Moves such as British Columbia's decision to replace the Harmonized Sales Tax and return to its old retail sales system are hurting competitiveness, says the report by Jack Mintz and Duanjie Chen.
The annual ranking of tax competitiveness ranked Canada's marginal effective tax rate 20th in the 34-member OECD, and 57th among the 90 countries surveyed.
The report noted that Ottawa carried through with its last reduction in corporate tax rates from 16.5 per cent to 15 per cent in January.
However, Ontario delayed its planned general corporate tax rate cut from 11.5 per cent to 10 per cent.
The report recommends the tax system in Canada could be made more neutral, and less distortionary, across sectors and provinces.
"Canada has had remarkable success since the year 2000 in achieving a competitive corporate tax system that at one time imposed one of the highest tax burdens in the world," the report said.
"However, the principles enunciated for corporate tax reform — neutrality with internationally competitive tax rates — have only been partially adopted ... It is important now for governments to reduce tax preferences, providing room for even more rate reductions."
By province, the report ranked New Brunswick with the lowest marginal effective tax rate due to its low corporate income tax rate and the Atlantic Investment Tax Credit.
Manitoba, Saskatchewan and British Columbia were among the provinces with the highest rates due to high corporate income tax rates and their reliance on retail sales taxes.