For chip design giant Nvidia, the boom in artificial intelligence has coincided with a useful period of unusually low tax rates. A decade ago the company’s effective tax rate was 17.4 per cent. Last year it was 12 per cent. The previous year, the company set aside nothing at all. Now, rates are rising.
Varying global tax rates alter investment returns for US multinational companies. Nvidia, for example, counts the US, China, Germany, Hong Kong, India, Israel, Taiwan, and the UK as significant tax jurisdictions.
Tax incentives and other concessions mean that, even in countries with the same tax rates, companies do not face the same bills. Research by Dr Javier Garcia Bernardo at Utrecht University found that while Luxembourg and Norway have similar levels of statutory tax, multinational companies in Luxembourg paid as little as 1 per cent of gross income in taxes, while those in Norway paid up to 67 per cent.