In terms of personal taxes and social security contributions in 2012, this translated into 60.8% of income being retained on $200,000 and just 50.1% for the top earner, the report by UHY Hacker Young revealed.
At the other end of the tax burden scale, in the UAE all the income is kept because no personal tax or social contributions is payable.
The worst five countries for those on £1.5m were France, with 45.9% of income kept, Italy (48.4%), Netherlands (48.9%), Ireland (48.9%) and Spain (49.7%).
Mark Giddens, head of private client services at UHY Hacker Young said: “The complex way in which governments layered on the tax burden on high earners also shows how complicated the UKs personal tax system has become. High, complex and opaque taxes are making the UK uncompetitive internationally.”
He added that although the top rate income tax cut from 50% to 45% will move the UK back towards the mainstream of taxes on the highest earners, it will still leave the tax burden on the highest earners in the UK above that of the US, Australia, or Japan.
“A high personal tax burden makes it difficult for the UK to attract and retain the most experienced and skilled workers and entrepreneurs,” he said.
The BRIC countries – Brazil, Russia, India, China – all have some of the lowest levels of personal tax and social security contributions, the report stated. The average taxpayer in a BRIC country will keep 85% their income at $25,000 and 75% at $200,000. This compares to just 80% and 62% for the same average taxpayers in G7 countries.
Russia was the most consistently low-tax economy, appearing most often in the five lowest taxing economies across the pay brackets. Italy and France appeared most often in the five highest taxing economies.
Nikolay Litvinov, partner of UHY Yans-Audit LLC in Russia, said: “Russia’s 13% flat rate of income tax makes it very competitive compared to rival economies, especially at the higher end of the income scale.”
James Tng, Tax Partner, UHY Haines Norton in Australia, says: “Australia seems to have found the balance between a progressive and competitive tax system. Unlike other major industrial economies, Australia doesn’t have a huge debt burden to complicate things. Low taxes are offered for the lowest earners, but the taxes on high earners are still a lot lower than elsewhere.”
Income kept by those earning USD 25,000 and USD 200,000 after personal taxes and social security contributions in 2012
Country USD 200,000 %
- 1. UAE 200,000 100.0%
- 2. Russia 174,000 87.0%
- 3. Nigeria 166,784 83.4%
- 4. Japan 164,109 82.1%
- 5. Czech Republic 159,883 79.9%
- 6. Slovakia 157,634 78.8%
- 7. Romania 154,719 77.4%
- 8. Estonia 154,033 77.0%
- 9. Brazil 147,946 74.0%
- 10. Mexico 142,185 71.1%
Income kept by those earning USD 1,500,000 after personal taxes and social security contributions in 2012
Country USD % of income kept
- 1. France 687,920 45.9%
- 2. Italy 725,605 48.4%
- 3. Netherlands 733,812 48.9%
- 4. Ireland 734,106 48.9%
- 5. Spain 744,848 49.7%
- 6. UK 749,600 50.0%
- 7. Austria 762,205 50.8%
- 8. Israel 794,175 52.9%
- 9. Germany 798,717 53.2%
- 10. Canada 803277 53.6%
