2023 Tax Competitiveness Index

The U.S.-based Tax Foundation released its annual report, the 2023 International Tax Competitiveness Index (ITCI). This report analyzes and quantifies tax competitiveness across 38 OECD member countries. By enabling cross-country comparisons, the ITCI highlights the importance of openness and neutrality in tax systems and is meaningful in that it can serve as a catalyst for promoting corporate activity and, ultimately, enhancing national economic growth.

First, Korea ranked 23rd with a score of 61.6 points, marking a one-place improvement from the previous year. A closer look at individual categories shows that Korea demonstrated strong competitiveness in the consumption tax category, ranking second globally. In contrast, it ranked relatively low in property taxes (32nd) and individual income taxes (37th), revealing a significant disparity across tax categories.

Second, Estonia was ranked as the most tax-competitive country, followed by Latvia, New Zealand, Switzerland, and the Czech Republic. On the other hand, Colombia, Italy, France, Chile, and Portugal were identified as having the lowest levels of tax competitiveness.

Third, the International Tax Competitiveness Index is composed of five major categories, all of which share a common characteristic: higher tax rates are associated with lower competitiveness scores. This suggests that high taxes and inefficient tax systems adversely affect corporate activity and, in turn, hinder economic growth.

Finally, the COVID-19 pandemic led many countries to implement temporary changes to their tax systems. As governments faced revenue shortfalls during economic downturns, it became increasingly important to consider optimal tax structures that can both support economic recovery and enhance tax revenues.



I. Introduction to the International Tax Competitiveness Index
II. Korea’s International Tax Competitiveness Index
III. Global Tax Competitiveness by Category
IV. Policy Implications

References

Korean version: https://www.cfe.org/20231019_26074