Paying Taxes provides a comparison of the world’s tax systems from the point of view of a case study company. The study from PricewaterhouseCoopers and the World Bank provides individual rankings on the ease of paying taxes globally and also highlights how businesses are affected not only by corporate income taxes, but also by many other taxes. In addition, it shows how the procedural burden of tax compliance impacts companies.
Data from the study, produced as part of the World Bank – IFC’s Doing Business project includes a measure of the ease of paying taxes for small to medium sized domestic companies in 181 economies around the world. The indicators used by the project are based on a case study company and assesses taxes from this company’s perspective using three indicators: the total tax rate (the cost of all taxes borne by the company); the time taken to comply with the major taxes; The number of tax payments for the major taxes.
Key findings of the study
Economies that rank highly on the ease of paying taxes tend to have lower and less complex taxes with simple administrative processes for paying taxes and filing tax returns.
As in previous years, the study confirms that corporate income tax is only one of many taxes that business has to bear. It accounts for only 13% of payments, 26% of compliance time and 37% of the Total Tax Rate (TTR) so any reform agenda needs to look beyond corporate income tax.
Thirty-six economies made it easier to pay taxes in 2007/08. As in previous years, the most popular reform feature was reducing the profit tax rate, which happened in no fewer than 21 economies. The second most popular was introducing and improving electronic filing and payment systems. This reform, carried out in 12 economies, reduced the frequency of payments and the time spent paying taxes and filing returns. Eight economies reduced the number of taxes paid by businesses by eliminating smaller taxes such as stamp duties. The top 10 reformers for paying taxes this year reduced the number of payments by almost half. Bosnia and Herzegovina, Bulgaria, Morocco, Mozambique and Zambia revised their tax codes.
The full report and data can be downloaded from the PwC website
Photo from Creative Commons: Flickr: Sune Frack