By Elizabeth Wilmot

The taxman is finally loosening his grip on corporate purse-strings around the globe.

For the first time in 14 years, a survey of 106 countries and territories has found there was no rise in corporate tax rates in the last year. The growing trend instead is to use indirect taxes, such as Singapore's Goods and Services Tax (GST), and tougher enforcement to maintain government coffers.

The survey, conducted by KPMG International, found that the global corporate tax rate stood at 25.9 per cent as at April 1 this year. That is down by just under one percentage point from a year earlier.

The highest average corporate tax rates are found in the Asia-Pacific region, where rates fell by 0.8 percentage point to stand at 28.4 per cent. Singapore has one of the lowest corporate tax rates in the region at 18 per cent.

The lowest average corporate tax rates are found in the European Union (EU), down by one percentage point to 23.2 per cent. Bulgaria and Cyprus, for instance, have rates of just 10 per cent each.

Globally, the average indirect tax rate, which also takes the form of Value-Added Tax (VAT), is 15.7 per cent, with little movement over the past five years.

The lowest average indirect tax rates are found in the Asia-Pacific region at 11.14 per cent, with a rising average rate of 0.5 per cent since 2006. Singapore lifted its GST to 7 per cent last year. The EU has the highest average indirect tax rate in the world at 19.49 per cent on average.

According to Mr Owi Kek Hean, Head of Tax Services at KPMG Singapore, there have been signs that governments have been switching their focus to indirect taxes. Currently, 135 countries use indirect tax systems, and more are in the pipeline.

'In a world where companies and their profits are increasingly mobile, taxes on consumption present a source of revenue that few governments can resist,' said Mr Owi.

India is engaged in merging state-based indirect taxes as a prelude to introducing a country-wide GST by 2010.

Germany is midway through its pilot scheme to put VAT regulation in the hands of specialist offices, and it is likely to be rolled out to the rest of the country.

Companies are tightening up on enforcement as well. India, for instance, has adopted a tough attitude to companies using the country's low tax base to improve profit margins elsewhere in the world.

'There is an obvious tension here between the undoubted economic benefits to all of more efficient supply chains and freer trade, and the need for governments to secure their revenues,' said Mr Owi.

This article was first published in The Straits Times on September 17, 2008.