The Caribbean and LAC in the Global Corporate Tax Landscape: Strategy Lessons from OECD Corporate Tax Statistics 2025

The OECD’s Corporate Tax Statistics 2025 is more than a technical publication. For businesses in Jamaica, the wider Caribbean and Latin America & the Caribbean (LAC), it’s effectively a global scoreboard: showing where our region sits on corporate tax rates, withholding taxes, treaty networks and BEPS implementation – and how that shapes investment and tax strategy.

In this article, we translate the key findings into practical implications for boards, CFOs and tax leaders across the region, and outline how groups should respond.

1. Where LAC stands on corporate tax rates

The OECD looks at four big regional groupings: OECD members, Africa, Asia & Pacific, and Latin America & the Caribbean (LAC). Across all regions, statutory corporate income tax rates (STRs) have fallen since 2000 – but at different speeds

For LAC, the data show:

• The average statutory corporate tax rate in LAC dropped from 26.8% in 2000 to 21.1% in 2025, a decline of 5.7 percentage points across 35 jurisdictions

• Over the same period, OECD members saw a bigger average decline (from 32.3% to 24.1%), but remain slightly above LAC in 2025.

At first glance, this suggests LAC has become relatively competitive. But there’s a twist:

• Seven of the 35 LAC jurisdictions have a statutory corporate tax rate of zero.

• When these zero-rate jurisdictions are excluded, the average LAC tax rate jumps to 26.4% in 2025 – 5.3 percentage points higher than the simple regional average .

So we effectively have two LAC realities:

1. Zero-tax or very low-tax jurisdictions (important for regional planning, but under increasing pressure from BEPS and Pillar Two); and

2. Standard-tax LAC jurisdictions, where corporate tax rates are closer to the mid-20s and above.

For businesses headquartered or operating in Jamaica and its neighbours, this means that:

• The headline tax competition story in LAC is often exaggerated by the presence of a handful of zero-rate jurisdictions.

• For most LAC economies with real domestic markets and revenue needs, corporate tax remains a major cost factor – and governments have limited room to keep cutting.

2. Withholding taxes: LAC’s “hidden” competitiveness challenge

Corporate tax on profits is only one part of the picture. The OECD’s dataset on withholding taxes (WHTs) on dividends, interest and royalties reveals a different pressure point.

Across 146 jurisdictions, the OECD finds that:

• Low- and middle-income jurisdictions (a group that includes many LAC states) levy higher average WHT rates on interest and royalties than high-income jurisdictions and investment hubs.

• WHTs strongly affect:

  • The cost of repatriating profits,

  • Financing choices (debt vs equity), and

  • The cost of using group IP or know-how cross-border.

The averages are telling:

• Dividends – low & middle-income: 11.5%; high-income: 15.5%; investment hubs: 5.2%.

• Interest – low & middle-income: 14.7%; high-income: 12.6%; investment hubs: 4.3%.

• Royalties – low & middle-income: 16.8%; high-income: 16.2%; investment hubs: 2.8%.

Two key conclusions:

1. Investment hubs deliberately keep WHTs very low, reinforcing their role in global holding, financing and IP structures.

2. Many LAC countries – grouped within “low and middle-income jurisdictions” – apply relatively high WHTs on interest and royalties, making cross-border financing and IP use more expensive.

Jamaica’s position in the WHT distribution

The OECD highlights Jamaica as a clear outlier in its group:

• Among low and middle-income jurisdictions, Jamaica is the only jurisdiction with a standard WHT on dividends above 30%, at 33.3%.

• Jamaica also sits at the upper end of the distribution for WHT on interest and royalties, again at 33.3%, alongside Peru, Argentina and Mexico at 30–35%.

Domestically, these high WHT rates are often seen as defensive measures to protect the tax base. But for corporate groups:

• They increase the cost of cross-border payments to shareholders, lenders and IP owners.

• They can discourage routing of investment through Jamaica where alternative locations with lower WHTs exist.

• They make the treaty network and treaty-reduced WHT rates a critical part of planning – not a nice-to-have.

For any LAC business with cross-border shareholders, financing or IP flows, WHT strategy is now inseparable from overall capital and tax strategy.

3. Treaties and the region’s integration into global tax networks

The OECD notes that:

• The total number of bilateral tax treaties across the 146 jurisdictions exceeds 5,100 in 2025, up from just 1,035 in 1990 .

• However, OECD countries have significantly more treaties on average than regions such as Africa and LAC, which contain a higher proportion of non-OECD members.

This matters because:

• Treaty-based WHT rates are substantially lower than domestic WHT rates, often clustering below 5% .

• Jurisdictions with dense treaty networks are more attractive as regional or global holding, financing and IP hubs, even if their domestic WHTs are high.

For Caribbean and LAC groups, the practical questions become:

• Does our regional holding or treasury company sit in a treaty-rich jurisdiction that minimises WHT drag?

• Are we relying too heavily on domestic WHT reliefs instead of fully leveraging available treaty benefits?

• Are there treaty mismatches that create BEPS risk (e.g., treaty shopping structures) in a world where transparency and anti-avoidance rules are tightening?

4. Profit shifting, investment hubs and LAC exposure

The anonymised and aggregated Country-by-Country Reporting (CbCR) data in the OECD report give a global view of how profits, employees and assets are distributed.

The key takeaway remains stark:

• High- and middle-income jurisdictions account for 33% and 31% of employees and 35% and 27% of tangible assets, but only 28% and 20% of profits respectively.

• Investment hubs, by contrast, host just 4% of employees and 12% of tangible assets, yet attract 18% of total MNE profits 

In other words, profits are still disproportionately booked in investment hubs relative to real activity – a classic BEPS signal.

For LAC:

• Many economies fall within the middle-income group, which, despite hosting a substantial share of employees and assets, captures a relatively small share of global MNE profits.

• At the same time, several nearby hubs and low-tax jurisdictions (inside and outside the Caribbean) act as magnets for mobile profits.

As BEPS measures and Pillar Two are implemented, structures that route LAC-generated profits through such hubs are under increasing pressure – both from:

• Anti-avoidance rules (CFC, hybrid mismatch, interest limitation, IP regime standards), and

• Minimum tax rules, which limit the benefits of low-tax outcomes for large groups.

5. BEPS implementation: closing the classic “leakage” channels

The OECD report tracks the implementation of several BEPS Actions across the Inclusive Framework:

• Hybrid mismatch rules (Action 2) – 45 jurisdictions have adopted measures to neutralise hybrid mismatches by 2025.

• CFC rules (Action 3) – 56 jurisdictions have CFC rules in place in 2025, up from 49 in 2019, with 34 high-income and 17 middle-/lower-income jurisdictions implementing them.

• Interest limitation rules (Action 4) – 106 interest limitation regimes are now in place, up from 67 in 2019.

• IP regimes (Action 5) – 46 regimes have been assessed as non-harmful, with several abolished or under amendment.

• Mandatory disclosure rules (Action 12) – 29 jurisdictions have MDR in place..

• CbCR (Action 13) – 106 jurisdictions require mandatory CbCR filing for 2022.

Implementation is more advanced in high-income jurisdictions, but middle-income regions (including LAC) are catching up. With each new rule:

• Classic profit shifting channels (hybrids, thin capitalisation, “paper IP” regimes) become harder to operate.

• Transparency and data-driven risk assessment (via CbCR and MDR) make aggressive structures more visible and more likely to be challenged.

For Caribbean and LAC businesses – especially those using offshore hubs or complex financing chains – this is a clear signal: the room for tax arbitrage is shrinking, and strategy must pivot to substance, resilience and clarity.

6. Strategic implications for Caribbean and LAC businesses

Putting the pieces together, the OECD statistics suggest several strategic themes for regional groups.

6.1 Rethink the role of zero-tax and hub jurisdictions

With LAC’s “headline” average corporate tax rate significantly pulled down by seven zero-rate jurisdictions, it can be tempting to see these as long-term solutions

However:

• BEPS measures and Pillar Two erode much of the advantage for large groups.

• CbCR data exposes large profit flows into hubs with low substance, increasing audit and reputational risk.

Boards should:

• Stress-test structures that rely heavily on zero-tax or hub jurisdictions.

• Evaluate how much value they still deliver once top-up tax, CFC pick-up and reputational risk are factored in.

6.2 Treat WHT planning as core capital and treasury strategy

Given high average WHTs on interest and royalties in low and middle-income jurisdictions – and Jamaica’s particularly high standard rates – WHT cannot be an afterthought.

CFOs should:

• Map effective WHT rates on key flows (dividends, interest, royalties, service fees) across their structure.

• Optimise financing channels and holding structures to leverage treaty networks, while staying within anti-treaty-shopping rules.

• Factor WHT drag into cost of capital calculations for cross-border projects.

6.3 Align profit with people and assets

CbCR data reinforces the global expectation that profits should broadly follow employees, assets and real activities 

Regional groups should:

• Ensure high-profit entities in low-tax jurisdictions also carry real decision-making, DEMPE functions and operational substance.

• Review transfer pricing policies so that they align with the actual value chain and can withstand scrutiny.

6.4 Integrate tax policy trends into strategic planning

Given the pace of BEPS implementation, boards and tax leaders should:

• Regularly update heat maps of where CFC, hybrid, interest limitation and MDR rules apply across their footprint.

• Build Pillar Two and CbCR considerations into expansion decisions, joint ventures and new regional hubs.

7. How Dawgen Global can support your regional strategy

Dawgen Global works at the intersection of global tax developments and Caribbean/LAC business reality. Using insights from Corporate Tax Statistics 2025, we help clients move from reactive compliance to forward-looking strategy.

Our Tax Services team can help you:

• Benchmark your footprint against global data

  • Compare your effective tax profile, WHT exposure and use of hubs to patterns seen across high-, middle- and low-income groups.

  • Identify jurisdictions where your EATRs, WHTs and profit allocation may raise red flags.

• Optimise group structures for a BEPS and Pillar Two world

  • Reassess the role of zero-tax and hub jurisdictions in your structure.

  • Rethink holding, financing and IP locations in light of treaty networks, WHT, CFC and minimum tax rules.

• Integrate tax into board-level decision frameworks

  • Build dashboards that combine statutory rates, WHTs, effective tax indicators and CbCR risk signals into a coherent view for decision-makers.

• Support engagement with policymakers and regulators

  • Help industry associations and governments in the region interpret the OECD data and design balanced, competitive and compliant tax policies.

Next Step!

The Corporate Tax Statistics 2025 report makes one thing very clear: Caribbean and LAC businesses operate in a tax environment that is both competitive and increasingly constrained. Headline rates, zero-tax hubs and traditional planning techniques are no longer enough.

If you would like to understand where your group really sits in this global landscape – and how to adjust your tax, financing and investment strategy accordingly – Dawgen Global is ready to help.

📧 Email our Tax Services Team: [email protected]
📱 WhatsApp (Global): +1 555 795 9071

At Dawgen Global, we help you make Smarter and More Effective Tax Decisions – across Jamaica, the Caribbean and the wider LAC region.

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