Flat Tax Roundup 2011

No major flat tax developments transpired in 2011, either in new countries getting on the bandwagon or existing flat-tax countries falling off.

Vietnam has joined the list of countries-- Malta (15%), Andorra (10%), Malaysia (15%)--that tax non-residents at a flat rate, set at 20%, while residents pay graduated rates up to 35%.

The big news is the revival of the flat tax in the campaign for the Republican presidential nomination.  Herman Cain (since withdrawn), Rick Perry, and Newt Gingrich have explicitly proposed a flat tax.  If either Perry or Gingrich win the nomination, the flat tax will be a major issue throughout the campaign.  Although Jon Huntsman signed a flat tax into law in Utah, he proposes three federal income tax rates.  Mitt Romney plans to lower rates in the future, but is not proposing an immediate major reform.  Michele Bachmann, Rick Santorum, and Ron Paul support reform and lower rates, but none of these seem likely to secure the nomination.

Malta Extends its Preferential 15% Flat Tax

To enhance Malta’s attractiveness for skilled persons engaged in certain high-tech economic fields, the government, in its 2012 budget, has extended its preferential 15% flat tax to international professionals developing digital games.  Maltese companies that commission digital games will qualify for a tax credit of about $20,000.

The government will also exempt royalties from copyright-protected books, film scripts, music, and art.

Return With Us to Those Exciting Days of Yesteryear

The Flat Tax Rides Again--Perry, Huntsman, Gingrich (optional), Cain, and Bachman.

Et tu Romney?

Three Cheers for Herman Cain

9-9-9

Madagascar Enhances its Flat Tax

To improve the investment climate in the African island nation of Madagascar, located off the southeast coast of the African continent, the government’s 2010 budget reduced the flat-rate personal income tax from 24% to 23%, with a personal allowance of MGA 250,000 (US$1 = Malagasy Ariary 1,942), about $125 per month, or $1,500 a year.  Corporation tax was incorporated into the income tax code at the same 23% rate.

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Andorra Implements Non-Residents 10% Flat Tax

Andorra historically had no income or capital gains taxes on residents and non-residents.  In 2007, to slow property inflation, the government levied a 15% capital gains tax.

In late December 2010, Andorra published the Taxation of Non-Residents Act, 2010.  It subjects non-resident companies and individuals to a 10% flat tax on local-source profits and income, minus permitted expenses and deductions.  It plans to reduce capital gains tax on property from 15% to 10% in the near future.

The government plans on introducing a value-added tax to replace the existing consumption tax.  Following the imposition of a 5% VAT, the government next intends to apply the 10% flat tax to resident companies and individuals.