Venezuela might be one of Latin America’s most economically challenged countries as its per capita income falls dramatically, but it’s no worse when it comes to taxing its family businesses than some of the world’s wealthiest countries.
Venezuela – and Canada, Australia, Japan – are the three least favourable places to have a family business when it comes to paying taxes after transferring the business over to the next generation. That’s according to a survey by the professional services company, KPMG. Canada, Japan, and Venezuela are the three least favourable countries in terms of tax burden, even after all tax reliefs are taken into account when the business is transferred through inheritance.
For transfers during the family business owner’s lifetime, Canada, Venezuela and Australia are among the highest-taxing countries, after reliefs are claimed, says the report. Also, scoring badly in this respect is South Africa.
Despite the perception, the UK family business sector is weaker than many of its competitors, it has one of the most favourable tax regimes for families planning to transfer their business from one generation to the next, says the report.
Overall, the UK was ranked favourably for its inheritance tax regime, especially once inheritance tax reliefs are taken into account. The UK ranked above the US, France, Spain and the Netherlands, with lower taxes due when transferring a business to the next generation.
“Measures to support family business transfers can greatly increase the business’s prospects of future prosperity and growth,” says Tom McGinness, co-chair of KPMG’s Global Centre of Family Business Excellence. “A thriving family business sector is one of the keys to sustaining a vibrant economy. In the post-Brexit world, it will be more important than ever for the UK government to encourage family enterprises and entrepreneurialism.”