26th July 2021
Some of the more unusual international taxes to be aware of
When you talk about taxes, many people automatically think of the usual suspects such as income tax or taxed income, tax rates, tax credits or capital gains tax. We want to know what our tax code is and the tax deductions that affect our take home pay. If you’re a business, then your main preoccupations might be corporate tax and the latest global tax developments that affect foreign earnings and foreign income. But there are also a number of unusual (and humorous) international taxes to be aware of.
In our latest post, we pick out a selection of some of the more peculiar international taxes.
Taxing ice, pumpkins and bachelors
Did you know that the US state of Missouri has a bachelor tax that’s been in existence since 1820? The midwestern state still imposes a tax on bachelors from the age of 21 to 50 – thankfully, there’s only a ‘single’ $1 to be paid every year if you don’t get married, but the regulation is still in place. Meanwhile Maine has a blueberry tax to prevent over-harvesting of this popular superfood and Arizona has an ice tax (blocks of). You’ll be fine if you want to put the champagne on ice, though, as this doesn’t apply to ice cubes.
States such as California also impose a jock tax so that professional athletes from other states have to pay tax where they are based while the state of New Jersey has its own pumpkin tax which applies when the popular orange squash is used for decorative purposes (otherwise exempt). You’ll certainly need to think twice before carving your next Halloween pumpkin if relocating to this destination! And if you want to set up a tattoo business in Arkansas, be prepared for a 6% tattoo tax, which was introduced in 2012.
Travelling around the globe, as of 2017, the state of Punjab in India introduced a pet tax which doubles if you have a more unusual domestic pet such as an elephant, camel, cow, horse, buffalo or bull. Staying with our animal theme, given that our grass-eating herbivores contribute significantly to greenhouse gases, a cow flatulence tax in Denmark will cost local farmers $110 per animal – that’s the highest amount out of all the EU countries that have a similar tax.
From 1784 to 1811, the British government imposed a hat tax, given that men with hats were deemed to be wealthier and therefore should pay more in tax. Going even further back in time, as a way of funding wars, King Henry I brought in a cowardice tax which King John later increased by a whopping 300%. Fast forward to the present, based on a complex culture points scoring system, films set in the UK and that reflect a diverse British culture or promote British heritage, can qualify for a 25% tax break. Ireland too has a soft spot for more creative endeavours, with writers, composers and sculptors able to enjoy tax advantages if their work is deemed to have cultural or artistic merit.
Stranger international taxes you might not be aware of
If Swedish parents don’t get their name approved before their child turns five, they can be hit with a fine of up to around £400. The law was originally put in place to prevent people using royal names. Apparently, you can’t name your child ‘Ikea’ but ‘Lego’ and ‘Google’ are allowed. France has long spearheaded a campaign against so-called ‘Google’ taxes to clamp down on tax evasion by the big tech giants. A global agreement was recently signed by 130 countries to impose a global minimum corporate tax rate of 15% to clamp down on digital services income and profit shifting.
And here are a couple of other weird and wacky taxes to finish off. Although now defunct (but only since 1999) did you know that bribery was once upon a time legal in Germany and was tax deductible too? To increase tax revenues and support the local tobacco industry, Hubei province in China set quotas for cigarette pack sales., though there are much stricter laws now about smoking in public. During his time as czar in the 17th century when Peter the Great ruled Russia, men had to carry a token as proof that they had paid their beard tax. That would have put a stop to lockdown beards!
Although Switzerland isn’t technically a tax haven, having done away with its favourable corporate tax regime in 2019, it still remains one of the most popular offshore financial centres with trillions of dollars in assets originating from abroad. Having a Swiss bank account is almost synonymous with wealth and the secrecy surrounding people’s assets dates back to 1934, when it was deemed a criminal offence to reveal a client’s identity. With its headquarters in Zurich, football’s international governing body has long benefited from tax concessions from the countries hosting its prestigious FIFA World Cup tournament, which is staged every four years.
However, our prize (being the operative word) for the best unusual international tax has to go to Canada where cereal makers who include a free toy with their packets of cereal enjoy a tax break, as long as they are not alcohol related.
International tax compliance to be aware of
There are some oddball taxes around the world that you may encounter on your travels as a global contractor. There are of course other far more serious ones, relating to your employment and tax status that you really do need to be aware of, which vary from country to country and can often be complex and difficult to abide by. Remaining compliant with local tax authorities must be a top priority for any contractors looking at international opportunities. Failure to abide by local and national legislation could expose you to fines, criminal charges and even potential prison sentences. Should you need advice on tax, national insurance or immigration laws, our 6CATS International experts are on hand to advise.