Global Tax Rankings: Most Improved OECD Countries

The 2025 version of the International Tax Competitiveness Index is the 12th edition of the report. Over the years, many different researchers at the TaxA 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. Foundation have worked on the report, several new members of the Organisation for Economic Co-operation and Development (OECD) have been added, and various methodological changes have taken place.

One thing that has remained consistent is our work to ensure that the latest methods are applied to all years so that one can compare the Index data over time in an apples-to-apples manner.

This allows us to look back and see how country rankings have changed over time and be able to identify the largest movers and shakers over the last 12 years.

The five countries that saw the largest improvements in their ranking over the last 12 years are:

United States, which ranked 29th in 2014 and now ranks 14th
Canada, which ranked 25th in 2014 and currently ranks 13th
Greece, which ranked 30th in 2014 and is now at 23rd
Hungary, which placed 14th in the 2014 rankings and has climbed to 9th
Iceland, which ranked 34th in 2014 and has risen to 29th

The five countries that fell the furthest in the rankings between 2014 and 2025 are:

Colombia, which ranked 24th in 2014 and currently ranks 36th
Poland, which ranked 23rd in 2014 and is now at 35th
Belgium, which placed 20th in 2014 and has now fallen to 30th
Chile, which ranked 22nd in 2014 and is now at 28th
The Czech Republic, which was 5th in 2014 and has dropped to 10th

Highlighting the Good

The United States adopted a broad tax reform package in 2017. Its lower corporate and personal income tax rates, as well as its move toward a territorial tax systemTerritorial taxation is a system that excludes foreign earnings from a country’s domestic tax base. This is common throughout the world and is the opposite of worldwide taxation, where foreign earnings are included in the domestic tax base., remain to this day. The 2025 One Big Beautiful Bill Act (OBBBA) permanently renewed some core elements of the reform that had started to phase out, such as full expensing for machinery and equipment, and extended temporary full expensingFull 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. to industrial buildings.

Canada and its provinces decreased the combined consumption taxA 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. burden over the years while broadening the base from 38 to 53 percent of final consumption. Canada’s rank on the Index also benefits from the lack of wealth, estate, or inheritance taxes. Following the United States, Canada adopted full expensing for some short-lived assets in 2019 and accelerated depreciationDepreciation 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 for other assets, which boosted its ranking on the Index and helped spur new capital investment critical for long-term growth. However, unless renewed, these provisions are set to fully phase out by 2027, endangering the economic gains. The 2025 federal budget takes a step in that direction by extending temporary full expensing to some industrial buildings from 2026 to 2030.

Greece broadened its VAT base from 38 to 43 percent of final consumption while reducing its corporate income taxA 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. rate from 26 percent to 22 percent and moving to a more territorial tax system by extending its participation exemption to capital gains in 2020. Greece also reduced its dividend tax rate from 10 to 5 percent, the lowest rate in the OECD, and excluded capital gains from the sale of listed shares without substantial ownership from taxation.

Hungary lowered and consolidated its corporate tax rates in 2016, moving from a 19 percent top rate to a flat 9 percent rate, still the lowest in the OECD. Hungary has also maintained its flat personal income tax throughout the 12 years covered by the Index, while slightly lowering the top rate from 34.5 to 33.5 percent, including social contributions on regular income and from 16 to 15 percent on capital income.

Iceland phased out its net wealth taxA 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. in 2015. It has broadened its value-added tax (VAT) base from 42 to 53 percent of final consumption and reduced the share of revenue collected from non-standard social contributions over time.

Learning from the Bad

Colombia has fallen to the third-last ranking as its tax policy deteriorated along various dimensions. Its VAT rate increased from 16 percent to 19 percent, while its VAT base has become one of the narrowest in the OECD. Additionally, Colombia increased its corporate income tax rate to 35 percent, the second highest in the OECD. It also introduced capital duties and a net wealth tax.

Poland has introduced a patent boxA patent box—also referred to as intellectual property (IP) regime—taxes business income earned from IP at a rate below the statutory corporate income tax rate, aiming to encourage local research and development. Many patent boxes around the world have undergone substantial reforms due to profit shifting concerns. and a digital services tax while tightening its cross-border rules in recent years. Poland also has multiple distortionary property taxes with separate levies on real estate transfers, estates, bank assets, and financial transactions.

In recent years, Poland has also moved to a more complex and distortionary corporate tax system, with a turnover-based tax rate threshold creating a tax cliff, an alternative minimum tax further restricting its loss carryover provisions, and higher tax subsidies for research and development activities.

Belgium has limited carryforwards to 70 percent of net operating losses and abolished its notional interest deduction, while its capital allowances declined across all classes of investments. It also introduced an annual tax on securities accounts and—effective in 2024—imposed strict controlled foreign corporation and thin capitalization rules. In 2026, Belgium is set to end its tax exclusion for capital gains not considered professional income and apply capital gains taxA capital gains tax is levied on the profit made from selling an asset and is often in addition to corporate income taxes, frequently resulting in double taxation. These taxes create a bias against saving, leading to a lower level of national income by encouraging present consumption over investment. at a 10 percent rate, which will further decrease its ranking.

Chile completely abolished loss carrybacks in 2017 and increased both its corporate income tax and capital gains rates over the past few years. The largest improvement over the past decade, full expensing for buildings, machinery, and intangible assets,

The Czech Republic has continually increased its VAT turnover threshold to the highest in the OECD, giving up tax revenue while distorting business size. In 2025, the Czech Republic started to apply a solidarity tax of 23 percent to the long-term capital gains from the sale of securities, a change that policymakers have since committed to reverse in 2026.

The Index provides lessons for policymakers considering ways to remove distortions in their tax systems and remain competitive against their peers. The further up a country moves on the Index, the more likely it is to have broader tax bases, relatively lower rates, and policies that are less distortionary to individual or business decisions. Falling on the Index reveals a policy preference for narrow tax bases, special tax policy tools, and rules that make compliance more difficult.