better use of time than devising further global tax mandates.

What the Index Measures

The International Tax Competitiveness Index evaluates OECD member countries across five categories: corporate taxes, individual taxes, consumption taxes, property taxes, and cross-border rules. Within each category, it rewards rate competitiveness, neutrality across economic activities, simplicity, and breadth of base. [7]

The Index measures tax systems against a framework that prizes neutrality, broad bases, simpler structures, and lower marginal tax penalties on work and investment. A score in the Index is determined not only by total tax burden, but also—and perhaps more so—by how that revenue is raised. A country that raises substantial revenue from a broad, low-rate consumption tax A consumption tax is typically levied on the purchase of goods or services and is paid directly or indirectly by the consumer in the form of retail sales taxes, excise taxes, tariffs, value-added taxes (VAT), or income taxes where all savings are tax-deductible. scores well. A country that raises the same revenue through a narrow, high-rate corporate tax with carveouts scores poorly. This reflects a substantive view: the consumption tax is more economically neutral, imposes lower compliance costs relative to revenue raised, and does not create pressure to shift profits across borders. Overall, the Index embeds a variety of Tax Foundation principles, but in a quantitative and systematic way. It is therefore both normative and positive. (I should note that multilateral organizations have normative commitments of their own, but they have typically tended to focus on revenue adequacy and anti-avoidance at the expense of other principles, especially neutrality and simplicity.)

A brief methodological note before presenting the data. The comparisons in this paper are made on a consistent methodology basis: 2016 data is evaluated using the 2025 Index methodology and applied to the full current country set of 38 nations, including Lithuania, Costa Rica, and Colombia, whose retroactive 2016 scores are estimated from available data. This approach isolates genuine policy change from the effects of methodology evolution and country coverage expansion, producing a more honest picture of which countries genuinely improved. [8]

Against that backdrop, the 10-year record is instructive. The biggest overall improvers from 2016 to 2025 on this consistent basis: Greece rose 12 places (35 th to 23 rd), the United States 10 (25 th to 15 th), and Hungary, Canada, and Mexico each gained 5. These were ordinary tax reform efforts based on longstanding principles. The case studies that follow involve the five countries mentioned, plus a few more with exceptional work worthy of discussion.

Case Studies

The countries below are organized thematically by at least one of the dimensions on which they improved. This is a navigation tool but far from a rigid classification, as several improved across multiple dimensions simultaneously, and those broader gains are noted where relevant. I also note that ranking improvements are a concrete and engaging way to visualize scale, but they are by definition relative and not absolute, so the distribution of outcomes from other countries introduces some random variance into the metric we use for improvement.

I. Corporate Structure and Rates: Latvia and Hungary

Latvia entered the decade already near the top of the Index and improved further through one of the period’s most structurally interesting reforms: the adoption of a distributed profits tax A distributed profits tax is a business-level tax levied on companies when they distribute profits to shareholders, including through dividends and net share repurchases (stock buybacks). in 2018. [9] Under Latvia’s system, retained earnings face no corporate tax at all. Tax is assessed only when profits are distributed to shareholders. The incentive structure is clean and direct; as all distributions to shareholders are taxed equivalently, the distributed profits tax has little direct incentive on corporate behavior. Most specifically, it eliminates the tax penalty on corporate saving and capital accumulation that standard corporate income taxes impose, arguably in a way that’s more intuitive and durable even than full expensing Full expensing allows businesses to immediately deduct the full cost of certain investments in new or improved technology, equipment, or buildings. It alleviates a bias in the tax code and incentivizes companies to invest more, which, in the long run, raises worker productivity, boosts wages, and creates more jobs.. Latvia rose from third to first place on the corporate subscore as a result.

The distributed profits tax reform also coincided with a dramatic improvement in Latvia’s consumption tax ranking—from 33 rd to 20 th, the largest single-subscore gain on consumption of any country in the period. The most plausible explanation is better tax administration rather than any single rate change or base redesign. Latvia simply got better at collecting on the law it already had. The OECD attributes Latvia’s gains to a package of compliance measures, including automatic exchange of information on sellers on digital platforms, cash-payment restrictions in construction, reverse-charge procedures, and greater use of data and digital technologies to target inspections. [10] Latvia’s State Revenue Service points in the same direction: it notes the use of a receipt lottery as a means to improve its enforcement capacity. [11]

Latvia was not the pioneer of the distributed profits tax. Estonia adopted a functionally similar system almost two decades prior and has held the top corporate income tax position in the Index for most of the review period. Latvia’s reform illustrates the kind of policy diffusion that international tax policy discussion should be organized to facilitate — one country observing a neighbor’s experiment over nearly two decades, concluding it worked, and adopting it. No multilateral agreement was required, and no harmonization mandate would have produced it, since the distributed profits tax sits well outside the mainstream of corporate tax design that multilateral standard-setting tends to assume. To the extent that the global minimum tax regime does affect this approach, it may undermine it through the application of a top-up tax that changes the incentive structure. (However, with Latvia’s 20 percent rate, this will be uncommon.)

Hungary illustrates a different path to corporate competitiveness: rate rather than structure. At 9 percent, Hungary’s corporate rate is the lowest in the EU, and the corporate subscore improvement reflects this directly—from 19 th to 4 th, a gain of 15 places.

This low rate is extremely competitive, but two caveats matter. First, the local iparűzési adó (HIPA) can reach 2 percent and is imposed on a very unusual base without full deductibility of business inputs, resembling a gross receipts tax Gross receipts taxes are applied to a company’s gross sales, without deductions for a firm’s business expenses, like compensation, costs of goods sold, and overhead costs. Unlike a sales tax, a gross receipts tax is assessed on businesses and applies to transactions at every stage of the production process, leading to tax pyramiding.. [12] This makes Hungary’s business environment more distortionary than the 9 percent headline suggests. Second, Pillar Two has made that headline less striking: Hungary kept the 9 percent statutory rate, but it also introduced the qualified domestic minimum top-up tax and income inclusion rule from 2024 and the undertaxed profits rule from 2025, with HIPA and the innovation contribution treated, or at least hoped to be treated, as covered taxes for Pillar Two purposes. [13]

This competitive corporate income tax regime is combined with a flat individual income tax An individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source, where Hungary improved from 9 th to 3 rd, partly because of a rate cut from 16 percent to 15 percent. Overall, the code is competitive and relatively simple, and Hungary has improved from 14 th to 9 th.

Have Hungary’s low income tax rates, corporate and individual, come at the expense of revenue collection? Not necessarily. Hungary leans extremely heavily on consumption taxes. Its tax code certainly includes some mistakes—the iparűzési adó, or the reklámadó (a Hungarian variety of digital services tax that focuses on advertising)—but Hungary makes a big-picture choice right: it leans on a broad consumption tax for revenue in order to have the budget space to simplify and reduce its income taxes.

II. Investment Incentives: The United States and Canada

The United States was arguably the strongest subscore improver in the whole dataset. Its corporate ranking rose from 36 th to 9 th, a gain of 27 places, driven primarily by the 2017 Tax Cuts and Jobs Act (TCJA). Overall, the US rose from 25 th to 15 th.

Two provisions deserve most of the credit for the corporate tax gain. The reduction of the statutory corporate rate from 35 percent to 21 percent eliminated what had become one of the highest corporate rates among developed economies. At 35 percent, the US rate disincentivized investment (particularly when coupled with long depreciation Depreciation is a measurement of the “useful life” of a business asset, such as machinery or a factory, to determine the multiyear period over which the cost of that asset can be deducted from taxable income. Instead of allowing businesses to deduct the cost of investments immediately (i.e., full expensing), depreciation requires deductions to be taken over time, reducing their value and disco schedules for investment assets). Further, the rate was an extraordinary outlier by global standards, [14] which created sustained pressure for corporate inversions and profit shifting. The rate cut addressed both problems directly.

Full expensing of short-lived capital assets under Section 168(k) directly improved the after-tax return on domestic capital formation. By eliminating the present-value gap between the cost of investment and the tax benefit of recovering that cost, expensing removes or at least softens one of the most significant distortions in the standard corporate income tax. [15]

The TCJA’s new international provisions—global intangible low-taxed income (GILTI), foreign-derived intangible income (FDII), and base erosion and anti-abuse tax (BEAT)—are a more complicated story. They replaced an unusually distortionary and uncompetitive pre-TCJA status quo, and are surely a strong improvement. But they came with legitimate flaws of their own. They are not the source of the ranking improvement in the Index, and a full evaluation of their merits (or especially, their merits relative to recent OECD-led equivalents) is beyond the scope of this paper. [16]

All in all, though, the US improved its corporate income tax a great deal in 2017. In a paper for Tax Foundation 10 years ago, I laid out the three major changes the US would need to succeed at corporate income tax reform. [17] More or less, the US accomplished all three goals.

Canada also improved on cost recovery Cost recovery refers to how the tax system permits businesses to recover the cost of investments through depreciation or amortization. Depreciation and amortization deductions affect taxable income, effective tax rates, and investment decisions.. The accelerated investment incentive, introduced in 2018, enhanced the present value of capital cost allowance deductions by allowing a larger first-year deduction than the standard declining-balance method permits. In some cases, such as manufacturing, processing, and clean energy investments, full expensing is allowed. [18] This is a strong reform for Canada, one it should continue to lean into with additional extension in time and to further asset classes. [19] Canada has significantly improved its overall ranking from 18 th to 13 th overall in the Index.

Expensing or accelerated cost recovery have been bright spots in the Anglosphere in general. The United Kingdom also improved significantly on cost recovery over the period, [20] though this improvement was offset by some policy setbacks elsewhere.

III. Individual Tax Simplification: Greece and Mexico

Greece is the decade’s most striking overall improver, rising 12 places from 35 th to 23 rd on consistent methodology—but the subscore data reveals even greater improvements in certain areas. Greece’s individual income tax ranking rose from 20 th to 4 th, a gain of 16 places, the largest single-subscore improvement of any country in the period. Its corporate ranking also improved substantially, from 29 th to 16 th.

The primary driver on the individual side was the elimination of the solidarity surcharge—an emergency levy layered onto the income tax during the sovereign debt crisis of the early 2010s. Like many temporary taxes, it proved durable, remaining embedded in the rate structure for nearly a decade and raising marginal rates on labor income without corresponding policy justification. However, as the fiscal situation improved, Greece genuinely sought to improve its tax competitiveness. [21] The surcharge was phased out and fully eliminated by 2023. Removing it reduced marginal tax rates on labor, improving work incentives at the margin and eliminating a multi-layer rate structure. The deeper lesson is political. Crisis-era complexity can be unwound. Countries currently carrying the residue of crisis-era surtaxes, bracket additions, or temporary levies that have outlasted their justification have Greece’s experience as evidence that removal is possible.

Mexico improved five places overall, from 23 rd to 18 th, and the primary driver was the individual income tax—rising from 27 th to 14 th, a gain of 13 places. This improvement reflects two reinforcing developments. The introduction of the Régimen Simplificado de Confianza (RESICO) in 2022 replaced the prior simplified regime for small businesses and self-employed workers with a flat-rate structure; this does have gross receipts properties, which makes it inappropriate for business income, but it succeeded at drawing in a large segment of the working population that had previously operated outside the formal tax system. [22] Alongside this structural change, Mexico’s CFDI mandatory electronic invoicing system, which creates a real-time audit A tax audit is when the Internal Revenue Service (IRS) or a state or local revenue agency conducts a formal investigation of financial information to verify an individual or corporation has accurately reported and paid their taxes. Selection can be at random, or due to unusual deductions or income reported on a tax return. trail for business transactions, certainly improved consumption tax collections, as measured by the Index, and perhaps improved the legibility of Mexico’s economy more generally for income tax collection in conjunction with RESICO. [23]

It is worth noting that Mexico’s consumption tax ranking, while only modestly improved in this consistent comparison (13 th to 12 th), has long been a source of competitive strength: much as with the Hungarian example, strong, broad-based consumption tax revenues reduce the pressure on other parts of the code to carry the revenue burden.

IV. Consumption Tax: New Zealand

New Zealand fell one place in the overall rankings during the period, from 2 nd to 3 rd, where competition is particularly heavy. However, its trajectory on consumption taxes tells a story worth highlighting: it moved from 6 th to 1 st.

New Zealand’s Goods and Services Tax (GST) has long been a model for consumption tax design, not only in the Index, but also in broader policy conversations. [24] It features a broad base, a single rate of 15 percent, and a value-added tax (VAT) revenue ratio among the highest in the OECD, reflecting the minimal exemptions that erode the tax base The tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates. in most peer countries. Often, holes in the VAT base come from efforts to reduce or eliminate tax for essential elements of living, like health or groceries. While this seems well-intentioned, it reduces revenue that could be used to help struggling populations in other ways. And it creates potential for litigation around the edges of what is defined as “essential.” New Zealand wisely avoids this dynamic.

What drove the improvement to first place over the period was the systematic extension of the GST model to the modern platform economy. New Zealand has largely done so in a sensible way; though it briefly considered a digital services tax, it dropped the proposal. [25] Instead, it has folded digital services, through guidelines on extension to remote services, into the main GST regime.

This is an important lesson: digital services do not need dedicated destination-based taxes. They need guidelines to include them in the destination-based tax system that already exists.

V. Cross-Border Rules: Switzerland

Switzerland achieved one of the period’s most dramatic single-subscore improvements, rising from 7 th to 1 st on cross-border rules following the 2020 implementation of the Federal Act on Tax Reform and AHV Financing, known as STAF. [26] Switzerland’s overall ranking improved from 6 th to 4 th.

For decades, Switzerland had maintained a complex system of cantonal and federal rates; however, certain holding, domiciliary, and mixed companies benefited from preferential cantonal regimes available only to companies with primarily foreign-source income. These regimes drew sustained criticism from the EU and ultimately became politically unsustainable. [27] STAF simplified the system and also harmonized it further with the rest of the world, while still attempting to retain a competitive edge.

The result was that Switzerland’s already-clean cross-border architecture—no withholding Withholding is the income an employer takes out of an employee’s paycheck and remits to the federal, state, and/or local government. It is calculated based on the amount of income earned, the taxpayer’s filing status, the number of allowances claimed, and any additional amount the employee requests. tax on most royalties and generally limited withholding on cross-border interest, a broad participation exemption, no controlled foreign corporation rules, and one of the world’s most extensive treaty networks—became universally available and simpler than ever before. Switzerland’s deliberate choice to stay structurally clean pushed it to the top of the subcategory.

This case illustrates a nuance worth emphasizing. Switzerland did not act in a vacuum—international pressure was real and consequential. But Swiss policymakers chose how to respond, and did so with an eye toward competitiveness, growth, and simplicity—the kind of policy objectives often underrated by multilateral forums.

The Multilateral Record in Context

Having surveyed what nationally determined reform has accomplished over the past decade, it is worth examining what the parallel multilateral effort has and has not produced—and why the contrast matters for how international tax institutions should be evaluated going forward.

What Coordination Has Gotten Right

The original BEPS project addressed some genuine problems. Its most defensible actions targeted real arbitrage situations where two countries’ rules interacted to produce tax-free income that neither intended. Hybrid mismatch arrangements, in which an entity is treated differently under two countries’ laws, generating a deduction in one jurisdiction without a corresponding income inclusion in the other, are the clearest example; closing them required coordination almost by definition. Tightening permanent establishment definitions similarly addressed structures that let multinationals conduct substantial economic activity in a jurisdiction while claiming no taxable presence there. And country-by-country reporting under Action 13, while compliance-intensive, may have had a chilling effect on the profit-shifting arrangements most misaligned with economic substance—research on EU implementation found higher effective tax rates for firms just above the reporting threshold, consistent with transparency alone discouraging the most aggressive planning. [28] Action 14’s dispute resolution framework and Action 15’s multilateral instrument represent the best of what coordination can offer: using harmonization to reduce compliance costs rather than raise them. [29]

The OECD’s analytical and statistical functions, such as revenue data, comparative effective tax rate work, and economic modeling, remain valuable entirely independent of its negotiating outputs. Indeed, the Index itself uses some OECD data. Skepticism of specific multilateral agreements does not extend to skepticism of the institution more generally.

Where Multilateralism Goes Wrong

The problem is that the BEPS project did not stop at genuine arbitrage, and the further it moved from the original problem, the weaker the economic justification became.

Scope creep and diminishing returns. Early BEPS targeted the most egregious avoidance structures—the low-hanging fruit. Later efforts, especially Pillar Two’s global minimum tax, increasingly target situations where the “problem” is simply that one country has chosen more generous provisions than another in a specific area of tax. That is often competition and experimentation, and not always, or even mostly, arbitrage. Meanwhile, the compliance costs of each successive action are higher and the marginal revenue gains smaller.

Competing interests and implementation failures. Countries negotiate multilateral agreements to advance their own revenue interests, not to maximize global growth. The architecture of Pillar One illustrates this: every country prefers destination-based taxation when it is a net importer and source-based taxation when it is a net exporter, producing a tug-of-war that satisfies neither logic cleanly.

Domestically, negotiators agree internationally to things that prove difficult to implement at home, then return to national capitals asking for changes framed as international obligations, letting policymakers repackage controversial domestic changes as commitments flowing from international agreements rather than defend them on their own merits. Early versions of Pillar Two would have effectively required the United States to restructure core features of its R&D incentive regime to avoid having those incentives offset by top-up taxes imposed elsewhere. [30] A pattern emerged: the commitments made by negotiators abroad were often more difficult at home than intended.

Costs front-loaded, benefits speculative. Pillar Two’s compliance infrastructure is already being built—systems for top-up tax calculations, GLOBE information returns, treaty interaction analysis—at real and immediate cost. The revenue gains remain deeply uncertain at best, and not particularly large compared with the difficulty involved. [31] The accounting rules foundation has compounded this problem: building on book income rather than purpose-designed tax concepts has produced persistent incoherence, particularly in the treatment of refundable versus non-refundable tax credits, which has been revised multiple times in ways that appear to reflect negotiating pressure rather than principle.

The Option Value of National Experimentation

Perhaps the subtlest cost of premature harmonization is that it forecloses policy learning. Estonia introduced its distributed profits tax in 2000. Latvia watched, evaluated, and adopted its own version in 2018. Poland has considered elements of the Baltic model, and indeed it is preferable that Poland be able to continue in its experimentation. [32] A mandatory global standard on corporate tax structure, had one existed in 2000, would have prevented Estonia’s experiment entirely—and Latvia would have had nothing to copy. The option value of allowing countries to try different approaches is real, and it is precisely what the international community should be organized to preserve, not eliminate.

Conclusion

The reforms documented in this paper are varied in their specifics. Each improved in different areas of tax. But what these reforms share is a common orientation: identify where the tax system imposes unnecessary costs on investment, work, or compliance, and reduce those costs through deliberate action whose content is chosen at home. None required a global agreement. Several were shaped by international examples or pressures, but the decisive choices about what to change and how were made in national capitals.

That is not a complete argument against international coordination. The early BEPS actions that closed hybrid mismatch loopholes and tightened permanent establishment definitions addressed real problems requiring cross-border cooperation. Dispute resolution frameworks and treaty updating mechanisms reduce compliance costs in ways that benefit all parties. And international benchmarking creates the conditions for the kind of policy learning this paper documents. Latvia’s reform obviously learned from Estonia’s prior experiment. Switzerland’s post-STAF architecture was partly shaped by OECD pressure and emerged stronger for it.

The argument is not a broad rejection of multilateralism in favor of these unilateral reforms. It is instead that coordination works best when targeted at genuine mismatches, most of which have already been addressed. The further it moves from the original arbitrage problem—into rate harmonization, accounting-based minimum taxes, and mandatory convergence on unsettled questions of tax design—the worse the cost-benefit ratio becomes. Continued expansion of the multilateral agenda can displace attention from the nationally determined reforms that remain the most reliable source of genuine improvement.

The reform menu is not closed. Nearly every OECD member has substantial room to improve on at least one of the five dimensions the Index measures. The countries documented here did not wait for a global agreement to get started. Others should follow their example. International tax practitioners should favor an international community that learns together, but remain skeptical of one that mandates.

Appendix

Appendix: International Tax Competitiveness Index Rankings, 2025

2025 Rankings and Change from 2016

Country	Overall	Corporate	Individual	Consumption	Property	Cross-Border
Estonia	1 (0)	2 (−1)	2 (+2)	22 (−8)	1 (0)	7 (+4)
Latvia*	2 (+1)	1 (+2)	7 (−2)	20 (+13)	7 (0)	6 (0)
New Zealand*	3 (−1)	31 (0)	6 (0)	1 (+5)	4 (+1)	22 (+2)
Switzerland*	4 (+2)	10 (−2)	8 (+2)	2 (+3)	36 (−1)	1 (+6)
Lithuania	5 (+3)	3 (−1)	9 (−2)	25 (+9)	10 (−1)	15 (+2)
Luxembourg	6 (−1)	20 (+8)	22 (0)	8 (−6)	16 (+2)	5 (−2)
Australia	7 (+2)	29 (−4)	15 (+4)	9 (−2)	2 (0)	33 (−7)
Israel	8 (+3)	11 (+1)	32 (0)	11 (−1)	5 (+1)	10 (+12)
Hungary*	9 (+5)	4 (+15)	3 (+6)	38 (−2)	22 (−5)	4 (0)
Czech Republic	10 (−6)	8 (−1)	10 (−8)	32 (−6)	6 (+6)	11 (−2)
Sweden	11 (+2)	6 (+4)	19 (+5)	26 (−4)	8 (0)	13 (−5)
Turkey	12 (−5)	21 (−12)	5 (+3)	17 (−2)	24 (+2)	8 (+5)
Canada*	13 (+5)	22 (+1)	27 (−1)	7 (+2)	25 (0)	18 (+1)
Slovak Republic	14 (−4)	24 (−11)	1 (+2)	34 (−3)	9 (−5)	24 (−1)
United States*	15 (+10)	9 (+27)	17 (+6)	4 (−1)	30 (−2)	35 (0)
Netherlands	16 (−4)	23 (−1)	30 (−13)	14 (+4)	21 (+2)	3 (−2)
Costa Rica	17 (−2)	34 (−1)	23 (−7)	6 (+2)	12 (−1)	30 (−2)
Mexico*	18 (+5)	26 (−2)	14 (+13)	12 (+1)	3 (0)	36 (0)
Austria	19 (−3)	19 (−3)	26 (−1)	16 (+1)	17 (+3)	16 (−11)
Germany	20 (+1)	30 (−4)	33 (+3)	13 (+3)	14 (0)	9 (+1)
Norway	21 (−1)	13 (+5)	29 (−14)	23 (+1)	15 (+1)	14 (0)
Japan	22 (−5)	35 (−1)	34 (+1)	5 (−4)	23 (−4)	25 (+4)
Greece*	23 (+12)	16 (+13)	4 (+16)	30 (−2)	29 (+3)	23 (+8)
Finland	24 (−5)	7 (+4)	28 (0)	28 (−7)	19 (−4)	19 (−1)
Slovenia	25 (+6)	12 (−7)	11 (+2)	29 (0)	26 (+4)	21 (+13)
Korea	26 (−4)	25 (−5)	38 (−7)	3 (+1)	31 (+2)	29 (+3)
Denmark	27 (+1)	17 (−2)	36 (−2)	19 (+6)	13 (0)	34 (−7)
Chile	28 (−1)	32 (−11)	24 (−6)	10 (+1)	11 (−1)	38 (0)
Iceland	29 (+1)	15 (−1)	20 (+10)	24 (+3)	27 (−5)	26 (−6)
Belgium	30 (−6)	18 (+14)	13 (−1)	27 (−7)	32 (−5)	27 (−15)
Ireland	31 (+1)	5 (−1)	37 (0)	36 (+1)	18 (+6)	28 (−7)
United Kingdom	32 (+1)	28 (−11)	25 (+4)	33 (+2)	37 (−1)	2 (0)
Portugal	33 (+3)	36 (−1)	21 (+12)	21 (+2)	20 (+1)	32 (+1)
Spain	34 (−5)	33 (−6)	18 (−4)	18 (+1)	35 (−1)	17 (−1)
Poland	35 (−9)	14 (−8)	35 (−24)	35 (+3)	28 (+1)	31 (−1)
Colombia	36 (−2)	37 (+1)	12 (−11)	15 (−3)	33 (−2)	37 (0)
Italy	37 (0)	27 (+3)	16 (+5)	37 (−7)	38 (−1)	20 (+5)
France	38 (0)	38 (−1)	31 (+7)	31 (+1)	34 (+4)	12 (+3)

• Featured case study country Note: 2025 rank shown with change from 2016 rank in parentheses on a consistent-methodology basis (all 38 countries, 2025 methodology applied to both years). Positive numbers indicate improvement (lower rank number is better). Rankings for Lithuania, Costa Rica, and Colombia reflect retroactively estimated 2016 scores. Source: Tax Foundation, International Tax Competitiveness Index, 2016 and 2025 editions, consistent-methodology comparison.

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References

[1] Alan Cole, “The Impact of BEPS 1.0,” Tax Foundation, Apr. 12, 2024, https://www.taxfoundation.org/research/all/global/beps-international-corporate-taxation/.

[2] Sean Bray, Daniel Bunn, Johannes J. Gaul, and Christoph Spengel, “OECD Pillar Two Compliance Costs: A Quantitative Assessment for EU-Headquartered Groups,” ZEW Discussion Paper No. 25-053, October 2025, https://www.zew.de/fileadmin/FTP/dp/dp25053.pdf.

[3] Daniel Bunn and Alan Cole, “US Tax Carveout Is a Good Step Toward Needed Cross-Border Work,” Bloomberg Tax, Mar. 5, 2026, https://www.news.bloombergtax.com/daily-tax-report-state/us-tax-carveout-is-a-good-step-toward-needed-cross-border-work.

[4] Daniel Bunn, “Three Global Tax Policy Ideas in Need of a Reality Check,” Tax Foundation, Feb. 11, 2026, https://www.taxfoundation.org/blog/global-tax-policy-ideas/.

[5] Gabriel Zucman, “A Blueprint for a Coordinated Minimum Effective Taxation Standard for Ultra-High-Net-Worth Individuals,” EU Tax Observatory, Jun. 25, 2024, https://www.gabriel-zucman.eu/files/report-g20.pdf.

[6] See, e.g., Cristina Enache, “The High Cost of Wealth Taxes,” Tax Foundation, Jun. 26, 2024, https://www.taxfoundation.org/research/all/eu/wealth-tax-impact/.

[7] Alex Mengden, International Tax Competitiveness Index 2025, Tax Foundation, Oct. 21, 2025, https://www.taxfoundation.org/research/all/global/2025-international-tax-competitiveness-index/.

[8] The data with consistent methodology and country list over the last 10 years, which will be used for the remainder of this paper, can be found at: Tax Foundation, “International Tax Competitiveness Index” (GitHub repository), https://www.github.com/TaxFoundation/international-tax-competitiveness-index (accessed Apr. 6, 2026).

[9] Amir El-Sibaie, “Latvia Joins the Cash-Flow Tax Club,” Tax Foundation, Apr. 16, 2018, https://www.taxfoundation.org/blog/latvia-cash-flow-tax/.

[10] OECD, OECD Economic Surveys: Latvia 2024 (Paris: OECD Publishing, 2024), http://doi.org/10.1787/dfeae75b-en.

[11] Latvia State Revenue Service, State Revenue Service Public Report 2020 (Riga: State Revenue Service, 2020), https://www.vid.gov.lv/en/media/2495/download?attachment=.

[12] Budapest Chamber of Commerce and Industry, “Local Business Tax (HIPA),” https://www.bkik.hu/en/local-business-tax-hipa.

[13] EY, “Hungary Enacts Local Legislation on BEPS 2.0 Pillar Two,” EY Global Tax Alert, Dec. 15, 2023, https://www.ey.com/en_gl/technical/tax-alerts/hungary-enacts-local-legislation-on-beps-2-0-pillar-two.

[14] Kyle Pomerleau and Emily Potosky, “Corporate Income Tax Rates around the World, 2016,” Tax Foundation, Aug. 18, 2016,

https://www.taxfoundation.org/data/all/global/corporate-income-tax-rates-around-world-2016/.

[15] Erica York and Alex Muresianu, “The TCJA’s Expensing Provision Alleviates the Tax Code’s Bias Against Certain Investments,” Tax Foundation, Sep. 5, 2018, https://www.taxfoundation.org/research/all/federal/tcja-expensing-provision-benefits/.

[16] For more, see: Alan Cole, “The Impact of GILTI, FDII, and BEAT,” Tax Foundation, Jan. 31, 2024, https://www.taxfoundation.org/research/all/federal/impact-gilti-fdii-beat/.

[17] Alan Cole, “Fixing the Corporate Income Tax,” Tax Foundation, Feb. 4, 2016, https://www.taxfoundation.org/research/all/federal/fixing-corporate-income-tax/.

[18] Canada Revenue Agency, “Accelerated Investment Incentive,” Government of Canada, last modified Jul. 21, 2025, https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/report-business-income-expenses/claiming-capital-cost-allowance/accelerated-investment-incentive.html.

[19] Stephen J. Entin, “Canada To Adopt Expensing and Accelerated Cost Recovery,” Tax Foundation, Nov. 28, 2018, https://www.taxfoundation.org/blog/canada-adopt-expensing-accelerated-cost-recovery/; Alan Cole, “Canada Can Offer a Contrast to Erratic US Policy,” Perspectives on Tax Law & Policy 6:2 (2025), https://www.ctf.ca/EN/EN/Newsletters/Perspectives/2025/2/250209.aspx.

[20] Alex Mengden, “Full Expensing to Be Made Permanent in the United Kingdom,” Tax Foundation, Nov. 22, 2023, https://www.taxfoundation.org/blog/uk-full-expensing-permanent/.

[21] Daniel Bunn, “Tax Competitiveness is on the Agenda in Greece,” Tax Foundation, Oct. 23, 2019, https://www.taxfoundation.org/blog/greece-tax-cuts-greece-tax-reform/.

[22] Jade del Río, “Simplified Trust Regime (RESICO): General Overview,” Feb. 25, 2022, https://www.jadelrio.com/mx/en/blogs/simplified-trust-regime-resico-general-overview.

[23] KPMG, “Mexico: Updates to Electronic Invoicing (CFDI) Included in 2026 Tax Reform,” KPMG TaxNewsFlash, Nov. 13, 2025, https://www.kpmg.com/us/en/taxnewsflash/news/2025/11/mexico-updates-electronic-invoicing-cfdi-2026-tax-reform.html.

[24] Eugen Trombitas, “New Zealand’s Consumption Tax Takes ‘Best in Class’ Place,” Bloomberg Tax, Apr. 1, 2026, https://news.bloomberglaw.com/daily-tax-report-international/new-zealands-consumption-tax-takes-best-in-class-place.

[25] EY, “New Zealand Government Drops Digital Services Tax Proposals,” EY Global Tax Alert, May 27, 2025, https://www.ey.com/en_gl/technical/tax-alerts/new-zealand-government-drops-digital-services-tax-proposals.

[26] PwC Switzerland, “TRAF,” https://www.pwc.ch/en/services/tax-advice/corporate-taxes-tax-structures/corporate-tax-reform-iii.html.

[27] European Commission, “EU-Switzerland: State Aid Decision on Company Tax Regimes,” Press Release IP/07/176, Feb. 13, 2007, https://www.ec.europa.eu/commission/presscorner/detail/en/ip07176.

[28] Preetika Joshi, “Does Private Country-by-Country Reporting Deter Tax Avoidance and Income Shifting? Evidence from BEPS Action Item 13,” Journal of Accounting Research 58:2 (March 2020), https://www.onlinelibrary.wiley.com/doi/abs/10.1111/1475-679X.12304.

[29] Alan Cole, “The Impact of BEPS 1.0,” cited above, contains an extended assessment of the actions described here.

[30] Alan Cole and Cody Kallen, “Risks to the U.S. Tax Base from Pillar Two,” Tax Foundation, Aug. 30, 2023, https://www.taxfoundation.org/research/all/federal/global-minimum-tax-us-tax-base/.

[31] Daniel Bunn, “What the OECD’s Pillar Two Impact Assessment Misses,” Tax Foundation, Jan. 23, 2023, https://www.taxfoundation.org/blog/global-minimum-tax-revenue-impact-assessment/.

[32] Kyle Pomerleau and Alex Mengden, “A Distributed Profits Tax in Poland,” Tax Foundation, May 13, 2025, https://www.taxfoundation.org/research/all/eu/poland-distributed-profits-tax/.

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Alan Cole

Senior Economist Alan Cole is a Senior Economist with Tax Foundation’s Center for Federal Tax Policy. His areas of focus include business taxes, cross-border taxes, and macroeconomics. In addition to work at Tax Foundation, Alan has served on the Joint Economic Committee and with The Conference Board.