Tax Around the World: Finland June 23, 2006
Today’s series on Tax Around the World features Finland. Taxation of an individual’s income in Finland is progressive. The tax rate for an individual in 2005 was between 10.5%-33.5%. In addition to direct taxation there is also municipal tax in Finland. This tax is payable by an individual on his or her income and it fluctuates between 15% - 20% depending on the municipal authority.
The following table shows Finland’s individual income tax rates for 2006:
2006 Finland Tax Brackets
| Tax Base - Euro | Tax Rate |
| 0 - 12,200 (US$ 15,350) | 0% |
| 12,200 - 17,000 (US$ 21,389) | 9.0% |
| 17,000 - 20,000 (US$ 25,164) | 14.0% |
| 20,000 - 32,800 (US$ 41,269) | 19.5% |
| 32,800 - 58,200 (US$ 73,227) | 25.0% |
| 58,200 and over | 32.5% |
(n.b.: as of 6/22/06, 1 USD = 0.794786 Euro)
Some facts about Finland:
- Its population is 5.2 million.
- The capital Helsinki has 560 000 residents.
- Finland is the sixth largest country in Europe in area.
- No tuition fees for full-time students. Attendance is compulsory between the ages of 7 and 16, and free meals are served to pupils at primary and secondary levels.
- Finland has consistently been among the highest scorers worldwide; in 2003 Finnish 15-year-olds came first in reading literacy and science, and second in mathematics, worldwide.
- Nokia, based in Espoo, Finland is ranked 130 in the Fortune Global 500 with US$36billion in revenue in 2005.
Source:
~ www.nordisketax.net
~ Thanks to x-rates.com for the currency calculator.
Tax Around the World: China March 13, 2006
While we’re on the topic of China and how their personal savings rate is 30%, (vs. -0.4% in USA), let’s take a look at their taxation laws.
- The tax on an individual’s income is progressive. As of 2005, an individual’s income is taxed progressively at 5% - 45%.
- A limited company in China is liable for tax at the rate of 33% in 2005.
- Companies in China that are located in specific legally defined areas pay company tax of 24%.
Capital Gains Tax in China
- An individual’s capital gains are taxable in China at the rate of 20%.
- Capital gains tax for a Chinese company is added to the regular tax.
- A 10% deduction at source is made from the capital gains of a foreign company in China.
- On taxing capital gains from the sale of real estate, when calculating the capital gain the purchase cost is deducted from the sale price at the 20% rate. When the capital gains are in excess of 50% of the purchase price, the rate of capital gains tax fluctuates between 30% - 60%. (It is 60% when the capital gain is over 200% when compared to the cost).
Ouch! Compare that with USA’s capital gains tax for real estate. As of 2006, Real estate gains in the US are tax free up to $250,000 gains for an individual and $500,000 for a married couple.
2005 China National Tax Brackets
(for an Individual)
| Tax Base - Yuan (US$ equivalent) | Tax |
| 1 - 500 (US$62.11) | 5% |
| 501 - 2,000 (US$248.47) | 10% |
| 2,001 - 5,000 (US$621.18) | 15% |
| 5,001 - 20,000 (US$2,484.72) | 20% |
| 20,001 - 40,000 (US$4,969.44) | 25% |
| 40,001 - 60,000 (US$7,454.16) | 30% |
| 60,001 - 80,000 (US$9,938.88) | 35% |
| 80,001 - 100,000 (US$12,423.59) | 40% |
| 100,001 and above | 45% |
* The table relates to income from a business. Income from a wage is taxable at 5% - 35%.
* Passive income such as interest and royalties is taxable at a standard rate of 20%.
Overseas Income
- An individual and company who are Chinese residents are also taxed on their income outside China and receive a credit for overseas taxes.
- Qualification for residence for an individual:
- Permanent residence in China while an individual who has no permanent residence in China but has lived in China for less than 5 years is taxed on his income in China, or overseas income that has its origins in China.
(n.b.: as of 3/10/06, 8.0492 Yuan = US $1)
Source:
http://www.novexcn.com/personal_icm_tax_99.html
Tax Around the World: Japan February 24, 2006
Today’s series on Tax Around the World features Japan, the second largest economy in the world after USA. Taxation of an individual’s income in Japan is progressive. The tax rate for an individual in 2005 was between 10% - 37%, and is proposed to be between 10% - 40% in 2006.
The following table shows Japan individual income tax rates for 2005:
2005 Japan National Tax Brackets
| Tax Base (Yen) | Tax |
| 1 - 3,300,000 | 10% |
| 3,300,001 - 9,000,000 | 20% of base exceeding 3,300,001 |
| 9,000,001 - 18,000,000 | 30% of base exceeding 9,000,001 |
| 18,000,001 and over | 37% of base exceeding 18,000,001 |
For 2006, the national individual income tax rate will be changed as below. The income tax bands would increase from four currently to six.
2006 Japan National Tax Brackets
| Tax Base (Yen) | Tax |
| 1 - 1,950,000 (US$ 16,685.21) |
5% |
| 1,950,001 - 3,300,000 (US$ 28,236.50) |
10% of base exceeding 1,950,001 |
| 3,300,001 - 6,950,000 (US$ 59,467.78) |
20% of base exceeding 3,300,001 |
| 6,950,001 - 9,000,000 (US$ 77,008.64) |
23% of base exceeding 6,950,001 |
| 9,000,001 - 18,000,000 (US$ 154,017.28) |
33% of base exceeding 9,000,001 |
| 18,000,001 and over | 40% of base exceeding 18,000,001 |
(n.b.: as of 2/23/06, 1 USD = 116.87 Yen)
Source:
KPMG Tax Corporation (pdf file)
Tax Around the World: UK February 15, 2006
In the UK, there are three tax brackets, or bands ranging from 0% to 40%. This covers income after the personal allowance (£4,895 for single people, meaning that 40% is not paid until more than £37,295 is earned).
2005/2006 UK Tax Bands
|
Taxable Bands Allowances
|
2004-05 (£)
|
2005-06 (£)
|
|---|---|---|
|
Starting rate 10%
|
0 - 2,020
(USD 3519.97) |
0 - 2,090
(USD 3641.95) |
|
Basic rate 22%
|
2,021 - 31,400
(USD 54716.38) |
2,090 - 32,400
(USD 56458.94) |
|
Higher rate 40%
|
over 31,400
|
over 32,400
|
(n.b.: as of 2/13/06, 1 USD = 0.573868 GBP or 1 GBP = 1.74256 USD)
Source:
HM Revenue & Customs
Tax Around the World: Mexico January 10, 2006
Like its neighber USA, Mexico has a progressive income tax system. However, there are no state or local income taxes. The progressive rate of the personal income tax varies from 3% to 35%, according to the tax bracket.
2003 Mexico Federal Tax Brackets
| Marginal Rate (Mexican Peso (MXN)) | Individual Income |
| 3% | 0 - 1389 |
| 10% | 1,389 - 11,792 |
| 17% | 11,792 - 20,723 |
| 25% | 20,723 - 24,090 |
| 32% | 24,090 - 28,842 |
| 33% | 28,842 - 58,170 |
| 34% | 58,170 - 91,683 |
| 35% | 91,683 and over |
(n.b.: as of 1/10/06, US$1 = 10.5185 MXN)
Source:
The Federation of International Trade Associations
Tax Around the World: Canada January 3, 2006
In Canada, both the federal and provincial governments impose income taxes on individuals. Income taxes throughout Canada taxes are progressive with the wealthy paying a higher percentage than the poor. Canadian income taxes are still less progressive than those of many nations, as there are only four tax brackets compared to the six that USA has.
2006 Canada Federal Tax Brackets
| Marginal Rate |
Individual |
| 15% | 0 - 36,378 |
| 22% | 36,379 - 72,756 |
| 26% | 72,757 - 118,285 |
| 29% | over 118,286 |
Provincial income tax is not included in these brackets. Although there are ten provinces, I’ll give four examples, British Columbia, Ontario, Quebec, and Alberta provincial taxes:
2006 Canadian Provincial Tax Brackets
| Province | Tax Rates and Brackets |
| British Columbia (Top federal + province income tax: 43.7%) |
6.05% ($0 - 33,755) 9.15% (33,756 - 67,511 11.7% (67,512 - 77,511 13.7% (77,512 - 94,121 14.7% (94,122 and over) |
| Ontario (46.41%) |
6.05% ($0 - 34,758) 9.15% (34,759 - 69,516) 11.16% (69,517 and over) |
| Quebec (48.22%) |
16.0% ($0 - 28,710) 20.0% (28,711 - 57,430) 24.0% (57,431 and over) |
| Alberta (39.0%) |
10.0% All income |
Income not taxed
It is interesting to note what is not taxed in Canada. The following list is not comprehensive:
- gifts and inheritances;
- lottery winnings;
- winnings from betting or gambling for simple recreation or enjoyment;
- strike pay;
- compensation paid by a province or territory to a victim of a criminal act or a motor vehicle accident (Quebec has changed rules in 2004 and, legally, this may be taxed or may not–Courts have yet to rule);
- certain civil and military service pensions;
- war disability pensions;
- RCMP pensions or compensation paid in respect of injury, disability, or death (Quebec has changed rules in 2004 and, legally, this may be taxed or may not–Courts have yet to rule);
- income of First Nations, if situated on a reserve;
- profit from the sale of a taxpayer’s principal residence;
- provincial child tax credits or benefits and Québec family allowances;
- the goods and services tax or harmonized sales tax credit (GST/HST credit); and
- the Canada Child Tax Benefit.
Source:
Taxation in Canada - Wikipedia
Tax Around the World: USA January 1, 2006
To begin 2006, I’d like to start off with a series of posts titled “Tax Brackets Around the World”. Since I live in the USA, I’ll start with the US tax brackets. Every so often, I’ll post information about taxation in other parts of the world. The more we learn about our neighboring countries and other countries around the world, it will help me (and hopefully you) a little about how we live compared to others. I hope there will be readers from other countries to teach us about their personal finance strategies and how we can all benefit from ideas elsewhere.
As we know, tax brackets are the divisions at which tax rates change in a progressive tax system (or an explicitly regressive tax system, although this is much rarer). There are cutoff values for taxable income — income past a certain point will be taxed at a higher rate. In a flat tax system, everyone is in the same tax bracket, and all of their income is taxed at the same rate, no matter how high their income may be.
2006 USA Federal Tax Brackets
| Marginal Rate |
Single | Married Filing Jointly |
Head of Household |
Married Filing Separately |
| 10% | 0 - 7,550 |
0 - 15,100 |
0 - 10,750 |
0 - 7,550 |
| 15% | 7,550 - 30,650 |
15,100 - 61,300 |
10,750 - 41,050 |
7,550 - 30,650 |
| 25% | 30,650 - 74,200 | 61,300 - 123,700 |
41,050 - 106,000 |
30,650 - 61,850 |
| 28% | 74,200 - 154,800 |
123,700- 188,450 | 106,000 - 171,650 |
61,850 - 94,225 |
| 33% | 154,800 - 336,550 | 188,450 - 336,550 | 171,650 - 336,550 | 94,225 - 168,275 |
| 35% | over 336,550 | over 336,550 | over 336,550 | over 168,275 |
These rates don’t include local and state income tax. So where are you and will you be going to the next bracket this year?