- Côte d’Ivoire has been named the country with the highest personal income tax rates globally
- Only Finland (56.95%), Japan (55.97%), Denmark (55.90%), and Austria (55%) closely follow Côte d’Ivoire
- No other African country makes it to the top-ten list of highest-taxed countries in 2023
There is a general belief that the state of development in a country determines the level of tax the citizens pay. So, for instance, a country like the United Kingdom or America is naturally required to pay more tax than a country like Côte d’Ivoire.
Well, according to a recent report released by World Population Review, the difference is the case. The report reveals that Côte d’Ivoire – a West African nation with 40 per cent of its population living below the national poverty line, is the country with the highest Personal Income Tax (PIT) globally.
Although Morocco and Madagascar lead the pack in Africa when it comes to value-added tax (VAT) imposed on goods and services in Africa as at 2022, Côte d’Ivoire leads the pack for Personal Income Tax.
According to the World Population Review report on a study carried out on 150 countries, only Finland (56.95%), Japan (55.97%), Denmark (55.90%), and Austria (55%), closely follow Côte d’Ivoire to round up the top five countries with the highest Personal Income Tax (PIT).
No other African country makes it to the top-ten list of highest-taxed countries in 2023—based on the highest personal income tax rates.
However, Chad (35%), Equatorial Guinea (35%), Guinea (35%), Sudan (35%), and Zambia (35%), make it to the top ten in the list of countries with the highest corporate taxes globally. The information further discredits the general belief that relates tax rates to the GDP of the country.
Interestingly, despite the fact that Côte d’Ivoire citizens pay the highest income taxes in the world, both its sales and corporate tax regimes are lower than those of other countries globally. Currently with a score of 60%, Côte d’Ivoire’s income taxation is rated the highest compared to even the most developed countries globally.
What is Personal Income Tax (PIT)?
According to Action Aid, Personal Income Tax (PIT) is a direct tax levied on personal income including wages and salaries, director’s fees, dividends, royalties and rental income, amongst others. PIT is paid by resident and non-resident individuals once they engage in taxable or income-generating activities in the country in question.
PIT rates may either be flat or graduated, meaning that the tax rate increases as taxable income increases – those earning more pay a higher proportion of their earnings towards taxes.
In the graduated approach, which is the most commonly used, tax rates are based on the income bracket of a taxpayer. Individuals are taxed on income earned in an accounting period, referred to as the year of assessment – usually a calendar year.
All You Need to Know About the Tax System in Côte d’Ivoire
Citizens of Côte d’Ivoire are subject to such tax regimes as specific direct income taxes depending on the revenue they earn and the general income tax (IGR). For residents of the Francophone West African country, salary tax, which is grouped under the personal income tax rates, is 1.5% of 80% of their gross income (GI) and is levied and withheld by employers.
On the other hand, their national contribution is 80% of the gross income and is taxed at progressive rates from 1.5% to 10% based on varying tax brackets. This is according to PWC’s worldwide tax summaries.
Highest and Lowest Taxed Countries in Africa
The top ten highest-taxed African countries, according to the list, are Côte d’Ivoire, South Africa, Uganda, Senegal, Zimbabwe, Guinea, the Democratic Republic of Congo, Mauritania, Morocco, and Zambia.
Conversely, Libya, Seychelles, Mauritius, Sierra Leone, Sudan, Madagascar, Nigeria, Botswana, Angola, and Egypt are the African countries with the lowest tax rates.
The world’s top ten tax havens, according to the study, are Luxembourg, Cayman Islands, Isle of Man, Jersey, Ireland, Mauritius, Bermuda, Monaco, Switzerland, and the Bahamas.