Business investment decisions are affected by corporate tax rates. Countries around the world have realized this, and the world average on corporate taxation in 2020 was between 23.85%, a huge reduction on the average of 40.11% in 1980.

There were some notable corporate tax changes in 2020 around the world, and nine countries reduced theirs, while one country, Micronesia increased it by a further 9%. Corporate tax rates are expected to change over the next few years in some countries in Europe too. Many countries, including the U.S., have agreed to consider a 15% global minimum tax rate to prevent profit shifting. It just remains for them to finalize their agreement, something which may prove difficult to achieve.

Corporate taxes became a huge issue in the recent U.S. election because of U.S. President Joe Biden's proposal to raise corporate taxation from 21% to 28%. Recently Biden offered to scrap this plan in a bid to ensure all corporations pay taxes. His proposal of a 15% tax floor is considered a rate that will stop companies with huge profits from shifting their liabilities to more tax-friendly countries.

How do Malta's and the United State's corporate taxes compare?

Compared to the U.S., Malta is considered a tax haven for the rich. The small country located on an archipelago in the Mediterranean has one of the lowest taxes on profits in the E.U. Incorporated companies are subject to a 35% tax rate, and this is paid on their worldwide income and capital gains. Various mechanisms in the country offer fiscal incentives to companies and their shareholders on their dividend distributions. Some mechanisms grant relief from double taxation. Foreign corporations often end up paying as little as 5%.

Currently, the U.S. still has a 21% corporate tax rate. This is subject to some reductions for domestic corporations with a foreign-derived tangible income. Foreign corporations engaged in the U.S. have an additional 30% branch profits tax imposed. Corporations in the U.S. are also subject to state and municipal levies where applicable.

Why choose Florida to incorporate?

The U.S. has several states that are preferred by entrepreneurs wanting to incorporate. Florida is one of the eight corporation-loving states in the country. Florida has many advantages. 

Besides the vibe of the state and its cities, the warm weather, and its various entertainment offerings, there are several other reasons why people choose Florida to incorporate their businesses.

Business taxes

According to The Really Useful Information Company (TRUiC): starting a Florida LLC is easy, and there are many benefits for a new business in the state. Florida is a tax-friendly state and doesn't impose state individual income tax. Additionally, some companies, like "S" corporations are also exempt from state taxation.

Business formation resources

Florida has easy and detailed online resources about businesses and state laws. This online business infrastructure is considered one of the best in the country, making it easy for business people to search the state's database to complete their business filings in no time.

Favorable environment for software businesses

Business-to-business software sales are one of the areas where the state of Florida excels. This is because it is one of the U.S. states that doesn't impose taxes on these sales. This low taxation means that consumers can save when buying these expensive software licenses in bulk.

How to choose a tax classification status?

LLCs have disregarded tax entities by default, and this is one of the most common tax statuses chosen by single-member LLCs. The IRS does not consider the LLC as a taxable entity, and the income passes through it to the owner who pays income tax for it through their personal tax return. The business income is only taxed once. One disadvantage is that taxes are paid on all income, even if some is kept in the business for future use.

LLCs and corporations can choose to have SCopr status. The business pays no income tax, but all profits after expenses and distributions pass through to the owner who pays income tax on them, but there is no employment tax. Once taxed, these profits are known as "retained earnings." And cannot be taxed again.

The business owners are considered employees of the corporation and the business pays payroll tax for them. Money remaining in the business can be distributed as dividends to active shareholders, reducing the tax obligations of the owners.

There are certain limitations like paying owners a decent salary, there can be no more than 100 allowable shareholders, and the business can only have one class of stock. Finally, shareholders are taxed on all the LLC earnings, even if they don't receive a distribution.

Conclusion

Florida taxation is as favorable as that of Malta. Starting a Florida LLC is easy and quick, something which can take you a bit longer to accomplish in Malta. However, many companies are multinational and may choose both locations for an EU/US presence.