Signs that the downward trend in corporate taxes has stalled or even reversed increased in 2024, with more Organisation for Economic Co-operation and Development (OECD) countries raising taxes than lowering them for the second year in a row. Portugal was one of only three countries to buck this trend by reducing its tax burden last year.

"For the second year in a row, corporate tax increases were greater than decreases, suggesting that the downward trend in corporate taxes has stalled or is showing signs of reversing," the OECD stated in its annual report on tax reforms.

The average corporate tax rate across the 143 countries and jurisdictions for which the OECD collects data was 21.1% in 2024, down from 28% in 2000, "but is no longer on a steady downward trend," the report says.

"While the last two decades were marked by a decline in corporate taxes globally, 2023 and 2024 saw a reversal of this trend. More countries increased rates than reduced them, and the increases were more significant than the decreases," he adds, noting that "a number of countries also introduced or increased additional taxes (or surcharges) on corporate income to generate more revenue for the general budget, taking into account the increase in government spending and, in particular, defense spending.

The Czech Republic, Iceland, Slovenia, the Slovak Republic, and Lithuania were the five countries that decided to raise corporate taxes in 2024. These increases were significant, with three of the five raising the rate by at least two percentage points. The Czech Republic increased it from 19% to 21%, while in Iceland, it temporarily increased it from 20% to 21%. In Slovenia, this increase was even more significant, rising by three percentage points, from 19% to 22%, for a five-year period starting in 2024.

Portugal eases tax burden

Portugal ended up being an exception to this trend, being one of only three countries, along with Austria and Luxembourg, that decided to cut corporate taxes in 2024. Here, the corporate income tax rate went from 21% to 20%, a government proposal that was approved in Parliament thanks to the favourable votes of the parties supporting the executive, the Liberal Initiative and the PAN, and the abstention of the Socialist Party and Chega.

Austria, on the other hand, moved forward with a reduction to 23%, compared to 24% in 2023, while in Luxembourg, the rate went from 17% to 16%. In Italy, a reduction in this tax was introduced, but only for companies that meet certain criteria related to reinvestment and employment, dropping from 24% to 20%.