E-mail this page				Print this page

Contact: mercer.pressoffice@mercer.com

UK
London, 19 November 2007

• Belgium, Denmark and Hungary have least attractive personal tax environments
• United Arab Emirates, Hong Kong and Russia have most attractive environments
• UK is middle-ranking at joint position 14
• Married employees with two children better off than single employees

The United Arab Emirates (UAE), Russia and Hong Kong are amongst the world's most benign personal tax environments while Belgium, Denmark and Hungary are the least attractive according to a global survey of expatriate hot spots by Mercer. The data also shows that, in general, married employees are better off than single employees while married employees with two children fare the best.

Mercer's Worldwide Individual Tax Comparator Report analysed the tax and benefits systems across 32 markets focusing on personal tax structures, average salaries and marital status. This data is used by multinational companies to structure pay packages for their expatriate and local market employees.

For single managers, the UAE is the most attractive tax environment according to percentage of net income available. The UAE ranks highly as it does not assess any income tax and the country's social security contributions amount to only 5% of an employee’s gross salary. Russia, ranked 2, applies a flat tax of 13% across all income levels, while Hong Kong reaches rank 3, with taxes and social security contributions at 14.2% of gross base salary.

Excluding Russia, in general, European countries have less attractive tax environments and dominate the bottom of the rankings. The UK ranks 14=, followed by Ireland (18), Spain (19), and Switzerland (21). France and Germany are ranked 22 and 29.

At the bottom of the rankings, single managers in Hungary (30), Denmark (31) and Belgium (32) pay, respectively, 48.5%, 48.6% and 50.5% of their gross income in taxes and social security contributions.

Brian Waite, a senior consultant specialising in international issues, commented: "Local taxation is one of several factors that multinationals take account of when deploying staff across the globe. It has an obvious impact on take-home pay, and in some markets with low or zero tax rates it is an important incentive for employees to work abroad. In other high-tax destinations, multinationals need to create compensation packages that at least match their expatriates' purchasing power in the home market.

"Other important considerations for expatriate allowances are housing, private schooling and local cost of living adjustments, and there are additional complications around contributions to the home market pension plan. These factors can all contribute to the high cost of a global expatriate workforce."

Markus Wiesner, Mercer's head of operations in Dubai, added: "We often find that the UAE's zero taxation is a strong draw for expatriates on short-term assignments. For three to five years, young professionals can fast-track their savings to afford a mortgage when they return home, while senior executives can maximise their savings potential ahead of retirement. It's in these particular groups that we get a really good mix of expatriate talent in Dubai."

Asian markets dominate the top of the rankings with Hong Kong, Taiwan, Singapore, South Korea and China (Beijing) ranked 3, 4, 5, 6 and 7. The lowest ranked Asian market is India at 14=. In the Americas, Mexico (8), Brazil (9) and Argentina (10) outrank the United States (14=) and Canada (20).

According to Niklaus Kobel, researcher at Mercer's Geneva office, "Marital status is still a major factor in determining local tax rates. The data highlights the fluctuation in tax rates applied according to an employee's income level and marital status. It is important to note that high tax rates do not necessarily mean less affluence."
 
Not all taxation systems vary according to marital status, however. Married employees in Brazil, India and Turkey have similar tax rates to single employees.

Back to top

Notes for editors

Mercer's 2007 Worldwide Individual Tax Comparator report is designed specifically to help companies understand, analyse and compare personal tax rates and taxation components across 32 countries to help HR departments compile well-structured, competitive salary packages for their employees. See tables below for full rankings, additional information and gross and net salary data.

Tax laws can change without notice. The Worldwide Individual Tax Comparator should be used as a general guide to taxation and not as a legal, accounting or other professional service.

Hong Kong, with a substantially different tax and financial system from the rest of China, is for the purposes of Mercer's reports, listed as a separate country.

The tax rates quoted in this release are based on the average for a middle manager, earning $91,000 a year.

Tables: Global Rankings Net Salary/Overall Taxation Rate (Taxes & Social Security), Percentage of Gross for managers (single, married and married with 2 children) Based on an average salary of $91,000

Back to top

Back to top

* Social security contributions applying to local UAE citizens only.
Where there are varying tax and social security contributions in any given market, the rates for a representative city are given.

Back to top

Issued in the United Kingdom by Mercer Limited which is authorised and regulated by the Financial Services Authority. Registered in England No. 984275. Registered Office: 1 Tower Place West, Tower Place, London, EC3R 5BU.

E-mail this page

Print this page

Contact: mercer.pressoffice@mercer.com