Taxation systems around the globe are incredibly diverse, with different countries having different structures for taxation. In the recent times, Kenyans have been crying foul over rising taxes, but are the country’s taxes really anything as compared to taxes in these nations?
The West African country with beach resorts, rainforests, and a Frenchcolonial legacy levies a massive 60 per cent personal income tax, the highest in the world. It sure is a frontier market with a unique profile, but for such a low quality of life, we can’t find a reason why someone would settle for paying their government most of their income.
Finland has the highest taxes in Europe and the second highest taxes in the world. The rates are so high that this small home of just 5.5 million people earns a place in this list of highest tax countries, courtesy of its top marginal tax rate of 56.95 per cent. Finland also has one of the highest capital gains taxes. An interesting fact is that anyone who has arrived in Finland and stayed longer than six months will become, from the Tax Administrator’s view, a resident. And any residents’ worldwide income is subject to Finnish tax with no distinction between the source country.
Japan is the third-largest national economy in the world, after the United States and China in terms of nominal GDP —which measures the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific period, say a year. In terms of purchasing power parity, it is the fourth-largest national economy in the world, after the United States, China, and India.
This is all quite astonishing for a country that only has the 11th largest population in the world.
Many contribute Japan’s success to their legendary work ethic. With its capital being home to more millionaires than any other city on the globe, Japan is the only Asian country amongst high tax countries with a top marginal tax rate of 55.97 per cent on income. The supremacy of Japanese corporations in Asia in producing a variety of sophisticated technology and automobiles means there is plenty of income for the government to tax.
Denmark has a developed economy that ranks ninth in the world in terms of GDP per capita and sixth in nominal GDP per capita. As it has a small population, the Danish’ government imposed a total tax
rate equivalent to 56 per cent of per capita income in order tomeet the needs of its people.
This is attributed to their expansive welfare system that provides generous benefits to families and individuals, as well as investments in infrastructure and services such as healthcare, education, and public transportation.
Danish people pay taxes on their income, consumption and property acquisition, with higher paid citizens paying more taxes due to a progressive taxation system. Furthermore, Denmark also imposes an inheritance tax of up to 15 per cent on estates worth more than Sh24 million.
In addition to this, Denmark’s corporate tax rate has been steadily increasing over the years, reaching 22 per cent in 2020. As a result of these high taxes, Danish citizens benefit from an extensive social safety net that includes free education from primary school through university level, generous maternity leave and parental leave policies, affordable healthcare options for all citizens and residents of Denmark regardless of income level or citizenship status, and generous pension schemes for retired individuals.
One of the few German-speaking countries in the world is also one of the most developed, just like every other German-speaking country. Austria also demands that its people pay for that privilege, as the top marginal tax rates stand at 55 per cent. Aside from the high-income tax rate, it also has a social security rate of 18 per cent, bonus payments are charged at a rate of six per cent, and capital gains tax is 27.5 per cent. Austria is the 15th richest country in the world in terms of GDP per capita, has a well-developed social market economy, and a high standard of living.
Sweden is the 11th richest country in the world in terms of GDP per capita. Its standard of living and life expectancy rankings are among the highest in the world and the country has very low-income inequality. Sweden has a developed post-industrial society with an advanced welfare state, but the cost of that is one of the highest rates of personal income tax, with as much as 52.9 per cent deducted from annual income. Sweden has a taxation system for income from work that combines an income tax (paid by the employee) with social security contributions (employers contributions) that are paid by the
Though Swedes may be taxed heavily, sales of residential properties are exempted from taxation.
Aruba is one of the most beautiful Caribbean islands and a popular island vacation destination. The island is also one of the safest in the Caribbean if you exclude some petty crimes. But who cares about a little pick pocketing when the government levies a staggering personal income tax rate of 52 per cent? It’s actually come down in recent years, as previously it was 59 per cent. But does it make the tax rate any better? Well, not to us. We can’t digest the notion of people paying more than half of their hard-earned money to the government in taxes.
Belgium’s strongly globalised economy and its transport infrastructure are integrated with the rest of Europe. Its location at the heart of a highly industrialised region helped make it the world’s 10th largest trading nation. All of that sounds great until you realise that the country also has one of Europe’s highest rates of personal income tax.
Currently, if you earn more than Sh7 million you will be taxed at a rate of 50 per cent. And if you think that’s crazy, that’s actually an improvement, because until recently that rate was closer to 54 per cent.
The rate of innovation in this small middle-eastern country is staggering. Israel is one of the rare
non-European countries on this list and has a population of just nine million people. However, it also has the 13th largest number of start-up companies in the world. Israel was one of the world’s most resilient
economies during the 2008 Great Recession. Currently, Israel has a GDP per capita similar to Southern European countries. Because of its history, geographical position, and high-quality university education
system, Israel is home to a highly motivated and educated populace that is responsible for spurring the country’s high technology boom and rapid economic development. But all that comes with a price: a top
marginal tax rate of 50 per cent.
Though one of the smallest countries in Europe, Slovenia still imposes a whopping 50 per cent tax on its citizens. Slovenia lies at the tripoint of the Germanic, Latin, and Slavic cultures. It has just 2.1 million citizens and it is among the smallest countries in the European Union. It is one of many former Communist countries to join the European Union, but it also has the highest tax rates amongst its fellow ex-Communist states. Still, Slovenia has a developed economy and is the richest of the Slavic countries by nominal Gross Domestic Product (GDP) per capita in front of such regional powers like Poland and