1. Corporate tax rates: Lower in Asia
Asia has the lowest average statutory corporate tax rate globally at 19.74%, while Western Europe’s average is higher at 24.39%. For example, Singapore (17%) and Hong Kong (16.5%) offer lower rates than most Western European countries, where rates like The Netherlands (up to 25,8%) and Germany’s (30%+) are common.
2. Personal income tax: More progressive in Western Europe
Western Europe features some of the world’s highest personal income tax rates, with The Netherlands (49,5%), France (55.4%), and Austria (55%). In contrast, many Asian countries have lower and sometimes flat rates; for example, Hong Kong’s top rate is 17%, and Singapore’s is 22%.
3. Social Security contributions: Heavier in Western Europe
Social security contributions are substantial in Western Europe, often matching or exceeding income tax rates to fund extensive welfare systems. Asian countries generally have lower, less comprehensive social security contributions.
4. Consumption (VAT) taxes: Higher in Western Europe
Western Europe relies heavily on VAT, with standard rates often between 20–25% (e.g., The Netherlands 21%, Germany 19%). Asian VAT/GST rates are typically lower, such as China’s 13% and Singapore’s 8%, and some countries have no VAT at all.
5. Local and regional tax variation: More pronounced in Western Europe
Western Europe often imposes significant local or municipal taxes, especially in places like Switzerland and Germany. In Asia, most taxes are set at the national level, with limited regional variation except in large countries like China and India.
6. Tax incentives and holidays: More common in Asia
Many Asian countries use tax holidays, special economic zones and other incentives to attract foreign investment. These are less common and more regulated in Western Europe, where tax policy tends to be more uniform and less geared toward incentives.
7. Wealth and Capital Taxes: More Prevalent in Western Europe
Western Europe imposes more wealth, inheritance and capital gains taxes than most Asian countries. For example, France and The Netherlands tax wealth and inheritance, while many Asian countries either have no such taxes or levy them at much lower rates.
Conclusion
These differences reflect broader policy priorities: Western Europe’s higher, progressive taxes support strong social safety nets, while Asia’s lower and simpler taxes aim to boost investment and economic growth.