The decades-long decline in the number of the world's largest companies headquartered in the US has begun to reverse. In 2021, the US began gaining back some of these headquarters, and in 2023, the US surpassed China as the country with the highest number of headquarters for the world's 500 largest companies by revenue (Fortune Global 500 or FG500).

Changes over time

The United States' long-term downward trend in the number of FG500 company headquarters located in the country stabilized in 2019 and reversed beginning in 2021 (see Figure 1). Even with this recent reversal, however, the US has seen the number of companies headquartered there decline nearly 25% (from 179 to 136) between 2000 and 2023. In contrast, the number of FG500 companies headquartered in China increased more than ten-fold (from 10 to 135) over this same period. That growth, however, has appeared to level out with China's numbers holding relatively steady since 2021, and even dropping by one in 2023.

Looking at the numbers through a broader lens, the United States, China, Japan, Germany, France, and the United Kingdom have consistently ranked as the countries with the most FG500company headquarters; that is, until 2023 when South Korea surpassed the United Kingdom. The UK has experienced its own reshuffling, with the number of FG500 company headquarters located there declining more than 60% (from 38 to 15) since 2000.

Collectively, the top 10 countries (by the number of FG500 company headquarters located in the country) hosted 434 (87%) of FG500 company headquarters in 2023, up from 411 (82%) in 2010, but down slightly from 451 (90%) in 2000. Many factors can affect a company's choice of headquarters location, such as a country's regional economic growth and stability, local infrastructure, regulatory environment, labor availability and productivity, transportation and other input costs, and tax policies.

Figure 1. Number of FG500 companies headquartered by country over time

Note: Figure displays data for countries that, at least once within the past decade, ranked in the top six for the number of FG500 company headquarters. Each year's FG500 list is based on revenue from each company's most recent fiscal year ended on or before March 31.

Source: Fortune Global 500; EY analysis.

Tax policy and headquarters locations

As shown in Table 1, each of the top 10 countries for FG500 company headquarters have reduced their top statutory corporate income tax rates significantly between 2000 and 2023. The largest decreases in the top statutory corporate income tax rate were in Germany (22.1 percentage points), Canada (17.1 percentage points), Japan (13.6 percentage points), France (12.0 percentage points) and the Netherlands (9.2 percentage points).

*The United States is excluded from the calculations of the "Top 10" and "Global 500" tax rate averages to facilitate comparing each grouping to the United States.

Note: The top 10 locations are ranked by total number of headquarters in the 2023 FG500. The "corporate income tax rate" is the top statutory corporate income tax rate, including both national and subnational corporate income taxes. Tax rates for the "Top 10," "Other" and "Global 500" groupings are all averages weighted by the number of FG500 companies headquartered in each location. Each year's FG500 list is based on revenue from each company's most recent fiscal year ended on or before March 31.

Source: Fortune Global 500; EY Worldwide Corporate Tax Guide; Organization for Economic Co-operation and Development (OECD); EY analysis.

Figure 2 shows the number of FG500 company headquarters located in the US since 2000 as well as the top statutory corporate income tax rate over the same period. The number of FG500 companies headquartered in the US stabilized in 2019 (at 121 companies), which is a 58-company decline relative to 2000 (when the United States had 179 company headquarters).

During the decade ending in 2020, the number of FG500 headquartered companies in the US either declined or remained steady (except for a one-time uptick in 2016 associated with an increase in companies in the wholesale and health care industries headquartered in the US and declining oil prices).

Before Congress enacted the Tax Cuts and Jobs Act (TCJA) in December 2017, the top US statutory corporate income tax rate had remained essentially unchanged since 1993 at approximately 39% (including both the federal rate and a weighted average state corporate income tax rate). The TCJA lowered the top federal corporate income tax rate to 21% and the combined US federal-state rate to 25.8%, and made a number of other changes to the US tax system. This is suggestive that the TCJA's tax changes, including the rate reductions, may have been contributing factors to the increased number of FG500 companies headquartered in the US.

Figure 2. US-headquartered FG500 companies and the US corporate income tax rate

Notes: Each year's FG500 list is based on revenue from each company's most recent fiscal year ended on or before March 31 of the current calendar year. Corporate tax rates reflect the rate in effect during the calendar year of the published list. Before the TCJA was enacted at the end of 2017, the top US statutory corporate income tax rate had remained essentially unchanged since 2000 at approximately 39% (including both the federal rate and a weighted average state corporate income tax rate). Enactment of the TCJA reduced the top federal rate to 21% and the top combined federal-state rate to 25.8% and also put in place additional anti-inversion rules. Many factors can affect a company's choice of headquarters location, such as a country's regional economic growth and stability, local infrastructure, regulatory environment, labor availability and productivity, transportation and other input costs, and tax policies.

Source: Fortune Global 500; EY Worldwide Corporate Tax Guide; Organization for Economic Co-operation and Development (OECD); EY analysis.

Summary

While several factors go into a company's decision on where to headquarter, the data suggests that tax policy may have a role to play when countries are looking to increase investment in their jurisdictions.

The dynamic nature of the Fortune 500 Global companies and the changing headquarters location of global companies are instructive for policymakers. As tax and economic policy debates continue, companies need to consider engaging with policymakers to illustrate how their operations across the globe could be impacted by proposed changes.

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Published by NTD’s Tax Technical Knowledge Services group; Kathy S Schatz-Guthrie, legal editor