Paying Taxes 2014: The global picture 88638 A comparison of tax systems in 189 economies worldwide Paying Taxes 2014 www.pwc.com/payingtaxes Contacts PwC* The World Bank/IFC John Preston Augusto Lopez Claros Global Head of External Relations, Director Regulation and Policy for Tax Global ,ndicators andb$ nalysis. PwC UK +1 202 458 8945 +44 20 7804 2645 alopezclaros@ifc.org john.preston@uk.pwc.com Andrew Packman Rita Ramalho Tax Transparency and Program Manager, Doing Business Unit Total Tax Contribution leader +1 202 458 4139 PwC UK rramalho@ifc.org +44 1895 522 104 andrew.packman@uk.pwc.com Neville Howlett Joanna Nasr Director External Relations, Tax Private Sector Development Specialist PwC UK + 1 202 458 0893 +44 20 7212 7964 jnasr@worldbank.org neville.p.howlett@uk.pwc.com * o3Z&pUHIHUVWRWKHQHWZRUNRIPHPEHUĺUPVRI3ULFHZDWHUKRXVH&RRSHUV,QWHUQDWLRQDO/LPLWHG 3Z&,/   RUDVWKHFRQWH[WUHTXLUHVLQGLYLGXDOPHPEHUĺUPVRIWKH3Z&QHWZRUN 2 Paying Taxes 2014 Contents Foreword 1 Key themes and ğndings 2 What does this publication cover? 6 Chapter 1: Findings of the World Bank and IFC’s Doing Business 2014 report 10 Chapter 2: The PwC commentary 18 The global results for the Paying Taxes study 2014 20 Comparing the eight geographical regions 30 The regional analyses: $frica 34 $sia Paciğc 50 Central $merica the Caribbean 64 Central $sia Eastern Europe 76 EU EFT$ 94 Middle East 110 1orth $merica 118 South $merica 126 $ppendix 1: Methodology 138 $ppendix 2: Economy subindicator results by region 146 $ppendix 3: The data tables 164 Foreword Andrew Packman Augusto Lopez Claros 7D[7UDQVSDUHQF\DQG 'LUHFWRU *OREDO ,QGLFDWRUV 7RWDO 7D[ &RQWULEXWLRQ OHDGHU DQG $QDO\VLV PwC UK 7KH :RUOG %DQN *URXS 4 Paying Taxes 2014 This is the ninth year that the Paying Taxes subindicator Last year we saw a slowing in the rate of decline in the Total has been part of the World Bank Doing Business project. Tax Rates around the world. This has continued. Excluding The information that it generates continues to be highly the large rate reductions in $ frica which arise as cascading relevant in providing a framework to compare and sales taxes are replaced, the picture around the world is contrast tax systems around the world in a way that is not much more mixed and the overall average Total Tax Rate seenbelsewhere. has actually increased. Some economies continue to reduce their rates to help provide an attractive environment for The period covered by the study (2004 to 2012) has seen investment; others are seeing a growing need to increase the end of a sustained period of economic growth, a severe tax revenues to provide funding for public services and to recession and a slow recovery. Governments have had to help reduce public sector değcits. This year we also see the balance the need to attract investment and foster growth compliance subindicators slowing in their rate of decline. while generating tax revenues. While the world is getting This is perhaps inevitable as practices converge towards best used to a ‘new normal’ as regards economic growth and a practice and a global standard, but in some regions there is new world order in terms of the economies that are leading still signiğcant progress that needs to be made. In $ frica it the recovery from recession, we ğnd the public at large still takes our case study company over a week more than has become ever more interested in how companies are the global average to comply with its tax obligations, while conducting business with a particular focus in ensuring in South $ merica a further nine weeks are needed. $ s in that companies are contributing to the societies in which previous editions of the Paying Taxes publication, we include they operate. Tax and how tax systems operate has ğrmly a number of articles from around the world which give moved up the agenda not only for governments, business further insights into how governments are addressing the and the media, but also for the man and woman on the challenges that they face and some of the speciğc policies street. Proposals for radical change to the way in which the that they arebimplementing. international tax system works are being discussed and providing robust information to inform this dialogue has This year the number of economies covered by the study never been morebimportant. has increased to 189, and while this number is impressive the value that the study brings lies in the ability to compare In this year’s Paying Taxes publication we continue to focus and contrast economies within relevant peer groups. The on the trends from the Paying Taxes data. The analysis looks analyses in this publication offer the ability to do this for a at this from a regional perspective and this year we have particular set of geographical areas drawing out relevant taken a more detailed look at the trends for the types of tax themes and issues, but we would urge you to make use of within each of the subindicators. This has provided some the tools and detailed information included on our websites interesting ğndings around how governments are choosing which give you the opportunity to create the groupings that to levybtaxes. are of most use and interest to you. We hope that the Paying Taxes study continues to generate data that you ğnd useful, but if you have any comments or feedback on how we can develop this study further then please let us know. Augusto Lopez Claros Andrew Packman .ey thePes and ğndings 2004 43.1% 268 26.7 hours payments Over the nine years of the study, the compliance sub- indicators have improved 2012 most for labour taxes. On average it takes our case study company 268 hours to comply with its taxes, it makes 26.7 payments and has an 2012 average Total Tax Rate of 43.1%. -9 % -55 hours -7 payments 2012 The compliance burden (the time to comply and the number of payments) has continued to fall in 2012, but the rate of decline has slowed. On average across the 9 years of the study the cost of tax, the Total Tax Rate (the taxes borne), has fallen by 9 percent; the time to comply has fallen by 55 hours (almost 7 days); and the number of payments has fallen by 7. 2 Paying Taxes 2014 Proğt taxes Labour Labour taxes taxes Proğt taxes 2004 2012 Over the nine years of the study the Total Tax Rate attributable to proğt taxes has fallen faster than that for labour taxes so that labour taxes are now the largest element On average, consumption of the Total Tax Rate. taxes have always taken the longest time tobcomply. Reforms 35 31 32 2012 While the global average Total Tax Rate has continued to fall in 2012, 14 economies have signiğcantly1 increased their 2010 2011 2012 rate while 14 have reduced it. Reforms continue around the world. 32 economies have made it easier to pay taxes between June 2012 and 0.2% June 2013. In the last three years the majority of the reforms have been focussed on introducing or improving electronicbsystems. If the exceptional rate reductions which arise from replacing cascading sales tax with VAT are excluded, the global average Total 2012 Tax Rate has started to rise in 2012. 1 :H UHJDUG D VLJQLĺFDQW PRYHPHQW LQ D VXELQGLFDWRU DV EHLQJ D PRYHPHQW RI  RU PRUH RI WKH JOREDO DYHUDJH IRU WKDW VXELQGLFDWRU KH\ WKHPHV DQG ĺQGLQJV 3 The regional picture Labour taxes and mandatory contributions have always been the largest part of the Total Tax Rate in the EU & EFTA and are the most time consuming to comply with. /aEoXr taxes biggest cost 41.4 213 8.3 'iYerse 41.1 179 13.1 tax systePs lowest number of payments The three economies in /aEoXr taxes North America have very take most time different systems across a vast region, but electronic ğling and payment are well used. 42.8 217 33.7 In Central America & the Caribbean, labour tax compliance requires more than twice as much time as corporate income tax, but proğt taxes are the largest element 52.7 618 24.2 of the Total Tax Rate. +ighest hours South America has always had the highest time to comply despite the introduction of electronic ğling and payment systems. Key Total TiPe to NXPEer of Tax Rate coPply payPents (%) (hours) 4 Central Asia & Eastern Europe has been the biggest reformer over the nine years of the study. Economies in this region have shown the largest fall in both the time to comply (220 hours) and number of payments (25.1 payments) and apart from the Middle East Biggest have the largest fall in the Total Tax Rate reformer (15.7 percentage points). 39.5 256 29.5 36.4 232 25.4 23.7 159 17.6 Proğt taxes /east biggest cost dePanding 52.9 320 36.1 tax systems The Middle East has the least demanding tax systems – the sub-indicators have all remained stable throughout the study period. +ighest Total Tax Rate In $VLD3DFLğF proğt taxes remain the largest component Africa has always had the highest of the Total Tax Rate. The cost Total Tax Rate and a lack of of labour taxes has increased electronic ğling and payment however, but they still take the hinders compliance. least amount of time in this region. KH\ WKHPHV DQG ĺQGLQJV 5 What does this publication cover? With many governments still under severe pressure to fund their spending programmes and the need to generate higher tax revenues either to help with reducing public sector değcits, or to replace the aid funding that has been cut in the wake of the ğnancial crisis, interest in the taxation of business is high. 6 Paying Taxes 2014 Interest in the taxation of business is high Over the last year this interest has The Paying Taxes study continues The objectives of the study are to: intensiğed with a wide range of to be one of a kind. It looks at external stakeholders including tax systems from the business • provide data which can be governments, media, civil society and perspective and considers all of the compared between economies on a the public at large being concerned taxes and contributions that a case like for like basis; about where tax revenue is coming study company (a small to medium from and looking to ensure that sized domestic company) pays and • facilitate the benchmarking of tax business is making its contribution to generates. As well as the corporate systems within relevant economic the societies in which it operates. income tax the company pays on and geographical groupings, which proğts, it looks at employment taxes, can provide an opportunity to learn Governments also recognise mandatory contributions, indirect from peer group economies; that tax systems contribute to taxes, property taxes and a whole the competitiveness of their variety of smaller taxes including • enable an in-depth analysis of the economy and their ability to attract environmentalbtaxes. results which can be used to help inwardbinvestment. identify good practices and possible The Paying Taxes study shows that reforms, and And for CEOs, in PwC’s 16th Annual corporate income tax is levied on CEO Survey2 the increasing tax burden business in 181 economies, value added • to generate robust data on tax was named as the top business threat tax (VAT) is collected by business in systems around the world, by 62% of those that participated 166 economies, and a range of labour including how they have changed, in the survey, up from 55% in the taxes and mandatory contributions is which can be used to inform the previousbyear. borne and collected by our case study development of good tax policy. company in all but one of the 189 Paying tax therefore continues to be economies. Paying Taxes uses a case study scenario important. The Paying Taxes study, to measure the taxes and contributions which is part of the World Bank Group Taxes borne and collected by business paid by a standardised business Doing Business project, provides data are clearly an important source of and the complexity of an economy’s on 189 tax systems around the world revenue for governments. The impact tax compliance system. This case with an ability to monitor tax reform. that these taxes and the tax systems study scenario uses a set of ğnancial It also allows these tax systems to be used to generate them have on statements and assumptions about compared and contrasted, helping business is important both in terms of transactions made over the year. Tax to stimulate debate and discussion their direct cost, and in terms of the experts from a number of different between business and government compliance costs that they impose on ğrms in each economy (including PwC) around how tax systems operate, and business as an unpaid tax collector compute the taxes and mandatory their economic impact. The database forbgovernment. contributions due in their jurisdiction, now covers a nine year period. based on the standardised case studybfacts. 2 http://www.pwc.com/taxceosurvey What does this publication cover? 7 The case study company is not intended to be a representative company, but has been constructed to facilitate a comparison of the world’s tax systems on a like for like basis. Paying Taxes covers both the cost of the taxes which are borne by the case study company, and also the administrative burden of the taxes that the company both bears and those that it collects on behalf of government (but which do not have an impact on the company’s results). Both the tax cost and the tax compliance burden are important from the business point of view and these are measured using three sub-indicators: • the Total Tax Rate, (the cost of all taxes borne); • the time needed to comply with the major taxes (proğt taxes, labour taxes and mandatory contributions, and consumption taxes); and • the number of tax payments. The Total Tax Rate measures the amount of taxes and mandatory contributions borne by the standard Both the tax cost and the tax compliance burden company (as a percentage of the are important from the business point of view and ‘commercial proğt’ or the proğt before these are measured using three sub-indicators: all of those taxes).3 Total Tax Time to Number of The time sub-indicator captures the Rate comply payments number of hours it takes to prepare, ğle and pay the three major types of taxes: proğt taxes, consumption taxes, and labour taxes and mandatorybcontributions. The number of payments measures the frequency with which the company has to ğle and pay different types of taxes and contributions, adjusted for the manner in which those ğlings and payments are made.4 3 Commercial proĺt is essentially net proĺt beIore all taxes borne. ,t diIIers Irom the conventional proĺt beIore tax reported in ĺnancial statements. ,n computinJ proĺt beIore tax many oI the taxes borne by a company are deductible. Commercial proĺt is computed as sales minus cost oI Joods sold minus Jross salaries minus administrative expenses minus other expenses minus provisions plus capital Jains Irom the property sale minus interest expense plus interest income and minus commercial depreciation. 7o compute the commercial depreciation a straiJhtline depreciation method is applied with the IollowinJ rates:  Ior the land  Ior the buildinJ 1 Ior the machinery 33 Ior the computers 2 Ior the oIĺce eTuipment 2 Ior the trucN and 1 Ior business development expenses. Commercial proĺt amounts to . times income per capita.  Where Iull electronic ĺlinJ and payment is allowed and is used by the maMority oI mediumsi]e businesses in the economy the number oI payments is counted as one even iI ĺlinJs and payments are more IreTuent. 8 Paying Taxes 2014 These sub-indicators do not take into The chapter goes on to take a detailed The case study account the ğscal health of economies, look at the global trends over nine company is not the macroeconomic conditions under which governments collect revenue, years for each of the sub-indicators. We compare the movements of each intended to be a or the public services supported by sub-indicator by geographical region. representative taxation. The ranking for the ease of paying taxes is a simple average of the We also break out the trend for each sub-indicator into its component company, but has percentile rankings of each of the sub- parts. For the Total Tax Rate and the been constructed indicators, but with a threshold applied to the Total Tax Rate. number of payments we look at the movement in proğt taxes, labour taxes to facilitate a (and mandatory contributions) and comparison of The results for each sub-indicator, split by type of tax, are included in ‘other’ taxes. For the time to comply we look at the individual trends for proğt the world’s tax Appendix 3 of this publication along taxes, labour taxes (and mandatory systems on a like with the World Bank’s overall ease of paying taxes ranking. Further contributions), and consumption taxes. for like basis. details are also available on the World We then take a look at the results by Bank’s Doing Business project (Doing geographical region. The analysis Business) and the PwC websites.5 The begins by comparing the regions and full methodology for the case study then looks at each region in detail. company and the sub-indicators and some examples of how the sub- For each region we focus on the nine indicators are calculated are included year trends for the region for the three in Appendix 1 to this publication and sub-indicators, and then we take the World Bank Doing Business website. each sub-indicator in turn looking at the individual components over Chapter 1 of this publication sets this period. The ğnal element of the out this year’s perspective from the analysis focusses on the movements for WorldbBank. each sub-indicator in the most recent year, and the economies and reforms It looks at which economies in those economies that are driving have reformed their tax systems thosebmovements. in 20122013 and focusses on developments over the last ğve years, A selection of commentaries from a including a ‘distance to the frontier’ number of PwC ofğces around the measure which shows how far an world is again included in each of economy is from the best performance the regional sections. These look at achieved by any economy included in the results of Paying Taxes for their the study. particular economy in more detail and they also refer to some of the Chapter 2 provides a further analysis reforms that have been, and are by PwC. being,bimplemented. This year the analysis begins by looking at the global results for the calendar year ending 31bDecemberb2012.  www.pwc.com/payinJtaxes What does this publication cover? 9 Chapter 1: Findings of the World Bank and IFC’s Doing Business 2014 report Russian cosmonaut Pavel Vinogradov, an International Space Station crew member, has become the ğrst person ever to pay taxes from space. Pavel paid his land tax using the Russian Federation’s Sberbank online banking system.6 Revenue authorities around the world are continuously making great efforts to streamline administrative processes and modernise payment systems. Today ğrms can ğle tax returns electronically in 76 of the 189 economies covered by Doing Business – from the taxpayer’s home, library, workplace or, as Russia shows, even from space. 6 Svetlana Kalmykova, “Taxmen Reach Agreement on Cooperation,” The Voice of Russia, May 16, 2013. http://voiceofrussia.com/2013_05_16/Taxmen-reach-agreement-on-cooperation. 10 Paying Taxes 2014. World Bank and IFC commentary Between June 2012 and June The most common feature of 2013 Doing Business recorded tax reforms in the past ğve 32 reforms making it easier years was to reduce proğt tax or less costly for companies to rates, often in the context of pay taxes – and since 2009 has parallel efforts to improve tax recorded 189. compliance. But in the past three years more economies focused on introducing or Guatemala made the biggest improving electronic systems. improvement in the ease of paying taxes in the past year. Among the regions, Europe and Central Asia made the biggest Belarus has advanced the improvement in the ease of most toward the frontier in paying taxes over the past regulatory practice in paying ğvebyears. taxes since 2008. For more information on good practices and research related to Paying Taxes, visit http://www.doingbusiness.org/data/exploretopics/paying-taxes. For more on the methodology, see Appendix 1. Findings of the World Bank and IFC’s Doing Business 2014 report 11 According to World Bank Enterprise Figure 1.1 Surveys in 121 economies, in the Labour taxes and mandatory contributions account for a large share of the tax payments in majority of these economies businesses many economies consider tax rates to be among the top ğve constraints to their business, Payments and tax administration to be among (number per year) Profit tax Labour tax Consumption tax Other taxes the top 11.7 Research has shown that Poor practice 9 22 14 20 high corporate tax rates are negatively economies 4 15 10 9 associated with levels of corporate 3 12 9 4 investment and entrepreneurship. 2 3 1 6 Moreover, economies with high tax Good practice rates have larger informal sectors.8 economies 1 11 And corporate tax rates might be negatively correlated with economic growth.9 Another study showed that a Time (hours per year) Profit tax Labour tax Consumption tax one percentage point increase in the Poor practice 428 388 453 Total Tax Rate can be associated with economies 76 136 103 a three percentage point increase in 50 92 73 evasion.10 Yet taxes are essential to 33 66 51 raise revenues so that governments Good practice 6 / 29 / 4 can fund social programs and public economies investments that promote economic growth andbdevelopment. Note: Poor practice economies are the 5 lowest-ranked economies on the ease of paying taxes. The second bar represents the 5 economies ranked from 140 to 144 on the ease of paying taxes. The third bar represents the 5 economies ranked from 93 to 97. The fourth bar represents the 5 economies ranked Striking the right balance is therefore from 45 to 49. Good practice economies are the 5 top-ranked economies. 3URƄWWD[ refers to taxes levied on taxable income or capital gains. /DERXUWD[ refers to all labour taxes and mandatory contributions a great challenge for governments levied on gross salaries, net salaries or number of employees. &RQVXPSWLRQWD[refers to value added when designing tax policies. Whom to tax 9AT and sales tax for which the statutory incidence does not fall on the ĺrm. 2WKHUWD[HV refers to all tax, by how much and how? One way other taxes except labour, proĺt and consumption taxes, such as property taxes, vehicle taxes, interest taxes and municipal fees. Doing Business measures only the time to comply with 3 maMor taxes: proĺt to encourage compliance and have an tax, labour tax and consumption tax. effective tax system is to keep rules as Source: Doing Business database. clear and simple as possible. Thus it is important to measure both the level of tax rates and the administrative burden of compliance (Figure 1.1). Overly complicated tax systems encourage evasion and are associated with larger informal sectors, more corruption and less investment.11 7 http://www.enterprisesurveys.org/. 8 Djankov and others 2010. 9 Lee and Gordon 2005. 10 Fisman and Wei 2004. 11 Djankov and others 2010. 12 Paying Taxes 2014. World Bank and IFC commentary Table 1: Who made paying taxes easier and lowered the tax burden in 2012/13 – and Who reformed in paying taxes in what did they do? 2012/13? Feature Economies Some highlights Between June 2012 and June 2013 Introduced or Croatia; Guatemala; FYR Rwanda introduced e-ĺling for Doing Business recorded 32 reforms enhanced electronic Macedonia; Madagascar; corporate income tax, value added making it easier or less costly for systems Maldives; Moldova; Morocco; tax and labour contributions. The ğrms to pay taxes (Table 1). Europe Paraguay; Philippines; system was fully rolled out in 2012. and Central Asia12 recorded the most Rwanda; Sri Lanka reforms easing compliance with tax Reduced proĺt tax Burundi; Gabon; Guyana; The government of Sweden, in its obligations (by 9 economies of 26), rate by 2 percentage Jamaica; Lao PDR; Myanmar; 2013 budget statement, reduced followed by Sub-Saharan Africa (8 points or more Sweden; Tajikistan the corporate income tax rate from of 47) and Latin America and the 26.3% to 22% for 2013. Caribbean (5 of 32). Eleven economies Merged or eliminated Armenia; Burkina Faso; Tajikistan merged the minimal introduced or enhanced electronic taxes other than Republic of Congo; Iceland; income tax with the corporate ğling, eliminating the need for 74 proĺt}tax South Africa; Tajikistan; income tax and abolished the retail separate tax payments and reducing Uzbekistan sales tax. compliance time by almost 200 hours Decreased number Albania; Panama; Romania Panama changed the payment in total. of tax ĺlings or frequency for corporate income payments taxes from monthly to quarterly. Guatemala improved the most on Reduced labour Republic of Congo; Thailand Thailand decreased employers’ the ease of paying taxes in 2012/13. taxes and mandatory social security contribution rate The Guatemalan tax authority in contributions from 5% in 2011 to 3% for January January 2012 launched its new online – June 2012 and 4% for July – December 2012. system, Declaraguate, for ğling and paying all taxes (except labour taxes Simpliĺed tax Qatar; Ukraine Qatar relaxed the disclosure and mandatory contributions). The compliance process requirements accompanying the corporate income tax return for new system allows taxpayers to pay entities 100% owned by Qatari or their taxes online without a need to Gulf Cooperation Council nationals. sign a contract and open an account with a speciğc bank. In addition, Introduced change in The Gambia The Gambia replaced the sales tax cascading sales tax with the value added tax, now set Declaraguate has expanded the at 15%. electronic ğling and payment option to such taxes as the solidarity tax. Source: Doing Business database. An electronic system for generation, transmission, validation and payment of social security contributions has been available since 2009, through the online platform administered by the Guatemalan Social Security Institute, and by 2012 this payment method had been picked up by the majority of medium-size businesses. This reduced the number of payments from 21 to 7 and the time to comply with tax obligations by 6 hours as measured by Doing Business. 12 The regional classiĺcations used in this chapter are shown on the Doing Business website: www.doingbusiness.org Findings of the World Bank and IFC’s Doing Business 2014 report 13 Twelve economies implemented other Figure 1.2 measures to ease compliance with tax Ukraine has systematically reduced the time to comply with tax obligations obligations. Three economies (Albania, Panama and Romania) lowered the Bar: Payments number of tax ğlings or payments. Bar: Total Tax Rate Line: Time In Albania and Panama corporate income taxes are now paid quarterly Payments (number per year) Total Tax Rate (% of commercial profit) Time (hours per year) rather than monthly. Seven economies merged or eliminated some types of 160 2400 taxes (Armenia, Burkina Faso, the Republic of Congo, Iceland, South 140 2100 Africa, Tajikistan and Uzbekistan). Two other economies, Qatar and Ukraine, simpliğed tax returns. Ukraine 120 1800 simpliğed the corporate income tax, VAT and social security contribution reports ğled by companies. In 2012 100 1500 these efforts reduced the time to comply with Ukrainian tax regulations 80 1200 by 101 hours, from 491 to 390 hours (Figure 1.2). 60 900 Eight economies reduced proğt tax rates in 2012/13: one high-income economy (Sweden), two upper-middle- 40 600 income ones (Gabon and Jamaica), two lower-middle-income ones (Guyana 20 300 and the Lao People’s Democratic Republic) and three low-income ones (Burundi, Myanmar and Tajikistan). 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 0 Reductions in proğt tax rates are often Source: Doing Business database. combined with efforts to widen the tax base by eliminating exemptions and with increases in the rates of other taxes, such as VAT. In 2012/13 some economies increased the tax burden for small and medium- size ğrms. Eight increased proğt or income taxes (the Arab Republic of Egypt, El Salvador, Greece, Senegal, Serbia, the Slovak Republic, South Sudan and Togo). Four increased labour taxes and mandatory contributions (the Democratic Republic of the Congo, Côte d’Ivoire, Tonga and Vietnam). And Bosnia and Herzegovina, Fiji, Mauritania, the Seychelles and Tonga introduced new taxes in the past year. 14 Paying Taxes 2014. World Bank and IFC commentary What have we learned from 20 hours on average, and the number ğve years of data? of payments by 4. Europe and Central Since 2009 Doing Business has recorded Asia had the biggest improvement, 189 tax reforms in 114 economies. reducing the number of payments by Of these reforms, 57 introduced or 20 on average and the time by 80 hours enhanced online ğling systems. These (Figure 1.3). Belarus has advanced and other improvements to simplify tax the furthest toward the frontier in compliance reduced the time to comply regulatory practice in paying taxes in with the 3 main taxes measured Europe and Central Asia and globally (proğt, labour and consumption) by since 2008 (Figure 1.4). Figure 1.3 Economies in Europe and Central Asia have decreased the time to comply with tax obligations the most since 2008 Bar: Number of Doing Business reforms making it easier to pay taxes Lines: Average time (hours per year) 60 400 Latin America & Caribbean South Asia Sub-Saharan Africa 45 300 Eastern Europe & Central Asia East Asia & Pacific 30 200 Middle East & North Africa OECD high income 15 100 50 43 33 31 32 DB2010 DB2011 DB2012 DB2013 DB2014 0 0 Note: To ensure accurate comparisons, the ĺgure shows data for the same 183 economies for all years, from DB2010 2008 to DB2014 2012 . The economies added to the Doing Business sample after DB2010 and so excluded here are Barbados, Libya, Malta, Myanmar, San Marino and South Sudan. This ĺgure uses regional classiĺcations for DB2014. Source: Doing Business database. Figure 1.4 Belarus has advanced the most toward the frontier in paying taxes since 2008 Distance to frontier (percentage points) 2012 100 2008 United Arab Emirates Georgia Finland Saudi Arabia Singapore Ireland Oman Denmark Kiribati Kazakhstan Switzerland Montenegro Korea, Rep. Morocco Cape Verde Rwanda Chile Armenia Malaysia Estonia Macedonia, FYR Poland Kyrgyz Republic Tunisia Sierra Leone Slovenia Sweden Vanuatu Latvia Cyprus Timor-Leste 75 Lithuania Turkey Costa Rica Belarus Botswana United States Liberia Belize Thailand Tonga Romania Ghana Swaziland West Bank and Gaza Djibouti Uruguay Burundi Austria Bulgaria Samoa Mongolia Belgium Hungary Fiji Uganda Lao PDR Lesotho Grenada Guyana Ethiopia Jamaica Sudan Mali Czech Republic Mozambique Iran, Islamic Rep. Ukraine Yemen, Rep. Nicaragua Bosnia and Herzegovina India Honduras St. Kitts and Nevis Italy Angola São Tomé and Principe Burkina Faso Antigua and Barbuda 50 Panama Sri Lanka Pakistan Equatorial Guinea Brazil Algeria Uzbekistan Congo, Dem. Rep. 25 Congo, Rep. Gambia, The Guinea Venezuela, RB Chad 0 Note: The distance to frontier scores shown in the ĺgure indicate how far each economy is from the best performance achieved by any economy on the paying taxes indicators since DB2006 (2004). The scores are normalised to range between 0 and 100, with 100 representing the frontier. The data refer to the 183 economies included in DB2010 (though for practical reasons the ĺgure does not show all 183). Barbados, Libya, Malta, Myanmar, San Marino and South Sudan were added in subsequent years. The vertical bars show the improvement in the 20 economies advancing the most toward the frontier in paying taxes between 2008 and 2012. Source: Doing Business database. Findings of the World Bank and IFC’s Doing Business 2014 report 15 Besides easing the administrative In 2012/13, however, electronic Similarly, economies in the Middle East burden of taxes, many economies also systems became more popular among and North Africa have been slow in reduced tax rates, often from relatively taxpayers in Kenya, Madagascar, picking up the pace on new technology high levels and with complementary Rwanda and Uganda. The Kenya for ğling and paying taxes. Only 5 efforts to improve tax compliance. Revenue Authority began introducing of 20 economies have implemented Among regions, Sub-Saharan Africa an online ğling system for VAT in electronic systems for submitting tax had the largest reduction in the Total 2009, and over the past three years declarations and paying taxes. These Tax Rate: 17.5 percentage points on use of the system picked up among include Morocco, Saudi Arabia and the average since 2008. Some of this taxpayers. Companies have reported United Arab Emirates, which reformed reduction came from the introduction improvements in the processing speed in this area in the past ğve years. of VAT, which replaced the cascading on the ğling website, a major source of sales tax.13 Burundi, the Democratic delay in previous years. This reduced In South Asia, India is the only Republic of the Congo, Djibouti, The the time required to comply with VAT economy (of eight) with a complete Gambia, Mozambique, Sierra Leone from 340 hours to 308. online system for ğling and paying and Swaziland all introduced VAT taxes. But in the past year Maldives systems. Some Sub-Saharan economies In Latin America and the Caribbean, and Sri Lanka have introduced also lowered proğt tax rates over the economies including Colombia, online platforms for ğling and paying past ğve years, including Benin, Cape Guatemala, Mexico, Paraguay and labour contributions, easing the Verde, the Republic of Congo, The Uruguay have implemented electronic administrative burden for businesses Gambia, Madagascar, Mali, Niger and systems for ğling and paying taxes over of complying with labour regulations. Sudan. Over the same period, the the past ğve years. In 2010 Colombia Still, as of 2012 most companies were biggest reduction in the share of proğt began requiring all companies with not taking advantage of the electronic taxes in the Total Tax Rate occurred in turnover equal to or above COP500 payment options. Pakistan also has an East Asia and the Paciğc, where it fell million (about 262,885) to ğle and established electronic system for ğling by 5.3 percentage points on average. pay corporate income tax and VAT and paying corporate income tax and through the Electronic Informatic VAT, but uptake has been limited. Electronic systems for ğling and Services provided by the National Tax paying taxes, if implemented well Authority. In the same year, Colombia and used by most taxpayers, beneğt upgraded its electronic system, the both tax authorities and ğrms. For tax MUISCA (Single Automated Model authorities, e-ğling lightens workloads of Income, Services and Control) and reduces operational costs such system, to ease e-ğling and payment as for processing, handling and for corporate income tax and VAT. As a storing tax returns. At the same time, result the time to comply with these tax e-ğling increases compliance with tax obligations dropped by 15 hours, and obligations and saves time.14 By 2012, the number of payments by 11. 76 economies had fully implemented electronic ğling and payment of taxes. In East Asia and the Paciğc 7 of 25 economies have established electronic Sub-Saharan economies face systems for ğling and paying taxes: particularly dif ğcult challenges with China; Hong Kong SAR, China; implementing electronic systems for Malaysia; the Philippines; Singapore; ğling and paying taxes. Rolling out Taiwan, China; and Thailand. In the new information and communication past ğve years only Malaysia and the technologies, and then educating Philippines have further rolled out taxpayers and tax of ğcials in their use, their electronic systems. are not easy tasks for any government. But where citizens face limited broadband access, power shortages, slow network speeds and system failures, implementation is slow and the challenges are even greater.15 13 9AT is collected by ĺrms and its cost is fully passed on to consumers. Because ĺrms have to make the payments and spend time ĺlling out returns, 9AT is included in the indicators on payments and time. But the amount of VAT paid is not included in the Total Tax Rate. A cascading sales tax, which is paid at every point of the supply chain, is included in the Total Tax Rate because ĺrms cannot deduct the sales tax they pay on supplies from the amount they owe on sales. Economies introducing VAT to replace the sales tax have therefore seen a reduction in their Total Tax Rate. 14 Edwards-Dowe 2008. 15 For more information, see the case study on Malaysia in the Doing Business 2014 report. 16 Paying Taxes 2014. World Bank and IFC commentary ‘Striking the right balance is a great challenge for governments when designing tax policies. Whom to tax, by how much and how.’ Findings of the World Bank and IFC’s Doing Business 2014 report 17 Chapter 2: The PwC commentary 18 Paying Taxes 2014 During the course of 2013 there has been an increasing focus on the perception that the world’s tax systems are no longer ğt for purpose and a feeling that they need to evolve to deal with a changing global economy. Our current tax regimes were developed in economies largely concerned with the exchange of physical products made and sold in physical locations. Trends in the international tax environment such as the globalisation of business, increasing competition among countries for tax revenues, and a growing proportion of company assets that are made up of intangibles such as brand names, software and know how, have transformed the tax landscape. In addition we see business increasingly conducted online and across borders. Largely as a result of these factors, the international tax environment has become very complex, and many of its processes and rules are now arguably outdated. The world’s tax systems need to be reformed. In reforming tax systems and designing tax policies around the world, there is a need to ensure that the differing perspectives and priorities of the various stakeholders are understood – from business to its investors and its customers, and from media to civil society and government. Updating global tax systems however is not simple, but doing nothing is not an option and there is a danger that unless we have agreed global tax reform, individual countries will take unilateral action which could lead to double taxation. This in turn would be a disincentive to investment and a drag on the growth that the world needs today. Tax systems around the world need to be updated to meet modern needs. The information provided by the Paying Taxes study can help inform the discussion around tax reform which includes the questions around who needs to be taxed, how they will be taxed, and by how much. The PwC commentary 19 The global results for the Paying Taxes study 2014 20 Paying Taxes 2014. PwC commentary On average around the world our case study company makes 26.7 payments, takes 268 hours (nearly seven weeks based on a 40 hour week) and has a tax cost of 4.1 of its commercial proğt The 2012 global tax proğle The time to comply is lowest in the Table 2 shows the global average United Arab Emirates where it takes results for each of the Paying Taxes 12 hours to deal with the taxes that sub-indicators. It also shows the range across the 189 economies in the study. apply, all of which are labour taxes. The highest number of hours is still 43.1 % taken by our company in Brazil. It On average around the world our case takes 2,600 hours, or more than a study company makes 26.7 payments, year for a full time person, with more takes 268 hours (nearly seven weeks than half of this time being spent on based on a 40 hour week) and has a tax consumptionbtaxes. cost of 43.1% of its commercial proğt. The lowest Total Tax Rate is found 268 hours The range for each sub-indicator is very in the Former Yugoslav Republic of wide. The number of payments ranges Macedonia with most of its 8.2% from 3 in Hong Kong SAR, China generated by proğt taxes. The highest and Saudi Arabia to 71 in República is in The Gambia closely followed Bolivariana de Venezuela. by Comoros, these being the last two remaining economies where a cascading sales tax still exists. The 26.7 payments cascading sales tax accounts for 221.0 and 176.8 percentage points of the Total Tax Rate in each of these economies respectively. Table 2: The global average result for each sub-indicator Time to comply Tax type Total Tax Rate (%) Number of payments (hours) Proĺt taxes 16.1 71 3.3 Labour taxes contributions 16.3 96 10.4 2ther / Consumption taxes 10.7 101 13.0 Total 43.1 268 26.7 Lowest 8.2 12 3.0 +ighest 283.2 2,600 71.0 Source: PwC Paying Taxes 2014 analysis The global results 21 Figure 3.1 shows how the global Figure 3.1 average for each of the sub-indicators is The global allocation of the Paying Taxes sub-indicators across proĺt taxes, labour taxes accounted for between the three types and oother’/consumption taxes of tax. 25% 38% 38% 36% 48% 39% While consumption taxes account for Other taxes Labour taxes Consumption Labour taxes Other taxes Labour taxes taxes the largest amount of time, and also the majority of tax payments, labour taxes and contributions now account for the largest element of the tax cost. It accounts for 38% of the Total TaxbRate. 37% 26% 13% The nine year global trends for Profit taxes Corporate income tax Profit taxes Paying Taxes Total Tax Rate Time Payments In this section the averages are Source: PwC Paying Taxes 2014 analysis calculated only for those economies that have been included in all nine years of the study (174 economies)16 to ensure that we represent a true trend. The values shown here for calendar Table 3: The fall in the global average results between 2004 and 2012 year 2012 are therefore different to Time to comply the averages shown earlier which are Total Tax Rate (%) Number of payments (hours) calculated using the data provided by 2012 2004 Change 2012 2004 Change 2012 2004 Change all 189 economies now in the study. Proĺt taxes 16.5 19.2 (2.7) 71 84 (13) 3.4 4.2 (0.8) The trends over the nine year period Labour taxes 16.7 17.2 (0.5) 98 121 (23) 10.3 13.8 (3.5) are shown in Table 3. They show a 9.1 contributions percentage point fall in the Total Tax 2ther / 11.1 17.0 (5.9) 106 125 (19) 13.3 16.0 (2.7) Rate, a fall in the number of hours Consumption taxes by 55 and a fall in the number of payments by 7. Total 44.3 53.4 (9.1) 275 330 (55) 27.0 34.0 (7.0) Source: PwC Paying Taxes 2014 analysis Each of the three sub-indicators has fallen every year, but as was detected for the ğrst time last year, the rates of decline are slowing. What follows is an analysis of each sub-indicator breaking out the global averages by region, and also this year between the types of tax captured by the study, being proğt taxes, labour taxes and mandatory contributions, and ‘other’ taxes (or in the case of the time to comply, consumption taxes). 16 The economies excluded from the trend data are: The Bahamas, Bahrain, Barbados, Brunei Darussalam, Cyprus, Kosovo, Liberia, Libya, Luxembourg, Malta, Montenegro, Myanmar, Qatar, San Marino and South Sudan 22 Paying Taxes 2014. PwC commentary The trends in the Total Tax Rate By far the largest movement in the Total In last year’s publication the analysis Tax Rate between 2011 and 2012 was Comment: showed the average Total Tax Rate shown in Africa (a fall of 4 percentage An interpretation of these trends is falling by around 1 percentage point per points). This was largely driven by the that the global ğnancial downturn year, but that the rate of decline slowed reform in the Democratic Republic of has had a signiğcant impact on tax in 2011 compared to previous years, the Congo where the cascading sales systems around the world. The policies when it fell by only 0.3 percentage tax was replaced by a VAT system which governments are choosing to points. In 2012 the Total Tax Rate reducing its Total Tax Rate from 339.1% implement to address the issues have has continued to fall by a further 1.1 to 118.1%. Without this one reform become much more diverse. Some percentage points. Figure 3.2 shows the African Total Tax Rate would have economies are choosing to continue to how the average global Total Tax Rate increased by 0.4 percentage points reduce their rates to contribute to an has fallen over the nine years of the and the global average Total Tax Rate economic environment which attracts study and how this breaks down by would also have increased by 0.2 investment and encourages growth, geographical region. percentagebpoints. while others have started to reverse this trend to address the need for additional Until 2008 it had been the case that In the most recent period (2012) the revenue streams to help fund public seven of our eight geographical regions picture has also become far more mixed sector projects or to reduce public had consistently recorded a fall in their than has been seen in previous years. sectorbdeğcits. average Total Tax Rate. This changed in While 38 economies have implemented 2009 when only ğve regions recorded measures that have reduced their Total a fall. This fell to three in 2011 and in Tax Rate, 38 have an increased Total the latest study only Africa and South Tax Rate. The regional sections which America show a fall in the Total Tax follow provide further details on the Rate while all other regions show an more signiğcant movements. increase apart from Asia Paciğc and EU & EFTA where rates of 36.6% and 42.5% respectively have been maintained. Figure 3.2 The global and regional trend in the Total Tax Rate from 2004 to 2012 Total Tax Rate (%) 75 70 65 60 55 Africa South America 50 World average 45 Central America & the Caribbean EU & EFTA Central Asia & Eastern Europe 40 North America Asia Pacific 35 30 Middle East 25 20 15 10 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The global results 23 In Figure 3.3 we have analysed the On average the largest component of The level of labour taxes has not global trend in the average Total Tax the global Total Tax Rate is now labour changed materially over this period Rate between proğt taxes, labour taxes and mandatory contributions. in Africa and South America. Further taxes and ‘other’ taxes. The global For the 174 economies that have been regional details are provided in the average for each type of tax (all of in the study since its inception, this has sections which follow. which are taxes borne by our case been the case since 2011. Labour taxes study company) has fallen over the and mandatory contributions account Proğt taxes fell consistently between period of the study. Over the past nine for almost 38% of the Total Tax Rate in 2004 and 2011, but increased slightly years ‘other’ taxes have recorded the 2012 compared with 32% in 2004 and in the most recent period. The trend largest fall (5.9 percentage points), proğt taxes are now just over 37% of in all of the geographical regions is followed by corporate income taxes the total. Labour taxes and mandatory broadly consistent with this pattern. (2.7 percentage points) and labour contributions have always been the Regional differences are highlighted in taxes with the smallest fall (0.5 of a largest element of the Total Tax Rate the sections which follow. Proğt taxes percentage point). There are distinct in the EU & EFTA, in Central Asia & have always been the largest element regional variations and different Eastern Europe and in the Middle East. of the Total Tax Rate in North America drivers to be aware of and these are Since 2004, the labour tax component and Central America & the Caribbean. looked at in the regional sections which has fallen in the ğrst two of these follow. At the global level there are a regions which largely accounts for the number of points to note. overall global fall for this type of tax. In the Middle East labour taxes have increased and this is also the case for Asia Paciğc, Central America & the Caribbean and North America. Figure 3.3 The global trends in the individual types of tax in the Total Tax Rate from 2004 to 2012 Total Tax Rate (%) 20 Labour taxes Profit taxes 15 Other taxes 10 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis 24 Paying Taxes 2014. PwC commentary ‘Other’ taxes have been the smallest element of the global average Total On average the largest component of Tax Rate since 2007 and now represent only 25% of the total having fallen the global Total Tax Rate is now labour from almost 32% (or by almost 7 taxes and mandatory contributions. percentage points). The main driver for this has been the replacement of the cascading sales taxes by VAT in a number of African economies and Yemen. ‘Other’ taxes have consistently been the largest component of the Total Tax Rate in South America and Africa. Comment: Studies conducted by the OECD17 over recent years have indicated that corporate income tax is the least growth friendly type of tax followed by labour taxes. The trends shown in this publication suggest that until recently governments have accepted this analysis, as corporate income tax rates have fallen markedly. The trends also indicate that in general labour taxes and mandatory contributions (which are not as distortive) have not seen a similar decline. When assessing investment options and opportunities to grow a business including increasing the labour force, labour taxes and mandatory contributions will be a factor in the decision making. A consistent message in our Paying Taxes publications has been that in considering appropriate tax reform, all of the taxes that a business bears need to be taken intobaccount. 17 2ECD (2010), Tax Policy Reform and Economic Growth, 2ECD Tax Policy Studies, 1o. 20, 2ECD The global results 25 The trends in the time to comply While the average time to comply has The global average for the time to fallen by 55 hours over the nine years Comment: comply has fallen every year since of the study, the rate of decline has It is inevitable that the pace of reform 2005, however this average fell by just slowed dramatically in the most recent will slow as economies implement one hour in the most recent period. period, falling by only 1 hour between reforms which bring them closer to a Figure 3.4 shows how the average 2011 and 2012. This compares with global standard, however there is still global time to comply for the case study a fall of at least 5 hours in each of the more to do. This is the case for Africa, company has changed between 2004 previous 6 years and one year where which remains one full week above the and 2012 and how this breaks down by there was a fall of almost 19 hours. global average and in South America geographical region. In the last year, two regions (Asia where reform has been particularly Paciğc and the Middle East) have slow and where the average time to shown an increase in the number of comply is still nearly nine weeks above hours required while three regions the global average. in particular have shown a much slower rate of decline (Central Asia & Eastern Europe, EU & EFTA and SouthbAmerica). Figure 3.4 The global and regional trends in the time to comply from 2004 to 2012 Time to comply (hours) 700 South America 600 500 400 Africa 300 World average Central Asia & Eastern Europe Asia Pacific Central America & the Caribbean North America 200 EU & EFTA Middle East 100 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis 26 Paying Taxes 2014. PwC commentary Figure 3.5 analyses the global trend for In the most recent period the time the average time to comply between spent on consumption taxes has Comment: corporate income tax, labour taxes actually increased by a small margin While corporate income tax can be and consumption taxes. It shows that (0.3 hours) reĠecting the introduction complex, they often only require one consumption taxes have consistently of new taxes in a few economies. return per company per year. Labour been the most time consuming Consumption taxes have consistently and consumption taxes however with time spent on labour taxes and been the most time consuming in half are often ğled and paid monthly mandatory contributions not far of our geographical regions. In North and involve repetitive calculations behind. Corporate income taxes have America, corporate income tax takes for each employee and transaction. always taken the least amount of time. the most time to comply and in the The use of accounting software and Middle East, EU & EFTA and Central electronic ğling and payment systems Since 2004, the greatest improvement America & the Caribbean labour taxes can therefore deliver far greater time has been seen for labour taxes have always taken the longest to savings for labour and consumption (23 hours), perhaps demonstrating dealbwith. taxes than for corporate income the greater impact of introducing taxes, resulting in the global trends electronic ğling and payment systems Corporate income taxes have that we have seen. It needs also to be for these taxes. The number of hours consistently been the easiest to comply recognised that the time to comply has fallen by 19 hours for consumption with in most regions apart from in the sub-indicator takes into account, taxes and by 13 hours for corporate Middle East where, not surprisingly, consumption taxes and elements of income tax. consumption taxes are the easiest to labour taxes which are collected by deal with and in Asia Paciğc where companies on behalf of government. labour taxes take the least amount These give rise to a compliance ofbtime. obligation over and above that which arises on the taxes a company bears (which make up the Total Tax Rate). Figure 3.5 The global trends in the individual types of tax for the time to comply from 2004 to 2012 Time to comply (hours) 130 120 110 Consumption taxes 100 Labour taxes 90 80 Corporate income tax 70 60 50 40 30 20 10 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis 27 The trends in the number All of the geographical regions have ofbpayments shown a decline in this sub-indicator Comment: The global average for the number of which is heavily affected by the Over the nine years of the study, of payments has fallen every year since introduction of electronic ğling and the three sub-indicators the number 2004, however this average fell by only payment systems (the sub-indicator of payments has fallen by the biggest 0.6 in the most recent period. Figure records only one payment where percentage which largely demonstrates 3.6 shows how the average global electronic ğling and payment is the successful implementation of number of payments for the case study available and used by the majority electronic ğling and payment systems company has fallen between 2004 and of businesses even though multiple around the world. But challenges 2012 and how this breaks down by payments may be made). The rate clearly remain in terms of not only geographical region. of decline for this sub-indicator has introducing such systems, but making however slowed; as is the case for sure that they are used by the majority The global average for the number of the other sub-indicators, with small of business and that they are user payments has fallen in every year of increases appearing in the last two friendly. It is interesting to note the study. The sub-indicator has fallen years for Africa and the Asia Paciğc that while such systems have been by seven payments over the past nine region due to the introduction of new introduced in South America, they years; all regions have contributed to taxes and more frequent payments in a have not always led to signiğcant this fall. few economies. reductions in the compliance burden. Figure 3.6 The regional trends in the number of payments from 2004 to 2012 Number of payments 55 50 45 40 Africa 35 Central America & the Caribbean 30 Central Asia & Eastern Europe World average Asia Pacific 25 South America 20 Middle East 15 EU & EFTA 10 North America 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis 28 Paying Taxes 2014. PwC commentary Figure 3.7 analyses the global trend As for the time to comply, the greatest for the number of payments between improvement has been seen for labour proğt taxes, labour taxes and ‘other’ taxes (3.5 payments) followed by taxes. It shows that ‘other’ taxes ‘other’ taxes (2.7 payments), which (which includes consumption taxes) includes consumption taxes, while have consistently had the greatest proğt taxes have seen the smallest number of payments with proğt improvement (0.8 payments). taxes always having had by far the smallest number of payments. This reĠects the fact that corporate income Comment: tax systems often require only one It is not surprising that proğt taxes annual payment while consumption show the smallest rate of improvement. taxes are often paid monthly. This Labour taxes and other taxes tend pattern is broadly followed in all of the to be more numerous and usually geographical regions apart from the require more regular and often Middle East where labour taxes and monthly payments. The introduction of mandatory contributions have always electronic ğling and payment systems had the largest number of payments to will therefore impact these taxes more. dealbwith. Figure 3.7 The global trends in the number of payments by type of tax from 2004 to 2012 Number of payments 18 16 14 Other taxes 12 Labour taxes 10 8 6 4 Profit taxes 2 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The global results 29 Comparing the eight geographical regions 30 Paying Taxes 2014. PwC commentary The Total Tax Rate in 2012 Figure 3.8 The regional comparison in Figure 3.8 Regional comparison of the Total Tax Rate shows that four regions, (Central Asia & Eastern Europe, EU & EFTA, North Average Total Tax Rate (%) America, and Central America and Middle East 9.2 14.1 0.4 23.7 the Caribbean) all have average rates Asia Pacific 17.3 10.7 8.4 36.4 that are close to the world average. Central Asia & Eastern Europe 10.5 20.2 8.8 39.5 The Middle East continues to have EU & EFTA the lowest average Total Tax Rate, at 12.9 26.5 1.7 41.1 almost 20 percentage points below North America 19.5 17.0 4.9 41.4 the global average. The Asia Paciğc Central America and the Caribbean 22.8 12.0 8.0 42.8 region has the second lowest average World Average 16.1 16.3 10.7 43.1 at 6.7 percentage points below the South America 16.4 17.2 19.1 52.7 global average. The Total Tax Rates Africa 18.2 14.6 20.1 52.9 continue to be highest in Africa and Profit taxes South America. In three regions, labour Labour taxes taxes are the largest component of the Other taxes Total Tax Rate, in three other regions, Source: PwC Paying Taxes 2014 analysis proğt taxes are the largest element, while ‘other’ taxes are the largest in the remaining two regions. Labour taxes are the largest element of the overall global Total Tax Rate. The different regions continue to have markedly different proğles in how they tax companies both in the Total Tax Rate and in the mix of taxes which make up that rate. To some extent this reĠects the level of development or availability of natural resources, but it also illustrates markedly different policies, for example between the EU & EFTA and NorthbAmerica. Comparing the eight geographical regions 31 The time to comply in 2012 Figure 3.9 The regional comparison in Figure Regional comparison of the time to comply 3.9 shows that six of our eight regions have an average time to comply below Average time to comply (hours) the global average; the Middle East Middle East 45 89 25 159 continues to have the lowest time to EU & EFTA 38 86 55 179 comply sub-indicator with 159 hours, North America 100 52 61 213 some 41% below the global average. Central America and the Caribbean 41 99 77 217 Africa has an average of 320 hours Asia Pacific 74 70 88 232 which is almost 20% above the world Central Asia & Eastern Europe 75 84 97 256 average, while South America still World Average 71 96 101 268 has by far the highest average at 618 Africa hours (15 weeks based on a 40 hour 89 104 127 320 week) which is more than double South America 136 193 289 618 the world average. The time taken in Corporate income tax República Bolivariana de Venezuela, Labour taxes Ecuador, Bolivia and Brazil remains Consumption taxes the major reason for the high number Source: PwC Paying Taxes 2014 analysis of hours taken here. Without these four economies the global average time to comply would be 246 hours. Figure 3.10 Consumption taxes are the most time consuming in four of our regions, Regional comparison of the number of payments labour taxes take the longest in three, Average number of payments while corporate income tax is only the North America most onerous in North America. On 1.3 3.0 4.0 8.3 average complying with consumption EU & EFTA 1.6 3.2 8.3 13.1 taxes takes the longest around Middle East 1.8 10.4 5.4 17.6 thebworld. South America 3.2 9.0 12.0 24.2 Asia Pacific 3.4 11.2 10.8 25.4 The number of payments in 2012 World Average 3.3 10.4 13.0 26.7 The regional comparison in Figure 3.10 Central Asia & Eastern Europe 4.7 9.0 15.8 29.5 shows ğve of our eight regions with an Central America & the Caribbean 4.7 13.0 16.0 33.7 average number of payments below Africa 3.9 14.5 17.7 36.1 the world average and three above. In North America and the EU& EFTA, Profit taxes Labour taxes the common availability of electronic Other taxes ğling and payment keeps the average number of payments low even though Source: PwC Paying Taxes 2014 analysis the number of taxes is similar to that found in other regions. At the other end of the scale in Africa and the Central America & the Caribbean the use of electronic ğling and payment is more limited. This, coupled with the existence of numerous labour taxes and mandatory contributions and ‘other’ taxes, keeps their averages above the world average. The Middle East region is below the world average driven by having fewer taxes as well as the increasing use of electronic ğling and payment in some economies. ‘Other’ taxes account for the largest element of the payments sub-indicator in six of our regions and also of the global average. Labour taxes have the most payments in the Middle East and the Asia Paciğc regions. 32 Paying Taxes 2014. PwC commentary On average complying with consumption taxes takes the longest around thebworld. Comparing the eight geographical regions 33 The regional analyses Africa At 52.9% Africa has the highest While Africa has a higher than average Total Tax Rate of average number of taxes, it is anybregion. the lack of electronic ğling in the region which contributes ‘Other’ taxes are the largest most to the difğculty of paying element of the Total Tax Rate taxes. In only 3 of the 53 for Africa while labour taxes economies do the majority of are the smallest part, which companies use electronic ğling is the reverse of the global for all major taxes. picture. The elimination of cascading sales taxes While the average Total Tax is beginning to change Rate for the region has fallen thisbproğle. signiğcantly since 2004 (by 16 percentage points largely Africa has the second highest as a result of the replacement average for the time to comply of cascading sales taxes), the of 320 hours. reduction in the average time to comply has been more Consumption taxes (VAT) take moderate (28 hours) and the the most time in Africa – 127 fall in the average number hours on average. of payments has been small (2.3bpayments). At 36.1 Africa has the highest average number of payments The most signiğcant falls of any region. in the time to comply have been in labour taxes, though this has increased slightly in recentbyears. 34 Paying Taxes 2014. PwC commentary 52.9 320 36.1 Total Tax Time Number of Rate (%) (hours) payments Nigeria Country article, page 44 Uganda Country article, page 48 South Africa Country article, page 46 The following economies are included in our analysis of Africa: Algeria; Angola; Benin; Botswana; Burkina Faso; Burundi; Cameroon; Cape Verde; Central African Republic; Chad; Comoros; Congo, Dem. Rep.; Congo, Rep.; Côte d’Ivoire; Djibouti; Egypt, Arab Rep.; Equatorial Guinea; Eritrea; Ethiopia; Gabon; Gambia, The; Ghana; Guinea; Guinea-Bissau; Kenya; Lesotho; Liberia; Libya; Madagascar; Malawi; Mali; Mauritania; Mauritius; Morocco; Mozambique; Namibia; Niger; Nigeria; Rwanda; São Tomé and Principe; Senegal; Seychelles; Sierra Leone; South Africa; South Sudan; Sudan; Swaziland; Tanzania; Togo; Tunisia; Uganda; Zambia; Zimbabwe The regional analyses: Africa 35 Figure 3.11 The sub-indicator trends for Africa All three sub- indicators have Line: Time (hours) Bar: Total Tax Rate (%) fallen over the Bar: Number of payments nine years of 343 thebstudy 342 340 327 318 317 316 316 314 72.2 71.3 70.3 71.1 70.1 67.8 58.2 58.3 54.3 38.8 38.6 38.1 37.9 37.8 37.4 37.1 36.8 36.5 2004 2005 2006 2007 2008 2009 2010 2011 2012 The trend data in Figure 3.11 includes only those economies for which data is available for all years of the study and therefore the ĺgures differ from the regional averages for 2012. The economies that are excluded are: Liberia, Libya, South Sudan Source: PwC Paying Taxes 2014 analysis The nine year trends in Africa 2012 this had dropped not just to below The fall in the Total Tax Rate from the Africa average, but also to below the 70.3% in 2004 to 54.3%18 in 2012 is the world average. The time to comply in 29 most marked, with smaller reductions in economies around the region is above the time to comply and in the number of the world average with seven economies payments made. The 2012 average Total (Republic of Congo, Cameroon, Tax Rate for the region is well above Senegal, Mauritania, Chad, Libya and the world average, due in part to the Nigeria) having hours in excess of 600 continuing presence of cascading sales (over 15 weeks). taxes in Comoros and The Gambia. As explained below, it is the replacement The average number of payments of cascading sales taxes by VAT that has for the region is also well above the contributed most to the drop in Total world average, yet over nine years Tax Rate for thebregion. it has dropped by only just over two payments. At the start of this period, The average time to comply in the the Central Asia & Eastern Europe, African region has been consistently and Central America & the Caribbean above the world average since 2004 regions both had more tax payments and the gap between the two averages than Africa; both of these regions now has steadily increased over that have fewer payments than Africa. The period. As shown in Figure 3.11, the lack of availability of online ğling and number of hours has reduced by just payment systems is the main reason for under 10% since 2004, though the the number of payments sub-indicator rate of reduction has slowed in recent being high. This is exacerbated by the years. Other regions have had more number of different taxes and the fact substantial reforms in the same period. that in many economies payments are For example, the Central Asia & Eastern made to several levels of government. Europe time to comply was 136 hours higher than Africa’s in 2004, but by 18 In this section the averages are calculated only for those economies that have been included in all nine years of the study to ensure that we represent a true trend. The trend data for 2012 will therefore differ from 2012 data which includes all economies. The economies excluded from the Africa region trend data are: Liberia, Libya and South Sudan 36 Paying Taxes 2014. PwC commentary The Total Tax Rate in Africa The cascading sales taxes still present The fall in Figure 3.12 shows how the Total Tax in Comoros and The Gambia (for Rate in Africa breaks down into the 2012) contribute heavily to the high Africa’s Total Tax three main components of proğt taxes, proportion of sales and other taxes, Rate since 2004 labour taxes and other taxes. It shows which in turn leads to a high Total Tax how the rate of decline in the Total Tax Rate. Burundi, Djibouti, Mozambique, is largely due Rate varies between the three main Sierra Leone, Swaziland and, most to the abolition types of tax. Labour taxes account for a recently, the Democratic Republic of relatively small proportion of the Total the Congo have abolished cascading of cascading Tax Rate and the labour tax percentage tax systems and adopted a VAT system salesbtaxes has remained virtually Ġat since 2004 leading to the signiğcant reduction in due to the small number of reforms the Total Tax Rate. If the two economies and the fact that while some economies that still have cascading sales taxes have decreased labour taxes, others were excluded from the regional have increased them. ‘Other’ taxes have average it would reduce tob46.1%. fallen noticeably, particularly in the last ğve years. While the trends for each of Looking across the Africa region, the types of tax are consistent with the corporate income tax is prominent in global trend, the proğle of taxes is still the majority of economies while labour out of step, with ‘other’ taxes still being taxes and mandatory contributions are the largest component (rather than the relatively small. In three economies, the smallest at the global level) of the Total Central African Republic, Equatorial Tax Rate and labour taxes being the Guinea and the Republic of Congo, the smallest (rather than being the largest case study company must pay the higher as is seen for the global average). of a corporate income tax on proğts or a minimum sales tax based on turnover. In all three cases the sales tax is higher than the proğt tax and therefore the company pays no proğt taxes. Nevertheless these economies still had high or fairly high Total Tax Rates of 87.6%, 44.1% and 63.8% respectively inb2012. Figure 3.12 Trend in Total Tax Rate in Africa by type of tax Total Tax Rate (%) 40 35 30 25 Other taxes 20 Profit taxes 15 Labour taxes 10 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The regional analyses: Africa 37 Figure 3.13 The fall in Total Signiĺcant movements in Total Tax Rate between 2011 and 2012 – Africa Tax Rate in the Decrease Total Tax Rate Increase Democratic Central African Republic 20.2 Republic of the Côte d’Ivoire 7.0 Congo dwarfs Niger 4.2 increases in Senegal 3.0 otherbeconomies Malawi 2.5 South Sudan 2.4 -2.6 South Africa -10.5 Ghana -221.0 Congo, Democratic Republic of Source: PwC Paying Taxes 2014 analysis Figure 3.13 shows the African • South Sudan, which features in the economies that have had the most study for the ğrst time, increased its signiğcant movement in Total Tax rate of corporate income tax from Rate between 2011 and 2012. Only 9 10% to 15%. Senegal also increased of the 53 African economies exhibited its corporate income tax rate from signiğcant changes in the Total Tax 25% to 30%. Rate. The reforms affected proğt, labour and ‘other’ taxes, but the • Malawi abolished its minimum reforms with the biggest impact on level of tax which was based on a Total Tax Rate were made to ‘other’ percentage of turnover, but this did taxes. In each of the three tax types not affect the case study company of tax some reforms reduced the Total as it was already paying corporate Tax Rate, while others increased it. income tax at a level above the Without the reduction in the Total threshold. The increase in Total Tax Rate recorded in the Democratic Tax Rate is largely explained by Republic of the Congo, the African an increase in the effective rate of average would have increased. employer pension contributions and changes in stamp duty on • The Democratic Republic of the propertybsales. Congo abolished its 15% cascading sales tax in 2012 replacing it with • The increase in Niger’s Total Tax VAT at 16%. Rate is largely due to the amount of depreciation on machinery that can • Ghana introduced a cap on be treated as tax deductible being employer and employee social halved from 20% to 10%. security contributions. The contributions are now levied • Côte d’Ivoire increased its Total Tax only on the ğrst GHS20,000 Rate by increasing the rate of social (approximately USD10,000) of security contributions relating to salary per year. Previously the retirement and abolishing several contribution had been levied on the tax reliefs. full salary. • Finally, the largest increase in • The most signiğcant change in Total Tax Rate occurred in the South Africa was the abolition of Central African Republic due its secondary tax on companies, to the introduction of a new which was replaced by a dividend environmental tax levied per tonne withholding tax of 15%. of waste produced. This increased the Total Tax Rate from 67.4% tob87.6%. 38 Paying Taxes 2014. PwC commentary Figure 3.14 The fall since Trend in time to comply in Africa by tax type 2004 in time to comply with Time to comply (hours) 140 tax obligations Consumption taxes in Africa has 120 been driven by Labour reductions in the 100 taxes time to comply with labour taxes 80 Corporate income tax 60 40 20 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The time to comply in Africa A number of economies have Figure 3.14 shows the breakdown in dramatically reduced the time required the time to comply since 2004 split by to comply, particularly for labour taxes. the type of tax. Consumption taxes In several cases the number of hours have consistently required the most required to comply with labour taxes time to comply. has dropped by over 100 hours in a single year due to a range of measures Over the last nine years, the average such as introducing online ğling and time to comply in Africa has fallen payment, increased use of accounting by 28 hours with almost 60% of the software, consolidating tax of ğces to decline, the largest fall, coming from allow several taxes to be paid at the reductions in the time to comply same of ğce and allowing several taxes with labour taxes which is consistent to be paid together. with the global trend. The difference between time to comply with labour In most years, however, only a and with consumption taxes has handful of economies have shown widened from 20 hours in 2004 to a signiğcant change in the time to 29 hours in 2012. The time taken comply with labour, corporate income to comply for labour taxes is still or consumption taxes. Nevertheless, high when compared to the relative these changes are often so dramatic proportion of the Total Tax Rate that a change in just one economy can that is attributable to these taxes. noticeably affect the average for the This may be explained by the fact whole Africa region. that most economies levy not only a personal income tax, but also more than one social security contribution. In addition, most companies have to administer not only the labour taxes that they bear themselves, but also the taxes which are borne by the employees, but withheld by theirbemployers. The regional analyses: Africa 39 Figure 3.15 Five economies Signiĺcant movements in time to comply between 2011 and 2012 – Africa have reduced Decrease Time Increase their time to Guinea 24 comply by at least 18 hours, while -18 Madagascar only Guinea’s -21 Rwanda time to comply -22 Senegal has increased -24 Cameroon -32 Kenya Source: PwC Paying Taxes 2014 analysis The most signiğcant movements • In its ğrst reduction in time to in time to comply for the African comply since 2007, Senegal has economies are shown in Figure 3.15. reduced its time to comply by 22 hours to 644 hours. This is For the region as a whole in 2012, due largely to increased used of the time to comply for corporate accounting software. income, labour and consumption taxes reduced marginally due to • Already one of the most efğcient reforms in ğve economies. None of the economies for paying tax in the economies, however, has experienced region, Rwanda reduced its time to the type of signiğcant reforms that comply by a further 21 hours due to led to the dramatic reductions in the the extension of its electronic ğling time to comply seen in some African systems. Since 2004, Rwanda has economies in earlierbyears. reduced its time to comply by nearly a third from 168 hours to 113 hours. The reasons for the movements are: • In 2012, electronic ğling was made • In Kenya, an online ğling system mandatory for all major taxes in was introduced in 2009, but Madagascar following increased recent upgrades to the system and taxpayer training in late 2011. This enhancements to the software have has reduced the time to comply by increased the impact. The time to 18 hours to 183 hours. comply has been steadily falling in Kenya from a peak of 432 hours in • The one increase in time to 2005 and 2006 to 308 in 2012. comply in the region for 2012 was Guinea; the time increased by 24 • Enhancements to electronic ğling hours following the introduction and the use of electronic payments of a requirement to provide a for social security contributions supporting summary when ğling have reduced the time required in VAT returns. Cameroon by 24 hours to 630 hours – which is still one of the highest in the region. 40 Paying Taxes 2014. PwC commentary Figure 3.16 The average Trend in the number of tax payments in Africa by tax type number of tax Number of payments payments has 20 fallen only Other taxes slightly across the African region since 2004, 15 Labour taxes mainly in respect of ‘other’ taxes and labourbtaxes. 10 5 Profit taxes 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The number of payments Although labour tax payments have inbAfrica declined across the region since 2004, Across the Africa region, the number only 10 economies had fewer labour of payments has declined slightly since tax payments in 2012 than in 2004, 2004 as shown in Figure 3.16. The while 3 economies had more payments. smallest decline is in proğt taxes, with labour and ‘other’ taxes each declining There have been more changes to the by roughly one payment over the last number of payments for ‘other’ taxes, nine years. This pattern is consistent but these have led to both increases with the global trend. and decreases. Now 14 economies have a lower number of payments of ‘other’ Africa remains the region with the taxes than in 2004, with an average highest number of tax payments due drop of 6 payments per economy to a lack of availability of electronic where there has been a reduction. ğling and payment, a large number of On the other hand, 7 economies have separate taxes, low availability of joint increased their payments of ‘other’ payments and the fact that taxes can taxes by an average of 2.9 payments often be levied by more than one level since 2004. of government. In the region, 44 out of the 53 economies have more payments than the world average, with ‘other’ taxes accounting on average for half of thebpayments. Figure 3.17 Compared Signiĺcant movements in tax payments between 2011 and 2012 – Africa to 2011, ğve Decrease Payments Increase economies Malawi 5 had fewer tax South Sudan 4 payments in -1 South Africa 2012, while -1 Burkina Faso two had more payments. -10 Mali -11 Morocco -12 Congo, Republic of Source: PwC Paying Taxes 2014 analysis Figure 3.17 shows the most signiğcant • The number of tax payments in changes between 2011 and 2012 in the Mali has fallen by 10 to 35 as VAT number of tax payments made in the and apprenticeship tax can each be Africa region. It is worth noting that paid jointly with other taxes. these economies are different from those showing the greatest change • Burkina Faso and South Africa now in time to comply. This would seem both have one payment fewer. In to suggest that the reforms of the tax the case of Burkina Faso this is due compliance systems have not included to the abolition of a separate capital wholesale changes to both ğling and gains tax and for South Africa it is payments. In two economies the due to the removal of the secondary reduction is due to the abolition of a tax on companies. tax, while the increase in Malawi is due to new taxes being introduced. • Malawi and South Sudan have both increased their number of tax The reasons for these signiğcant payments. In Malawi this is due to changes are: a new tax on property transfers and to the pension contribution, which • In the Republic of Congo, four was introduced part way through labour taxes were merged into 2011, having been in place for all a single tax on salary taking the of 2012. In South Sudan advanced economy from having the second quarterly payments of corporate highest number of tax payments in income tax were introduced. the region to the ninth highest. • Online ğling has been available in Morocco for social security contributions since 2003, but it was only adopted by the majority of companies in 2012. This has led to a reduction in the number of tax payments as the tax has moved to being largely paid online. At six, Morocco now has the lowest number of payments in the region. 42 Paying Taxes 2014. PwC commentary The Total Tax Rate for the Africa region has fallen signiğcantly since 2004 (by 16 percentage points largely as a result of the replacement of cascading salesbtaxes) The regional analyses: Africa 43 Nigeria In need of a coordinated approach to tax reform Taiwo Oyedele The Nigerian economy has been Over the years, the Nigerian growing steadily at about 5% per Government, especially through the PwC Nigeria annum for some years now. This Federal Inland Revenue Service and has raised the focus on the business the Joint Tax Board, has been making climate, including taxation. As efforts to reform the tax system Nigeria continues to seek ways to in a structured and coordinated diversify its economy and achieve manner. One such initiative was further development, government the development of a National Tax at all levels and the population Policy (NTP) aimed at simplifying recognise the importance of a the tax system, eliminating multiple dynamic tax system that is not only levels of taxation and ensuring geared towards ğscal growth, but taxbtransparency. addresses the sophistication of today’s business environment with the However, a new law, the Employee attendantbcomplexities. Compensation Act, was enacted to introduce a compulsory monthly Taxation and ğscal policy matters payment by all employers. This new tax are therefore now of greater interest resulted in an increase in each of the and as the Nigerian Government and Paying Taxes sub-indicators – the Total regulatory agencies observe trends in Tax Rate, number of tax payments developed economies, they in turn are and the compliance time, hence the focusing their attention on enforcing downward trajectory for Nigeria on total compliance. On the other hand, the Paying Taxes rankings for the taxpayers are ğnding smarter and currentbyear. better ways to manage their affairs to ensure full compliance at minimum cost, and to balance tax planning with corporate responsibility and long termbsustainability. 44 Paying Taxes 2014. PwC commentary 33.8 956 47 Total Tax Time Number of Rate (%) (hours) payments While the introduction of new taxes is Various tax incentives are being Overall, Nigeria is taking some positive one option for increasing tax revenues, introduced such as tax exemptions on steps to reform the tax system, but this should not be the main focus interest from all bonds and treasury to achieve the desired result in the as more could in fact be achieved bills for a period of 10 years. Incentives shortest possible time, these efforts through increased compliance with have also been granted for companies need to be coordinated rather than existing laws. We welcome any that provide infrastructure for public being implemented at cross purposes. measures that make tax systems more purposes and companies that employ The greatest ğscal incentive to ef ğcient and easier to follow thereby inexperienced graduates and those businesses is simplicity and certainty of increasingbcompliance. that retain them for at least 2 years. the tax system. However, important legislative changes One positive step is the on-going that would make the incentives more effort to introduce an electronic tax effective have not been addressed, system called the Integrated Tax such as the law that imposes corporate Administration System (ITAS). The income tax on dividends distributed new system will automate tax ğling out of tax exempt proğts. and documentation of taxpayer information. Also, a new transfer The speed with which legislation is pricing regulation was introduced in passed also affects taxpayer certainty. 2012. While this is likely to increase There is a balance to be struck between the compliance time, it provides more ensuring that legislation is properly certainty to investors and is therefore scrutinised and giving companies expected to have an overall positive suf ğcient certainty on timing to impact on the tax system. allow them to properly plan for the introduction of new legislation. There There was also an improvement in the are a number of tax bills, including approach to tax dispute resolution. The the Petroleum Industry Bill, that are government speedily reconstituted currently pending leading to increased the tax appeal tribunal tasked with uncertainty among taxpayers. the role of adjudicating over disputes arising from the operations of all tax laws and regulations. This is a marked improvement from the past where the tax appeal tribunal was not constituted for a long time leaving many tax cases unresolved for many years. The regional analyses: Africa 45 South Africa Paying taxes expected to become more difğcult, after years of improvements Paul de Chalain South Africa’s Total Tax Rate saw a The time taken for companies to signiğcant reduction in 2012, falling comply with their tax obligations PwC South Africa to 30.1% in the current study. This has been on a declining trend since reduction is primarily due to South e-ğling was introduced in 2003. Africa replacing the secondary tax Continued improvements have been on companies, which was levied on made over the years, including the a company declaring a dividend, ability to ğle a single monthly return with a dividends tax that is levied on for a number of payroll taxes and the shareholder. The Total Tax Rate reduced requirements for submitting has also reduced substantially from supporting information with corporate 37.6% in 2004. There are currently no income tax returns. However, some of proposals that could lead to further these gains are expected to be eroded signiğcant changes in the Total Tax for a variety of reasons. The South Rate in the short term. In the medium African Revenue Service (SARS) has term, however, there are two changes reversed the trend for the provision worth mentioning. The proposed of less information and has now National Health Insurance could introduced a number of measures signiğcantly increase the Total Tax which will increase the compliance Rate of the case study company in the burden on taxpayers. These measures near future, but this will depend on include the introduction of a new how it is proposed to be funded. corporate income tax return in 2013 with enhanced disclosure Also, it is proposed that a carbon tax be requirements; the introduction of a introduced in 2015 which could see the supplementary income tax return tax burden on companies that are liable whereby companies may be required to for that tax increasing signiğcantly, reconcile accounting proğts, corporate although the carbon tax would not income tax proğts, payroll taxes and affect the Total Tax Rate of the Paying indirect taxes; and onerous compliance Taxes case study company. requirements were introduced along with the new dividends tax. Certain taxpayers, most notably banks, are now also subject to onerous new requirements to provide third party information to SARS. Add to the above the proposed new withholding taxes on interest paid to non-residents to be introduced in 2015, and the medium term outlook for the compliance burden on companies does not lookbrosy. 46 Paying Taxes 2014. PwC commentary 30.1 200 7 Total Tax Time Number of Rate (%) (hours) payments Many of these changes can be In addition, many corporates report a attributed to the pressure that tax marked increase in SARS inquiry and revenues are under and concerns with audit activity. The tax administration the protection of the South African tax landscape in South Africa is therefore base. To this end, South Africa is no going through a signiğcant period different from many other countries ofbchange. and has recently undertaken, or signalled an intention to undertake, Many of these changes do not affect the a number of other steps to protect its case study company given its assumed taxbbase. attributes; however, they do serve to illustrate the creeping compliance These steps include: burden that many companies will bebexperiencing. • reform of transfer pricing legislation • hybrid debt and equity rules • extending exit charges in connection with the migration of tax jurisdiction • reğning controlled foreign company legislation • proposed rules for excessive interest • requirements for suppliers of digital services to register for VAT in SouthbAfrica • renegotiation of tax treaties, and • negotiation of numerous bilateral and multilateral mutual assistance and exchange of information agreements. The regional analyses: Africa 47 Uganda Looking to increase tax revenues without adding to the administrative burden Robert Nsereko Uganda’s ranking now at 98 out of the On the administrative side, the 189 economies covered by the study Uganda Revenue Authority (URA) PwC Uganda on Paying Taxes, remains ahead of the has implemented measures to reduce rest of the East Africa region except the time it takes a taxpayer to comply forbRwanda. with the law. These include; improved access to the URA customer service The time taken to comply with taxes channels like email and SMS alerts; in Uganda has improved a little in a dedicated help desk for handling the most recent period, and is better taxpayer queries; introduction of than the average for Sub Saharan Ġexible working hours during deadline Africa which is now at 314 hours. ğling days through the extension of This position can partly be explained working hours to assist taxpayers by the efforts of the Government of who encounter any difğculties. Even Uganda to make paying taxes much when ğling days fall on weekends, easier through both legislative and URA teams are available to help. administrative reforms. The tax administration has also introduced practical learning sessions for newly registered tax payers to equip them with hands-on knowledge around navigating the online ğling system. This is truly commendable and we expect to see even more initiatives introduced in future, as tax administration becomes even morebcomplex. 48 Paying Taxes 2014. PwC commentary 36.6 209 31 Total Tax Time Number of Rate (%) (hours) payments However, in a bid to increase domestic Over the years, the Government has tax revenues, it should be noted continued to put in place measures that the URA has now introduced aimed at improving the tax regime additional requirements for transfer including the restructuring of the pricing information which will place Kampala City Council Authority an additional burden on business and the Uganda Registrations (although in view of the Paying Taxes Services Bureau. It is expected that case study company fact pattern this all these efforts, coupled with better will not be reĠected in the Paying Taxes collaboration between different sub-indicators). Coupled with this, is departments, will continue to make the ability of the online ğling system taxes easier to pay in Uganda to cope with heavy user traf ğc during peak times especially towards ğling Overall, while there is still more room deadlines. The URA will therefore for improvement, it is important to need to ğnd more innovative ways of recognise the positive steps taken by increasing domestic revenue without the URA to become more taxpayer hampering the gains made so far in centric. It is hoped that such measures improving compliance time. will have a positive impact on the ease of paying taxes in Uganda and On the legislative side, during the most importantly to help sustain the 2013/14 annual budget speech, the increase in revenue collection which Government proposed increased has been seen over the years. The collaboration between government Government’s target to raise 80% of departments and the tax authority by its 2013/14 budget ğnancing from improving the sharing of information domestic revenue is an ambitious aimed at improving compliance target and its realisation will partly with the tax system. Furthermore, be supported by continuous efforts in the mandate to collect all dues and easing the process of compliance. charges was passed to the URA from the Uganda Registration Bureau. This is expected to improve how easy it is to pay tax as the URA has better tax collection systems compared to any other Government department. The regional analyses: Africa 49 The regional analyses Asia Paciğc The regional averages for For all years since 2004, Total Tax Rate (36.4%), time proğt tax has been the largest to comply (232 hours) and element of the average regional number of payments (25.4) are Total Tax Rate, at around 50%. all below the global average. The relative lack of electronic Only the Middle East (23.7%) ğling and payments in the has a lower average Total region keeps the average TaxbRate. number of payments (25.4) close to the world average Proğt taxes rather than (26.7). There are only 12 labour taxes account for the of the 37 economies in this largest element of the Total region where the majority of Tax Rate, but the trend for companies use electronic ğling increasing labour taxes and for all major taxes. reducing proğt taxes and ‘other’ taxes is consistent with the The trend data over the last globalbtrend. nine years shows a steady but moderate decrease across all The average time to comply the three sub-indicators; on (232 hours) in the region is average the Total Tax Rate moderately low. Only 11 out has reduced by 3.4 percentage of the 37 economies in the points, the number of payments region take more time than the by 1.9, and the time to comply globalbaverage. by 48 hours. The time to comply and number of payments have both risen slightly since their lowest point in 2010. 50 Paying Taxes 2014. PwC commentary 36.4 232 25.4 Total Tax Time Number of Rate (%) (hours) payments Thailand Country article, page 62 Singapore Country article, page 60 The following economies are included in our analysis of Asia Paciĺc: Afghanistan; Australia; Bangladesh; Bhutan; Brunei Darussalam; Cambodia; China; Fiji; +ong Kong SAR, China; India; Indonesia; Japan; Kiribati; Korea, Rep.; Lao PDR; Malaysia; Maldives; Marshall Islands; Micronesia, Fed. Sts.; Mongolia; Myanmar; Nepal; New Zealand; Pakistan; Palau; Papua New Guinea; Philippines; Samoa; Singapore; Solomon Islands; Sri Lanka; Taiwan, China; Thailand; Timor-Leste; Tonga; Vanuatu; Vietnam The regional analyses: Asia Paciĺc 51 Figure 3.18 The sub-indicator trends for Asia Paciĺc Overall, the three sub-indicators Line: Time (hours) Bar: Total Tax Rate (%) have fallen Bar: Number of payments since 2004, but the decline has 286 287 278 260 slowed or reversed 241 234 231 234 238 in recent years 40.0 40.1 40.2 39.2 37.5 37.5 38.1 36.6 36.6 27.1 27.3 27.4 25.7 25.5 25.4 24.7 25.1 25.2 2004 2005 2006 2007 2008 2009 2010 2011 2012 Figure 3.18 shows the trend in the three Paying Taxes sub-indicators since 2004. It includes only those economies for which data is available for all years of the study and therefore the ĺgures differ from the regional averages for 2012. The economies that are excluded are: Brunei Darussalam and Myanmar. Source: PwC Paying Taxes 2014 analysis The nine year trends in The average time to comply for the AsiabPaciğc region decreased from 287 hours in Overall, the average Total Tax Rate 2005 to 231 in 2010, before increasing for the region has fallen over the last slightly over the last two years. About nine years of the study, as shown in half the 35 economies have reduced Figure 3.18, from 40.0% to 36.6%,19 their time to comply since 2004, while though it rose slightly in 2010 and has 8 have increased it. The Maldives fallen again since. As explained below, accounts for 74% of the total increase the small reduction in the Total Tax in time to comply for these eight Rate has been driven by falls in proğt economies. For economies that show taxes. Approximately two thirds of the an overall reduction in time to comply economies in the region have reduced since 2004, four economies (China, their Total Tax Rates since 2004, while Indonesia, the Lao People’s Democratic a ğfth have increased their Total Tax Republic, and Timor-Leste) have Rate over the samebperiod. reduced their time to comply by over 300 hours, accounting for two thirds of the total reduction in time to comply across the region. Over the nine years since 2004, the average number of payments for the region has dropped by two. The number of payments decreased in ten economies and increased in seven. As with time to comply, the largest increase in payments was in the Maldives and the largest fall was inbChina. 19 In this section the trend averages are calculated only for those economies that have been included in all nine years of the study to ensure that we represent a true trend. The trend data for 2012 will therefore differ from 2012 data which includes all economies. The economies excluded from the Asia Paciĺc trend data are: Brunei Darussalam and Myanmar. 52 Paying Taxes 2014. PwC commentary Figure 3.19 Trend in Total Tax Rate in Asia Paciĺc by type of tax The proğt tax Total Tax Rate (%) element has 25 fallen on average since 2004, while the labour 20 tax element has Profit taxes risenbslightly 15 Labour taxes 10 Other taxes 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The Total Tax Rate in Asia Paciğc Five economies reduced their proğt The changes in the Total Tax Rates for Figure 3.19 shows how the decline tax rates by more than ten percentage ‘other’ taxes was driven by just three in the Total Tax Rate varies between points in the last nine years namely, economies; India, Sri Lanka and the three main types of tax. Since China, Fiji, Pakistan, Sri-Lanka and Timor-Leste. 2004, proğt taxes show the greatest Timor-Leste. The most common decline, with labour taxes having risen reason for a decrease in the proğt tax Looking across the Asia Paciğc region, slightly over the same period. The rate Total Tax Rate was a reduction in the corporate income tax is prominent in of ‘other’ taxes has fallen, but it has headline rate of proğts tax, though in the majority of economies. In 23 of the Ġuctuated between 7.9% and 9.2% over Sri Lanka it was the introduction of a 37 economies in the region proğt taxes the period. Proğt taxes rather than tax on turnover which was deductible account for more than 50% of the Total labour taxes account for the largest for corporate income taxes that caused Tax Rate, while in 7 economies labour element of the Total Tax Rate, but the the reduction. The greatest increases taxes account for more than 50% of the trend for increasing labour taxes and in proğt tax Total Tax Rates were in Total Tax Rate. reducing proğt taxes and ‘other’ taxes India and the Maldives. The Maldives is consistent with the global trend. introduced a proğt tax in 2011 as part of a number of measures designed to Although on average proğt taxes diversify the tax base. account for the largest proportion of the Total Tax Rate, there is some Since 2004, 3 economies have reduced variation between economies. Sales labour tax Total Tax Rates by an taxes charged on turnover account for average of 5 percentage points, while the greatest proportion of the Total 17 economies increased labour tax Tax Rate in Afghanistan, Sri Lanka, Total Tax Rates, by an average of Micronesia and the Marshall Islands, 2.8 percentage points. In most cases while in Myanmar a 20% tax on the increases were spread over a number value of land and buildings is the of years. Examples of signiğcant largest element. movements in labour tax Total Tax Rates include the introduction of mandatory contributions in the Maldives and the introduction of a superannuation levy in Tonga. The greatest reduction in labour tax Total Tax Rates was due to the reduction in the rate of employer’s social security contributions in Mongolia from 19% to 11% in 2008. The regional analyses: Asia Paciĺc 53 Figure 3.20 Between 2011 Signiĺcant movements in Total Tax Rate between 2011 and 2012 – Asia Paciĺc and 2012 four Decrease Total Tax Rate Increase economies decreased their Malaysia 11.8 Total Tax Rates, Tonga 4.2 while three Maldives 2.1 increased theirs -3.7 Myanmar -5.1 Lao PDR -6.4 Fiji -7.4 Thailand Source: PwC Paying Taxes 2014 analysis Figure 3.20 shows the Asia Paciğc • A new tax law which reduced the economies that have had the most standard rate of proğt tax from 28% signiğcant movement in the Total Tax to 24% in Lao PDR took effect from Rate between 2011 and 2012. Only 1 October 2012. 7 of the 37 Asia Paciğc economies showed signiğcant changes in the Total • The Maldives introduced pension Tax Rate and there was a mixture of fund contributions part way increases and decreases in the rate through 2011, but the full year which helped keep the overall rate Ġat effect of this was only felt in 2012 in the most recent period. leading to an increase in the Total Tax Rate. • The largest increase in Total Tax Rate in the region was 11.8 • Myanmar’s tax system underwent a percentage points and occurred signiğcant reform on 1 April 2012. in Malaysia due to lower tax The Proğt Tax Act was withdrawn, depreciation rates for certain ğxed the corporate tax rate was reduced assets and an increase in capital from 30% to 25% and commercial gains tax from 5% to 10% for tax rates for goods and services properties with a holding period of were reduced to 5%, with certain up to 2 years. exceptions. The salary tax rate was also changed. • The most signiğcant change in Thailand was the reduction in the • In Tonga, a new superannuation corporate income tax rate from 30% levy charged on salaries, at 5% to 23% which reduced the Total Tax each for employers and employees Rate by 5.6 percentage points. The increased the Total Tax Rate by 4.2 rest of the decrease in Total Tax percentage points. Rate (from 37.2% to 29.8%) was largely due to reductions in social security contributions. • Fiji has also had a reduction in corporate tax rate from 28% to 20%, which reduced its Total Tax Rate from 37.6% to 31.2%. 54 Paying Taxes 2014. PwC commentary Figure 3.21 A few economies Trend in time to comply in Asia Paciĺc by type of tax have signiğcantly Time to comply (hours) reduced their 120 time to comply across several 100 types of tax Consumption taxes Corporate 80 income tax Labour taxes 60 40 20 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The time to comply in Asia Paciğc On average, the change in time to Figure 3.21 shows the breakdown in comply has also been similar for each the time to comply since 2004 split of the three main types of tax thanks by the type of tax. In contrast to some to signiğcant and broad reforms other regions, the differences in the in a handful of economies; China, amount of time needed to comply Indonesia, Lao PDR and Timor-Leste between the three main types of tax have all reduced their total time to are not signiğcant. Consumption taxes comply by more than 300 hours since do however take the longest time 2004. The reduction in Timor-Leste to comply which is consistent with was almost exclusively in relation the global picture. While the time to to corporate income tax, due to the comply with all three types of tax has abolition of an alternative minimum declined since 2004, the rate of decline tax and withholding taxes, but the has slowed noticeably since 2008 and fall was spread more evenly in the the time to comply with consumption other economies. China uniğed its taxes actually increased in 2012 due to criteria and accounting methods for the introduction of a consumption tax tax deductions, Indonesia simpliğed in the Maldives. tax ğling and increased the use of electronic systems and Lao PDR consolidated taxes and improved the tax of ğce process and resourcing. The only really signiğcant increase in time to comply was caused by the introduction in the Maldives in 2011 of corporate income, labour and consumption taxes. The regional analyses: Asia Paciĺc 55 Figure 3.22 Signiĺcant movements in time to comply between 2011 and 2012 – Asia Paciĺc The introduction Decrease Time Increase of consumption Maldives 161 taxes in the Fiji 22 Maldives has led to the increase in average time Tonga 18 to comply for Pakistan 17 thebregion -20 Korea, Rep -20 China -44 Sri Lanka Source: PwC Paying Taxes 2014 analysis The most signiğcant movements in • In China the state tax authorities time to comply for the Asia Paciğc and the municipal authorities in economies between 2011 and 2012 Shanghai have been improving are shown in Figure 3.22. The region’s their tax systems. Online ğling slight upward trend in time to comply systems were improved to increase has continued with four economies the ef ğciency of tax return increasing their time to comply preparation and tax payment with tax administration while three settlement. This has reduced the economies reduced their time. time to comply by 20 hours to The reasons for the movements are: 318bhours. • The increase of 161 hours in time to • The time to comply has been comply for the Maldives dwarfs the reduced by 20 hours in 2012 due other changes in the region with to enhancements of tax systems in the change being almost entirely the Republic of Korea. The time to in respect of consumption taxes. comply has been falling steadily The Maldives introduced corporate from a peak of 290 hours in 2005 income, labour and consumption and 2006 to 187 hours in 2012. taxes in late 2011, and the increase in time to comply is due to there • The time to comply for Pakistan being a full year’s worth of ğlings increased by 17 hours in 2012 as for consumption taxes in 2012. The more details had to be included in Maldives introduced electronic VAT returns. systems for ğling corporate income tax, sales tax and pension • Tonga made paying taxes more contributions in 2012 which may complicated by introducing help reduce the time to comply for a superannuation levy which future periods. increased the time to comply by 18 hours in 2012. • In Sri Lanka, an online ğling system for social security contribution • Fiji made paying taxes more payments was introduced to make complicated by changing the paying taxes easier. The time to advance payments regime for comply has fallen from a peak of corporate income tax, transferring 256 hours since 2005 to 210 hours fringe beneğt tax liability from in 2012. employees to employers, limiting the ability to carry losses forward and restricting the tax deductibility of some expenses. 56 Paying Taxes 2014. PwC commentary Figure 3.23 The introduction Trend in number of tax payments in Asia Paciĺc by type of tax of electronic Number of payments systems has 14 reduced the number of 12 payments in Other taxes Labour taxes somebeconomies 10 8 6 4 Profit taxes 2 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The number of payments in With a fall of 28 payments spread AsiabPaciğc across all three tax areas, China had Figure 3.23 shows the breakdown in the largest drop in the region, over the the number of payments since 2004 nine years closely followed by India split by the type of tax. Since 2004 which reduced ‘other’ tax payments by the greatest decline, of 1.5 payments, 22, and Malaysia which reduced labour was for ‘other’ taxes while labour tax tax payments, also by 22. Thailand payments decreased only slightly and the Philippines both had 12 tax and proğt tax payments increased payments fewer by 2012 than in 2004. marginally. This is different from the The most common reason for the global picture where labour taxes show reduction in the number of payments the greatest improvement. is the introduction and improvement of electronic ğling systems along with Generally where reforms in the region their adoption by taxpayers. have affected the number of payments, the reductions in payments have been greater than the increases. Since 2004 the average drop was of 11 payments for economies where there has been a reduction in the number of payments, but an average increase of 6 payments for economies with increasing numbers of payments. The Maldives had the most signiğcant increase of 27 payments due to the introduction of proğt, labour and other taxes in 2011. The regional analyses: Asia Paciĺc 57 Figure 3.24 Signiĺcant movements in tax payments between 2011 and 2012 – Asia Paciĺc Between 2011 and 2012 while Decrease Payments Increase the adoption of electronic ğling Maldives 13 Fiji 4 reduced labour -3 Sri Lanka tax payments in -11 Philippines the Philippines, Source: PwC Paying Taxes 2014 analysis payments of ‘other’ taxes were Figure 3.24 shows the most signiğcant • In the Philippines, an electronic increased by changes between 2011 and 2012 in the ğling and payment system for new taxes in the number of tax payments made in the social security contributions, health Asia Paciğc region. insurance and housing development Maldives fund contributions was launched The reasons for these signiğcant in 2012. Over the past 2 years the changes are: system has been rolled out and in 2012 the majority of companies • The Maldives introduced a tourism, adopted this new system which goods and service tax in October reduced the number of payments in 2011 and passed a Pension Act 2012 by 11. in May 2011. These changes had a full year effect in 2012 on the • In Sri Lanka, a tax on cheques was number of payments and led to the eliminated in April 2011 the effect signiğcant increase in the number of which carried over into 2012. of payments by 13. An electronic ğling system was adopted in 2012 • A fringe beneğt tax liability which it is hoped will help to reduce was moved from employees to the number of payments in the employers in Fiji, increasing the longbterm. number of payments by four as the tax cannot be paid and ğled jointly with other taxes. 58 Paying Taxes 2014. PwC commentary With a fall of 28 payments spread across all three types of tax, China has had the largest drop in the Asia Paciğc region over the 9 years of thebstudy The regional analyses: Asia Paciĺc 59 Singapore Doing well in Paying Taxes, but post-ğling compliance is still a challenge Carrie Lim Singapore ranks ğfth in Paying However, there have been recent Taxes 2014. Since 2006, it has been positive developments to recognise. PwC Singapore consistently ranked in the top ğve The Inland Revenue Authority of economies surveyed. The Singapore Singapore (IRAS) has implemented an authorities continually strive to enhanced dispute resolution process improve the tax system to make it for corporate taxpayers. Taxpayers administratively easier to ğle and pay are generally expected to respond to taxes. the IRAS’s queries within two months, although there is admittedly no clarity It is an impressive picture but it does as to when the IRAS will complete its not tell the whole story. The ranking review. With effect from 1 January takes into account the Total Tax Rate, 2014, they will review objections to its the time to comply and the number of assessments and convey its decision payments; Singapore ranks highly as in writing within six months from the it has only one core tax per tax base, date of receipt of complete information requires a low number of hours to from the taxpayer. In addition, they comply and has a highly competitive will inform the taxpayer of the status Total Tax Rate. However as was and estimated time required for discussed at the launch event for completing the review of complex Paying Taxes 2013, the sub-indicators cases. do not cover the review and ğnalisation of tax matters, the post ğling On the dispute resolution front, compliance process, and it is worth Singapore will need to step up the pace noting that these involve signiğcant in reviewing its tax treaty network to complexity and subjectivity. ensure that it remains competitive. The lack of a treaty with the United States should also be addressed given that Singapore is a business hub for many US multinational companies. It is also important that it strengthens its resources to support businesses in resolving cross-border disputes which are expected to increase following the OECD Base Erosion and Proğt Shifting (BEPS) report. 60 Paying Taxes 2014. PwC commentary 27.1 82 5 Total Tax Time Number of Rate (%) (hours) payments One area for potential improvement is partners without having to update the Singapore is an open economy which the transparency of the decisions made terms of its bilateral treaties. It will has no natural resources and which by IRAS. While Singapore provides also sign the Convention on Mutual is dependent on global trade. Its guidance on general tax treatment Administrative Assistance in Tax tax system will continue to play an and practice, it does not have a public Matters which was developed jointly important role in its ability to remain ruling regime. It grants tax incentives by the Council of Europe and the competitive on the world stage. It will to encourage various economic OECD to facilitate better international need to maintain its momentum in activities, and publishes the qualifying cooperation in the administration responding to changes in the global tax requirements to enjoy the minimum of national tax laws. By signing the environment. If the past is anything level of a tax incentive program. Convention, Singapore will expand its to go by, we can be assured that However, the basis for further network of exchange of information Singapore will rise to the challenge. customised incentives beyond the partners by 11 jurisdictions, most minimum level is not disclosed, leading notably including the United States to a perception that the administration (with which it does not have a treaty). of tax incentives is opaque. In response In addition, it will allow overseas tax to the OECD Study into the Role of authorities of treaty jurisdictions to Tax Intermediaries, Singapore has obtain bank and trust information implemented an enhanced taxpayer from ğnancial institutions without compliance program but does not the need for a court order. Finally, disclose the criteria for participating or it will conclude a Model 1 FATCA the speciğcs of the program. intergovernmental agreement with the United States under which foreign That said, Singapore is committed to ğnancial institutions in Singapore will meeting international best practice report account information to the IRAS and has implemented measures who will exchange the information to improve tax transparency. The automatically with the US Internal Monetary Authority of Singapore Revenue Service. has designated tax evasion as a money laundering predicate offence in Singapore with effect from 1 July 2013. This means that the anti- money laundering regulatory rules will apply in full force to tax evasion. On 14 May 2013, it announced that it will, by the end of 2013, further bolster its framework for international cooperation to combat tax evasion. It will extend exchange of information assistance to all existing tax treaty The regional analyses: Asia Paciĺc 61 Thailand Reducing tax rates to stimulate growth Thavorn Rujivanarom With the temporary reduction in The Paying Taxes study is a useful corporate income tax rate from benchmark for Thailand against PwC Thailand 30% to 23% in 2012 and to 20% in other economies’ tax systems and 2013 and 2014, Thailand has made continues to be a useful guide for the signiğcant moves to reduce the tax cost Thai government for administrative for corporate taxpayers. The Paying reform. Although the number of tax Taxes results reĠect this change with payments and the number of hours Thailand’s ranking improving from 96 taken to comply have remained last year to 70 this year. It is the fall unchanged, the Revenue Department in the Total Tax Rate that has had the continues to encourage taxpayers to most signiğcant impact on the overall use online ğling. It offers the incentive result. The two other compliance sub- of providing an extension of eight days indicators have remained virtually from the due date for tax ğling for unchanged. The top marginal personal those who wish to ğle returns online. income tax rate in Thailand is also The records show that the number of expected to be reduced from 37% to taxpayers who participate in online 35% in 2013, although this will not of ğling has increased. course affect the Paying Taxes result. The question has been raised by both taxpayers and the media as to whether the corporate income tax rate of 20% will continue to apply after 2014. The reduction in the rate is aimed at stimulating economic growth and increasing Thailand’s competitiveness both within the region and on a global basis. With this in mind, the Thai government is well aware that it must stay the course in maintaining the lower corporate tax rates in order for it to remain internationally competitive. 62 Paying Taxes 2014. PwC commentary 29.8 264 22 Total Tax Time Number of Rate (%) (hours) payments Apart from the reduction in the The Paying Taxes Asia Paciğc launch corporate tax rates, there are also event will take place in Thailand on-going discussions among the this year and representatives from three tax collection departments, government agencies, businesses, namely the Revenue Department, the academics, ğnancial administration Excise Department and the Customs and the press will be invited to discuss Department, which have been initiated the results. This will be an excellent by the Ministry of Finance to consider opportunity for the government and further measures to simplify their tax business to engage in constructive collection system. These include the communication on the future shape of sharing of information, including data Thailand’s tax system. intelligence and process improvements in tax administration to prevent loopholes in the collection process. The Ministry of Finance has requested that these matters be made a priority for the three departments. An improvement in tax administration by the tax collection departments can therefore be expected in the near future. The Thai government is fully aware of the signiğcance of the World Banks Ease of Doing Business study, especially with regard to Paying Taxes. The Of ğce of the Public Sector Commission, as the facilitator, has been working closely with many organisations to continue developing the Thai public sector for sustainable results, improving the competitiveness of Thailand and its position in the Doing Business study. The regional analyses: Asia Paciĺc 63 The regional analyses Central America & the Caribbean The average Total Tax Rate The regional average of 33.7 for 2012 of 42.8% is slightly payments remains the second lower than the global average highest after the African region of 43.1%. The rate has moved and above the global average of little since last year with 26.7 payments. only one economy in the region showing a signiğcant Corporate income tax is the movement (an increase) in its most signiğcant element of the Total Tax Rate. Total Tax Rate, consistently accounting for around 55% of While the average time to the Total Tax Rate since 2004. comply is below the global average, it has fallen by only Most time is spent complying 20 hours over the nine years of with labour taxes and the study and by only one hour mandatory contributions, but inb2012. these taxes have also shown the greatest improvement since 2004 in the time to comply and in the number of payments. 64 Paying Taxes 2014. PwC commentary 42.8 217 33.7 Total Tax Time Number of Rate (%) (hours) payments Trinidad and Tobago Country article, page 74 Panama Country article, page 72 The following economies are included in our analysis of Central America & the Caribbean: Antigua and Barbuda; Bahamas, The; Barbados; Belize; Costa Rica; Dominica; Dominican Republic; El Salvador; Grenada; Guatemala; Haiti; Honduras; Jamaica; Nicaragua; Panama; Puerto Rico; St. Kitts and Nevis; St. Lucia; St. Vincent and the Grenadines; Trinidad and Tobago The regional analyses: Central America & the Caribbean 65 The nine year trends for Central Although the regional time to comply America & the Caribbean is lower than the world average, All three sub- Figure 3.25 shows the slow downward the number of payments has been trend in the three Paying Taxes sub- consistently signiğcantly higher than indicators have indicators since 2004. the world average since 2004. This fallen over the is due in part to the fact that only 6 The average Total Tax Rate for the out of the 20 economies in the region nine years of region has been consistently below the have fully implemented electronic thebstudy global average, but the reduction in the ğling (Belize, Costa Rica, Dominican region20 has not kept pace with the fall Republic, Guatemala, Nicaragua around the world. In 2012, the regional and Puerto Rico, territory of the Total Tax Rate is 1.6 percentage UnitedbStates). points lower than the global average, compared to being 8.8 percentage points lower in 2004. The average time to comply has been consistently lower than the global average, but again the gap has closed from being 26% below the world average in 2004 to 18% below it in 2012. Again this suggests that reforms in the region have had less of an impact than for the world as a whole. Figure 3.25 The sub-indicator trends for Central America & the Caribbean Line: Time (hours) Bar: Total Tax Rate (%) Bar: Number of payments 245 248 244 242 234 232 233 226 225 44.6 43.8 44.3 43.8 44.1 43.8 44.0 43.8 43.9 43.6 42.6 42.7 41.1 40.1 40.1 38.1 36.1 34.8 2004 2005 2006 2007 2008 2009 2010 2011 2012 The nine year trend data in Figure 3.25 and the rest of this section includes only those economies for which data is available for all years of the study and therefore the ĺgures differ from the regional averages for 2012. The economies that are excluded are The Bahamas and Barbados. Source: PwC Paying Taxes 2014 analysis 20 In this section the trend averages are calculated only for those economies that have been included in all nine years of the study to ensure that we represent a true trend. The trend data for 2012 will therefore differ from 2012 data which includes all economies. The economies excluded from the Central America & Caribbean trend data are: The Bahamas and Barbados 66 Paying Taxes 2014. PwC commentary The Total Tax Rate for Central Looking across the Central America & America & the Caribbean Caribbean region, the average Total Since 2004, proğt Figure 3.26 shows how the Total Tax Tax Rate for ‘other’ taxes decreased Rate breaks down between the three only slightly by 0.3 percentage points taxes have fallen main types of tax; proğt taxes, labour in total. Since 2004, seven economies on average across taxes and ‘other’ taxes. The proğt tax have decreased the burden of other rate has gradually declined every year taxes, while ğve have increased it. No the region, while from 2004 to 2011, but increased slightly one reform had a signiğcant impact, labour taxes have in 2012. Conversely, the labour tax rate but examples include changes to the rose from 2004 to 2010 and has fallen extraordinary and temporary tax risen marginally slightly since. This trend is similar to (Impuesto Extraordinario y Temporal the pattern than we see globally but the en Apoyo a los Acuerdos de Paz ‘other’ taxes have varied little over the (IETAAP)) in Guatemala, property period. Following a slight peak in 2006, taxes in Trinidad and Tobago and stamp they have since fallen but only gradually. duty tax and property transfer tax inbJamaica. The proğt taxes are the dominant constituent of the Total Tax Rate in the Over the nine years of the study, the region, accounting for over 50% of the average labour tax rate has increased tax burden of our case study company, by 0.4 percentage points driven by which is different to the global position changes in the Dominican Republic where labour taxes have become the since the Fiscal Reform in January 2006 largest element. The fall in the proğt increased the level of social security taxes of 2.1 percentage points since contributions. Although eight other 2004 drives the fall of 2.0 percentage economies showed changes to their points in the Total Tax Rate, mainly due labour tax rates in the period, these to reductions in the headline corporate were small in comparison. tax rate in Antigua and Barbuda, Puerto Rico (U.S.) and St Vincent and the Grenadines. Overall, proğt taxes fell in eleven economies between 2004 and 2012, and rose inbfour. Figure 3.26 Trend in Total Tax Rate in Central America & The Caribbean by type of tax Total Tax Rate (%) 30 25 Profit taxes 20 15 Labour taxes 10 Other taxes 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The regional analyses: Central America & the Caribbean 67 In the Central America & Caribbean region, only El Salvador shows a signiğcant movement in Total Tax Rate for 2012 Figure 3.27 Signiĺcant movements in Total Tax Rate between 2011 and 2012 – Central America & The Caribbean Decrease Total Tax Rate Increase El Salvador 3.3 Source: PwC Paying Taxes 2014 analysis As shown in Figure 3.27, in 2012 the tax rate changed almost entirely due to the increase in the rate of corporate income tax in El Salvador from 25% tob30%. 68 Paying Taxes 2014. PwC commentary Figure 3.28 Trend in time to comply in Central America & the Caribbean by type of tax Since 2004, the Time to comply (hours) time to comply 120 with labour taxes has fallen on 100 Labour taxes average across the region, while the Consumption taxes time for corporate income taxes has 80 risen marginally 60 Corporate income tax 40 20 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The time to comply in Central Across the region there have been a As well as accounting for the smallest America & the Caribbean number of important reforms that share of the Total Tax Rate in the region, Figure 3.28 shows the breakdown in the have affected the time to comply with corporate income taxes also require the time to comply since 2004 split by the consumption taxes resulting in both least compliance time, although this has type of tax. signiğcant increases and decreases; the risen slightly since 2004. The increase impacts of which have largely cancelled is entirely due to signiğcant tax reforms Labour taxes have consistently required each other out across the region. The in the Dominican Republic. The impact the most time to comply rather than time to comply with consumption taxes of this was offset by modest reductions consumption taxes which are seen in each of Panama, Honduras and Costa in the time to comply with corporate to take the largest amount of time to Rica fell by around 12 days over the income taxes in ğve other economies. comply globally. But labour taxes have nine years. In all cases, the introduction, also seen the biggest reductions due adoption and enhancement of electronic principally to reforms in just 4 of the systems were largely responsible for the 18 economies, namely Costa Rica, reductions in time to comply. Honduras, Jamaica and Panama. The time to comply with consumption In Costa Rica the time to comply with taxes increased in Antigua and Barbuda, labour taxes dropped by 60 hours Puerto Rico (U.S.), St Kitts and Nevis, between 2006 and 2007, while in the and St Vincent and the Grenadines. In same year the time required to comply all cases, a VAT or similar sales tax was with labour taxes in Honduras halved introduced, in some cases replacing from 192 hours to 96 hours. In both other taxes. In Puerto Rico (U.S.), the cases the reduction is due largely to the increase was around 10 days, but in introduction and widespread adoption each of the other economies it was of electronic ğling and payment. The nearer 6 days. reductions in Jamaica and Panama were more modest at 46 and 48 hours respectively over the 9 years. For Panama the reduction was largely due to the introduction and enhancement of electronic ğling systems and for Jamaica the key factor was the introduction of consolidated forms for ğling and paying labour taxes. The regional analyses: Central America & the Caribbean 69 Figure 3.29 shows signiğcant Only Panama movements in the time to comply had a signiğcant between 2011 and 2012 in Central America & the Caribbean. reduction in the time to comply Continuing the trend of reductions in the time to comply with labour inb2012 taxes discussed above, in 2012 the principal reduction in time to comply was due to the introduction in Panama of a new platform for ğling social securitybcontributions. Figure 3.29 Signiĺcant movements in time to comply between 2011 and 2012 – Central America & The Caribbean Decrease Time Increase -14 Panama Source: PwC Paying Taxes 2014 analysis 70 The number of tax payments in tax payments by 32. Over the nine The number of payments for proğt taxes Central America & the Caribbean years of the study, Belize, Costa Rica shows the least change. Across the Central America & the and Guatemala all reduced their Caribbean region, the number of labour payments by 11 thanks to the The largest decrease in tax payments in payments has declined since 2004 as introduction and widespread adoption the Central American & the Caribbean shown in Figure 3.30, with the most of online ğling and payment as well as region was in labour taxes in Guatemala dramatic decline being in payments the ability to make joint payments. as a new online platform allowed ğling of labour taxes. However, the region and payment to be performed online. has the highest average number of ‘Other’ taxes show an average decline payments after the Africa region. across the region of almost two As shown by Figure 3.31, in Panama the payments over the nine years. Tax number of proğt tax payments dropped Since 2004, ğve economies have shown reforms in the Dominican Republic by eight following a move from a a marked decrease in the number of reduced its ‘other’ tax payments by monthly to a quarterly payment regime. labour tax payments. The introduction 23 in 2007, though the impact on the This reverses an increase in payments in Jamaica of joint payment and ğling regional average was partially offset that occurred in 2011 when the monthly for social security contributions reduced by the introduction of a VAT system in payment regime was introduced. the number of payments by 36 in 2011, Antigua and Barbuda in the same year. as well as reducing the time to comply Guatemala and Nicaragua also reduced as mentioned above. their payment of ‘other’ taxes thanks to the use of online ğling and payment, While tax reforms in the Dominican while the introduction of VAT in St Kitts Republic increased the Total Tax and Nevis increased the number of Rate, it reduced the number of labour payments there. Figure 3.30 The fall in the Trend in the number of tax payments in Central America & the Caribbean by type of tax average number Number of payments of labour tax 20 payments has driven the Other taxes reduction in the 15 sub-indicator Labour taxes for this region – it has fallen by more than ğve 10 across the region sinceb2004 Profit taxes 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis Figure 3.31 Signiĺcant movements in the number of tax payments between 2011 and 2012 - Central America & the Caribbean Decrease Payments Increase -8 Panama -14 Guatemala Source: PwC Paying Taxes 2014 analysis The regional analyses: Central America & the Caribbean 71 Panama Paying Taxes helps inform a constructive discussion Francisco Barrios Paying Taxes is a valuable tool for the case study company. It facilitates a like business community which gives a for like comparison and encourages PwC Panama good insight into the time invested further research into best practice used and the cost of the processes required elsewhere with a view to learning from to comply with basic regulations in the experience of others and aiming for different tax jurisdictions. It is clear a similar level of performance. that the existence of this study helps jurisdictions to focus on how they Over the years the existence of this might improve their position and what project and its results have encouraged may be required in order to create an improvements in Panama. We have environment which can help attract seen the time to comply fall by 143 investment to their countries, which is hours over the nine years of the study, a worthy objective for this joint project. and also a small fall in the Total Tax Rate which is now just below the global Today we can say with absolute average. Following the publication certainty that the launch of this project of the report last year there has been last year in Panama aroused much an improvement in the number of curiosity, interest and discussion in payments (from 60 to 52), providing the media, and also a constructive focus on the beneğts of implementing dialogue among the political ğgures of electronic ğling and payment the economy. The discussion revolved mechanisms. around the impact of the tax system in the region, the signiğcant amount of We have also seen several practical time required for companies to comply modiğcations incorporated into the with the tax system in Panama, and systems in Panama aimed at changing the need to raise the country’s overall the characteristics and nature of the ranking in this global study. The data that has to be submitted, with Paying Taxes study is also interesting consequential beneğts around process as it enables governments to observe and controls, and a reduction in the how the tax burden can potentially be compliance time required. a constraint to doing business from an objective perspective. It allows readers of the results to consider how other economies are performing as regards their tax systems, in the context of the 72 Paying Taxes 2014. PwC commentary 40.5 417 52 Total Tax Time Number of Rate (%) (hours) payments Care is required however with such new initiatives as, in some cases, measures introduced have had an adverse impact on annual compliance requiring additional time to be invested to make the system work. Despite these isolated cases it is clear that the measures now being implemented have been strongly inĠuenced by compliance developments in other jurisdictions, with a particular emphasis on the use of technology and new ğnancial tools in order to help reduce time and make complying with deadlines easier, both for preparing tax information and making tax payments. Despite the advances mentioned above it is clear that further improvements are still needed, and we are sure that the Paying Taxes study will remain important in enabling continued comparisons to be made with other relevant jurisdictions. The regional analyses: Central America & the Caribbean 73 Trinidad and Tobago Tax administration still in need of reform Allyson West Trinidad and Tobago is experiencing Fiscal revenue plays a crucial role in an interesting period in its economic this drive for development and the PwC Trinidad and Tobago development. As the energy hub of Paying Taxes indicators provide helpful the Caribbean, the country was not background and insight for policy- as hard hit as its neighbours by the makers, policy commentators, and global ğnancial crisis and the level of investors. These annual indicators economic activity seems to be again show, a decrease in the Total Tax Rate on the upswing. Over the last few from 37.0% (2004) to 29.1% (2012) years, successive governments have but little change to the compliance invested heavily in infrastructure indicators with the payments falling projects, educational programmes only by one to 39 over the nine years and advanced technological tools of the study. The trends have served to modernise various aspects of the to provide a factual backing to inform public service e.g. national security. Government when implementing Among the aims of those initiatives reforms to create conditions that was to improve the efğciency of doing encourage investment, trade business in Trinidad and Tobago and andbgrowth. to increase the country’s appeal as an investmentbtarget. Tax competitiveness continues be an important theme for developing economies in the Caribbean, including Trinidad and Tobago. It is recognised that for such competitiveness, the legal framework must be complemented with effective administration. In seeking to create a legal landscape which is favourable to investment and trade, the marginal corporation tax rate was decreased from 35% to 30% in 2003 and then to 25% in 2006. Incentives were provided to various sectors, including manufacturers and the seven industries targeted by the Government for development and growth, and steps have been made to simplify the tax system. 74 Paying Taxes 2014. PwC commentary 29.1 210 39 Total Tax Time Number of Rate (%) (hours) payments While these changes to tax legislation In his Budget 2014 presentation, the are welcome, a more comprehensive Minister of Finance, the Honourable review is required to remove archaic Larry Howai, announced that the provisions and to introduce new government has earmarked signiğcant provisions to deal with modern funds for the improvement of the tax issues such as providing relief for administration. We look forward to the expenditure incurred to create or implementation of that plan and hope acquire intellectual property and to that it will resolve many of the issues encourage wider participation in the currently faced by taxpayers. stock exchange. More urgent however is the need for reform of tax administration, as depicted by the results of the Paying Taxes indicators for 2013. The President of Trinidad and Tobago, His Excellency President Antony Carmona S.C. pointed out the need for Ń the sleeping giant that is the Board of Inland Revenue (BIR)ń to be awoken. The average time taken to comply with tax requirements (210 hours) ranks poorly compared to other Caribbean economies. This is explained in part by the dif ğculty experienced in obtaining clear and değnitive advice from the BIR. This has created a situation in which there is much uncertainty The introduction of a more informal dispute resolution system to aid in clearing the backlog of matters before the local tax court has also been suggested. Furthermore, it is hoped that the Paying Taxes indicators will propel the government to recognise the importance of modernising the tax system through, for example, the introduction of e-ğling and e-payments. The regional analyses: Central America & the Caribbean 75 The regional analyses Central Asia & Eastern Europe Central Asia & Eastern Europe The average time to comply has been the biggest reformer across this region is 256 over the nine years of the study. hours, 12 hours below the Economies in this region have world average of 268. It is shown the largest fall in both fairly evenly split between the the time to comply (220 hours) majorbtaxes. and number of payments (25 payments), and apart from At 29.5, the region’s average Africa has the largest fall in the number of payments is a Total Tax Rate (15.7%). little above the world average ofb26.7. The average Total Tax Rate for the region is 39.5% which is a The region has shown a steady little below the world average improvement in the number of 43.1%. The Total Tax Rate of payments and in the time to has shown a slight upward comply over the last nine years. trend since 2010. The introduction of electronic All three types of tax have ğling and reducing tax rates shown a slight increase in Total has been the key to the reform Tax Rate in 2012. process in this region. In 12 of the 19 economies the majority Almost all of the economies in of companies use electronic the region have a signiğcant ğling and payment for all element of the Total Tax Rate major taxes. accounted for by labour taxes and mandatory contributions. 76 Paying Taxes 2014. PwC commentary 39.5 256 29.5 Total Tax Time Number of Rate (%) (hours) payments Russian Federation Country article, page 86 Ukraine Country article, page 90 Uzbekistan Country article, page 92 Turkey Country article, page 88 The following economies are included in our analysis of Central Asia & Eastern Europe: Albania; Armenia; Azerbaijan; Belarus; Bosnia and Herzegovina; Georgia; Israel; Kazakhstan; Kosovo; Kyrgyz Republic; Macedonia, FYR; Moldova; Montenegro; Russian Federation; Serbia; Tajikistan; Turkey; Ukraine; Uzbekistan The regional analyses: Central Asia & Eastern Europe 77 The nine year trends in Central in the most recent period. The time This region shows Asia & Eastern Europe to comply started to fall in 2006 and All three sub-indicators show large the reduction accelerated thereafter. the largest fall in reductions over the last nine years. The average time to comply has fallen compliance sub- The Total Tax Rate has shown a steady by 220 hours (46%) since 2004. Since decrease from 57.7% in 2004 to 41.4% 2004, 11 out of the 17 economies in indicators and the in 2010, but with a small upturn of the region have reduced their time to second largest fall 0.6% between 2010 and 2012.21 There comply by an average of 344 hours. The are 13 economies where there has economies showing the largest fall over in Total Tax Rate been an average fall per economy of 21 the nine years have been the Ukraine, across the nine percentage points in the Total Tax Rate Belarus, and Azerbaijan with falls of between 2004 and 2012. For the four 1,695, 668 and 542 hours respectively. years of the study economies that have increased their Total Tax Rate since 2004, the average The number of payments has also increase was three percentage points. fallen consistently over the 9 year Only the Africa region shows greater period by 25.1, with falls in 14 falls in Total Tax Rate due to the economies and with no economy removal of cascading sales taxes. increasing its number of payments. This fall is twice as large as that The region has recorded the largest fall recorded by any other region. in the average time to comply for any of Ukraine and Belarus reduced their our geographical regions and continues number of payments by 119 and to show the largest fall of any region 115bpaymentsbrespectively. Figure 3.32 The sub-indicator trends for Central Asia & Eastern Europe Line: Time (hours) Bar: Total Tax Rate (%) Bar: Number of payments 488 484 478 379 359 342 319 57.7 56.4 54.4 53.5 52.2 268 52.4 51.6 50.8 50.2 258 46.5 46.1 42.3 41.4 41.6 42.0 39.5 30.8 29.3 2004 2005 2006 2007 2008 2009 2010 2011 2012 Figure 3.32 shows the trend in the three Paying Taxes sub-indicators since 2004. It includes only those economies for which data is available for all years of the study and therefore the ĺgures differ from the regional averages for 2012. The economies that are excluded are: Kosovo and Montenegro. Source: PwC Paying Taxes 2014 analysis 21 In this section the trend averages are calculated only for those economies that have been included in all nine years of the study to ensure that we represent a true trend. The trend data for 2012 will therefore differ from 2012 data which includes all economies. The economies excluded from the Central Asia & Eastern Europe trend data are: Kosovo and Montenegro 78 Paying Taxes 2014. PwC commentary The Total Tax Rate in Central Almost a third of the reduction in the Signiğcant initial Asia & Eastern Europe Total Tax Rate over the nine years of Figure 3.33 shows how the Total Paying Taxes is driven by reforms in falls in the Total Tax Rate breaks down into the three Belarus which reduced its Total Tax Tax Rate for all main components of proğt taxes, Rate from 137.3% in 2004 to 54.0% in labour taxes and ‘other’ taxes. Since 2012 through abolishing some taxes three types of tax 2004, labour taxes have consistently and reducing the rates of others. have given way to accounted for the largest element, around 50% of the Total Tax Rate in In almost all of the economies in the a stable picture in the region, with proğt taxes and ‘other’ region, labour taxes and mandatory recent years taxes each accounting for around a contributions are a signiğcant quarter of the Total Tax Rate. This element of the Total Tax Rate. In two picture and the trend over the nine economies, Tajikistan and Uzbekistan, years of the study are consistent with while labour taxes account for around the global picture. 28 percentage points of the Total Tax Rate, ‘other’ taxes are far more All three types of tax have shown a signiğcant accounting for more than steady decline over the last nine years, 60% of the Total Tax Rate. Examples of though the rate of decline slowed from these ‘other’ taxes are a road tax levied 2009 for all types of tax and there has on turnover in Tajikistan accounting been a slight increase across all three for more than one third of the Total taxes in 2012. Tax Rate, and contributions to pension funds and to road funds (based on turnover) which again account for over half of the Total Tax Rate levied inbUzbekistan. Figure 3.33 Trend in Total Tax Rate in Central Asia & Eastern Europe by type of tax Total Tax Rate (%) 30 25 Labour taxes 20 15 Profit taxes 10 Other taxes 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The regional analyses: Central Asia & Eastern Europe 79 Figure 3.34 Changes in Total Signiĺcant movements in Total Tax Rate between 2011 and 2012 – Central Asia & Tax Rate in 2012 Eastern}Europe are few and there Decrease Total Tax Rate Increase are both increases Moldova 9.6 and decreases Serbia 2.8 -3.4 4.2 Russian Federation -6.5 3 Belarus -221 2.5 Source: PwC Paying Taxes 2014 analysis Figure 3.34 shows the economies • Belarus reduced its corporate in Central Asia & Eastern Europe income tax rate from 24% to 18% that have had the most signiğcant and the tax depreciation rates for movement in Total Tax Rate between certain ğxed assets increased with 2011 and 2012. Only 4 of the 19 new estimations used to establish economies exhibited signiğcant the useful life of assets. This helped changes in the Total Tax Rate, with the Total Tax Rate reduce by two increasing and two decreasing the 6.5 percentage points in 2012. rate. The reasons for these signiğcant changes are: • The Russian Federation reduced its pension fund contribution • The economy with the most from 26% to 22% and its cadastral signiğcant increase in the Total value of land in Moscow has Tax Rate is Moldova. It increased alsobchanged. its corporate income tax rate from 0% to 12%. In addition, the road • The 2.8 percentage point increase tax rates for vehicles registered in in Serbia’s Total Tax Rate is due to Moldova increased in 2012. This changes in the thresholds for social has led to an increase of security contributions. 9.6 percentage points in the Total TaxbRate. 80 Paying Taxes 2014. PwC commentary Figure 3.35 Trend in time to comply in Central Asia & Eastern Europe by type of tax Time to comply (hours) 220 200 180 160 140 120 Consumption 100 taxes Labour taxes 80 Corporate income tax 60 40 20 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The time to comply in Central In Belarus the reduction was spread Asia & Eastern Europe Figure 3.35 shows the breakdown in over the nine year period as electronic ğling was improved and its use The average time the time to comply since 2004 split by encouraged. Azerbaijan’s reduction in needed to comply the type of taxes. time to comply was mostly in respect of consumption taxes. This was due with taxes has While the time to comply with to the introduction of online ğling dropped by 46% consumption taxes has more than halved since 2004, the time to comply and payment systems combined with accounting software and the provision in nine years with corporate income and labour of computer terminals for those taxes has also dropped signiğcantly. without access to computers. The trends are broadly consistent with the global picture. Ukraine accounts In the region, 12 out of 17 economies 45% of the total reduction in time have adopted online ğling and to comply. Between 2004 and 2012, payment systems. The use of electronic the time to comply in Ukraine fell ğling systems covering corporate from 2,085 hours to 390 hours. The income tax, VAT, personal income tax biggest reduction, of 1,237 hours, and all mandatory contributions has came between 2006 and 2007 with been the key driver for the fall in time smaller reductions in subsequent years to comply in all type of taxes. as electronic ğling systems improved. The improvements in Ukraine occurred across all three types of tax although the greatest impact was for consumption taxes. Belarus and Azerbaijan also had signiğcant reductions in their time to comply of over 500 hours each, which together account for about a third of the reduction across the region sinceb2004. The regional analyses: Central Asia & Eastern Europe 81 The biggest reformers continue tobfocus on improving tax compliance Figure 3.36 Signiĺcant movements in time to comply between 2011 and 2012 – Central Asia & Eastern Europe Decrease Time Increase -19 Belarus -39 Moldova -101 Ukraine Source: PwC Paying Taxes 2014 analysis Figure 3.36 shows the most signiğcant • Tax returns were simpliğed in changes between 2011 and 2012 Moldova to make paying taxes in the time to comply in the region. easier. This has led to a decrease of The reasons for these signiğcant 39 hours in 2012. changesbare: • From 2012, Belarus allowed • Ukraine made paying taxes easier taxpayers to pay land tax once by simplifying the tax returns a year instead of quarterly. The and further improving its e-ğling time to comply has improved by system, signiğcantly improving 19bhours. its time to comply by 101 hours inb2012. 82 Paying Taxes 2014. PwC commentary The number of payments in The use of electronic ğling and Tajikistan and Serbia have the Central Asia & Eastern Europe payment systems has been the driving greatest number of payments at As shown in Figure 3.37 the average force behind many of these changes 69 and 66 respectively of which number of payments across the region along with reductions in the frequency about two thirds are payments of has seen a signiğcant and steady of payments e.g. changing from ‘other’ taxes. Both economies have reduction since 2004. It ranked as monthly to quarterly payments. six ‘other’ taxes in total of which the region with the largest number of three are paid monthly. In Tajikistan payments in 2004, but the fall over Labour taxes account for the most there are currently no electronic the last nine years has put the average payments in Moldova and Ukraine ğling systems available although result for this region just above the even though the two economies have electronic ğling is being developed, world average. Again the trends for adopted electronic ğling systems. while in Serbia only large companies each type of tax are consistent with the In both economies, some form of commonly use electronicbğling. global trend. electronic ğling is available for labour tax and social security contribution ‘Other’ taxes in the majority of the The fall in the number of tax payments payments, but the systems are not economies in this region accounted since 2004 is more than twice as large widely used. For proğt taxes, VAT and for a larger proportion in the as that recorded by any other region. other taxes however electronic ğling number of payments. There is still a As might be expected from the falls and payment is believed to be the wide gap in the number of payments in the time to comply, Belarus and the preferred method. (over seven payments) between Ukraine have the largest falls in the ‘other’ taxes and the other two number of payments of 115 and 119 mainbtaxes. payments respectively. Each economy therefore accounts for just under a quarter of the reduction for the region as a whole. Armenia and Georgia have the next largest reductions of 40 and 41 payments respectively. Figure 3.37 Trend in the number of payments in Central Asia & Eastern Europe by type of tax 25 20 Other taxes 15 10 Labour taxes Profit taxes 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The regional analyses: Central Asia & Eastern Europe 83 Figure 3.38 Signiĺcant movements in tax payments between 2011 and 2012 – Central Asia & Eastern Europe Decrease Payments Increase -2 Albania -3 Armenia -4 Bosnia and Herzegovina -17 Moldova Source: PwC Paying Taxes 2014 analysis The most signiğcant movements in • In Bosnia and Herzegovina, the number of payments for the Central forestry tax was temporarily Asia & Eastern Europe economies are abolished in 2012. shown in Figure 3.38. The region’s downward trend in number of • Armenia has reduced the number payments has continued and in 2012 of payments for vehicle, land and shows the largest reduction of any property tax. region, with four economies reducing their number of payments. • In Albania companies no longer need to pay the annual vehicle The reasons for the movements are: registration tax. Albania also made paying taxes easier by allowing • From 1 January 2012 Moldova corporate income tax to be paid on requires online ğling for VAT, a quarterly basis. land improvement tax and tax on immovable property. The reinstatement of corporate income tax has led to the introduction of advance quarterly payments of corporate income tax, but as these can be paid online the number of payments under the Paying Taxes methodology is just one payment. These changes have signiğcantly reduced the number of payments by 17 in 2012 from 48 to 31. 84 Paying Taxes 2014. PwC commentary The average number of payments across the Central Asia & Eastern Europe region has seen a signiğcant and steady reduction since 2004 The regional analyses: Central Asia & Eastern Europe 85 Russian Federation Paying Taxes results show signiğcant progress Andrey Kolchin In recent years there have been The Federal Tax Service (FTS) has signiğcant movements both on continued to widen the scope and PwC Russia improving tax administration and reach of electronic services and to reducing the aggregate ğscal burden on ensure their widespread use. In total, employment income. there are now more than thirty services made available to individuals and legal According to a Decree issued in May entities. These include tax information 2012 by the President, the Russian sources, tax of ğce appointment Government will take further steps scheduling systems, issuing of various to improve Russia’s competitiveness tax certiğcates, online payments and and its investment/business climate electronic registration. which will include roadmaps for the improvement in certain areas of state A personal electronic ofğce service regulation and business activities. for taxpaying legal entities has been One of the measurements which will launched as a pilot. The service will be adopted to assess the progress in give taxpayers access to a large set of relation to this decree will be the World data online: such as multiple forms Bank’s Doing Business indicators. for on tax payments and debts, and copies of registration certiğcates. It will There have been a number of initiatives also enable the submission of various taken in Russia to improve the tax requests and claims (e.g. registration administration and to ease taxpayer and de-registration, bank account interaction with the authorities around opening and closing, statements of tax tax compliance, in order to fulğl the payments). This in turn will enable objectives described above. taxpayers to fulğl their duties and interact with tax authorities more ef ğciently and with less administrative effort. 86 Paying Taxes 2014. PwC commentary 50.7 177 7 Total Tax Time Number of Rate (%) (hours) payments The number of tax returns submitted There were several actions taken by the The global Paying Taxes launch event is electronically grew further and FTS to expedite the implementation due to take place in Moscow this year reached 76% in 2012. This was of various pieces of legislation which and representatives from government achieved via a number of activities, were aimed at easing and improving agencies and business will be invited to including signiğcant investment in documentation and also the exchange discuss the results of this year’s Paying the IT infrastructure and resources of data between taxpayers and the Taxes report. It provides an excellent of the tax administration, support for tax authorities. Further to changes in opportunity for the stakeholders in the a network of designated operators VAT law, steps were taken to facilitate tax system to engage in constructive who facilitate the submission process, the electronic exchange of statutory communication on the future shape of education of taxpayers and on-going VAT invoices. In addition, based on Russia’s tax system. improvement of tools and processes. changes in statutory accounting law which relaxed requirements A new administrative procedure was for the content and form of primary introduced that permits taxpayers source documents, work started last to resolve tax disputes with senior year and was completed in 2013 to representatives of the tax authority, provide taxpayers with recommended without having to bring the matter electronic formats for primary before the court. This is expected to documents that will be accepted by the help reduce the number of disputes tax of ğce for review and examination referred to court and to enhance in electronic format. Further steps taxpayers’ ability to resolve matters in are planned to encourage electronic an expeditious way. document exchange with a view to easing the administrative burden of tax compliance. The regional analyses: Central Asia & Eastern Europe 87 Turkey Turkey’s tax system goes digital Zeki Gunduz The Ministry of Finance embarked on a In 2008 a pilot program program almost nine years ago to move was undertaken with the PwC Turkey tax administration onto an electronic telecommunication industry; an platform. The move from hard copy industry where companies issue ğling to electronic ğling started invoices to millions of individual back in 2004. This change has saved customers every day. The introduction taxpayers time on the preparation and of electronic invoicing has saved ğling of their tax returns and enabled these companies from having to issue electronic record keeping at the hard copy invoices. As a result of this taxbof ğce. program, the Ministry of Finance is looking to extend the use of electronic It has also set a precedent for other invoicing to all types of companies, e-initiatives and has been followed but initially with a focus on business by a number of further e-government to business transactions. The ultimate type applications (e.g. an e-tax ofğce aim is to create cost ef ğciencies for which enables taxpayers to access companies as they are obliged under to certain information, e-conğscate current regulations not only to issue which enables the conğscation of hard copy invoices, but also to store property to settle tax debts owed). them for ten years. The removal of hard There are several electronic initiatives copy printing should eliminate the that deserve a special mention which associated storage and printing costs. involve electronic invoicing and E-invoicing will also bring improved electronic accounting records. transparency which will make both internal and external audits easier. Finally, companies are expected to have better real time information on their cash management as e-invoices can be easily tracked from a simple electronic platform. 88 Paying Taxes 2014. PwC commentary 40.2 226 11 Total Tax Time Number of Rate (%) (hours) payments The second initiative to mention is the Finally there is an e-payment initiative, move to allow companies to keep in which is still at the conceptual stage, an electronic format those accounting but when it has been designed and records which they are required introduced it is expected that it will to keep by law. Companies with vastly improve the ef ğciency of tax electronic invoicing systems are able to audits. The idea is to set up a tracking keep their related statutory accounting system with banks to monitor the records electronically subject to certain Ġow of cash between the accounts conditions. This will be revolutionary of taxpayers in order to match the as it will save companies from the need delivery of goods/services with to print piles of statutory accounting payments and to help detect any records, including general ledgers and taxbevasion. inventories which must be stored for 10 years for regulatory reasons. Once these measures are in place, it is expected that they will bring Currently there are additional beneğts to both business and the tax costs associated with adopting authorities; tax audits should become both e-invoicing and the change to more efğcient and effective and in electronic accounting records, but return taxpayers should enjoy material the savings related to reduced storage savings on the costs associated with costs are expected to exceed these, as the considerable administrative well as the savings related to printing. burden of producing and maintaining A further advantage is that it should statutorybrecords. also bring increased transparency to tax audits and should help deter taxbevasion. The regional analyses: Central Asia & Eastern Europe 89 Ukraine Paying Taxes has a positive impact on tax reforms in Ukraine Ron Barden Although Ukraine continues to have The time to comply has reduced by just a relatively low ranking in the Paying over 80% since 2006, one of the largest PwC Ukraine Taxes study, there have been some improvements, in percentage terms of considerable improvements made any economy in Paying Taxes. When over the past few years in key areas of the study ğrst started, it took over tax reform. The Ministry of Revenues 2,000 hours each year to comply with and Duties continues to focus on the tax legislation in Ukraine, ranking improvements in the tax system to the country last in the table. This was improve the country’s position in the reduced to less than 500 hours in the study. Many of these improvements, 2013 study, with a further reduction to and the further changes that are being 390 hours in the most recent year. contemplated, can be considered to have been prompted as a direct result The tax system has evolved from one of issues highlighted by Paying Taxes. that required completely separate The study however is only designed to bookkeeping for tax purposes into one reĠect the position of the case study that starts with ğnancial accounting as company with its speciğc fact pattern its basis. Without Paying Taxes, which and so it will not fully reĠect all of focussed attention on this point, it is the positive changes that have been likely that this duplication of effort introduced in Ukraine. would have continued. Of the three key sub-indicators that are considered in Paying Taxes, two have improved greatly since its inception; the number of payments and the time to comply. The Government is considering its policy options regarding the third component, the Total Tax Rate, which has stayed at around 55% despite a signiğcant reduction in the statutory corporate tax rate (from 25% in 2010 to 19% in 2013). 90 Paying Taxes 2014. PwC commentary 54.9 390 28 Total Tax Time Number of Rate (%) (hours) payments But Ukraine is still ranked towards the The Total Tax Rate is also an area that bottom of the World Bank ranking on is now a focus of Government. Despite time to comply. Much more needs to a low corporate income tax rate (19% be done, particularly around VAT and in 2013 and 16% in later years), at payroll tax compliance. Government 55% Ukraine will continue to be at the continues to look at simplifying lower end of the distribution for this compliance requirements, and the sub-indicator unless the Government recent consolidation of the social looks at other taxes, in particular the security collection/compliance into rates of social security contributions. the Ministry of Revenues and Duties is a step in the right direction, which should have a positive impact in futurebyears. The number of payments required for compliance has been an on-going and speciğc focus of Government. The introduction of electronic ğling for many taxes and the introduction in 2013 of Advance Corporate Tax combined with an annual declaration have replaced the time consuming process of quarterly returns and payments. Electronic ğling is now available for almost all tax (and social security) returns but this is not fully reĠected in the study as it has not yet been taken up by majority of taxpayers for all ğlings (this includes the payroll taxes that require 24 payments and 16 separate returns per year compared to a single annual declaration in many other economies). The regional analyses: Central Asia & Eastern Europe 91 Uzbekistan Helping to identify areas for reform Peter Burnie The Paying Taxes study has informed In this context it is also interesting to the debate around tax administration note that many small and medium- PwC Uzbekistan and the broader ğscal policies of sized enterprises operating in many economies. Over the years, Uzbekistan currently operate under a this publication has highlighted simpliğed regime of corporate taxation those economies that have made which has relied (at least in part) on the most progress in making taxes turnover taxes, but which does not easier to pay by reforming the require substantial record keeping or underlying tax administration and more complex ğling processes. The compliancebsystems. Paying Taxes case study fact pattern does not capture this sort of company. However many economies in the study, including Uzbekistan, that are seeking to apply the successful tax policy and administrative developments that have assisted other economies, face a number of common challenges that go beyond the issues addressed by this study; namely the need for macro ğscal stability, the challenges associated with the number and structure of the corporate taxpayers in the territory and the overall level of development of infrastructure in the economy. 92 Paying Taxes 2014. PwC commentary 99.3 205 41 Total Tax Time Number of Rate (%) (hours) payments Nevertheless, changes to the system These and other amendments are the are coming and in a number of areas beginning of changes that have not these have now been implemented been seen in Uzbekistan before. The and may affect the results of Paying impact of these changes will, however, Taxes in the future. Many of these take some time to ğlter through to changes draw on the conclusions and affect the results of the Paying Taxes ğndings of Paying Taxes. Monitoring case study company. Nevertheless, the and understanding some of the drivers tone of engagement and conversation of the changes in the Paying Taxes is clear; the authorities are looking sub-indicators in previous years has at studies such as Paying Taxes as been part of the information that an indicator of global trends to help the Uzbek authorities have used identify good practice around tax when designing and implementing administration and regulation. The changes to the Uzbek tax regime. For expectation is that Paying Taxes can example, the frequency of ğlings has help identify the areas of reform that been addressed in the most recent can help Uzbekistan move towards update of the tax administration and implementing new practices that can regulations – and this will take effect help address their own development over the coming year. From 2013, challenges and needs. small and medium-sized enterprises that choose to use the standard regime (rather than the simpliğed regime) will no longer be required to pay the road fund and non-budget pension fund charges, both of which have been generally charged on turnover. This will lower the overall tax burden for such taxpayers. Other changes from 2013 also include reforms to the administration of assessments and potential underpayments. Previously there were no minimum limits on the amount of outstanding taxes that could trigger collection enforcement - this will be addressed to streamline the process and to provide taxpayers with the opportunity to manage their tax reconciliations more effectively and with less risk. The regional analyses: Central Asia & Eastern Europe 93 The regional analyses EU & EFTA On average, in the EU & EFTA Labour taxes and mandatory region, the case study company contributions are and have has a Total Tax Rate of 41.1%, consistently been the largest made 13.1 tax payments and part of the Total Tax Rate, took 179 hours to comply with accounting for 65% of the its tax obligations in 2012. overall rate in 2012. These taxes required 48% of the Across the nine years of the time to comply in 2012, but study, on average, the region’s accounted for only 24% of the average Total Tax Rate has number of payments. reduced by 4.1 percentage points, the time to comply has The region has the lowest fallen by 59 hours, and the time to comply apart from the number of payments has fallen Middle East and the lowest by 9.3. number of payments after NorthbAmerica. In recent years the Total Tax Rate for this region has started to increase, while the two compliance sub-indicators, time to comply and the number of payments, continue to drop away steadily. 94 Paying Taxes 2014. PwC commentary 41.1 179 13.1 Total Tax Time Number of Rate (%) (hours) payments Sweden Country article, page 106 United Kingdom Country article, page 108 Portugal Country article, page 102 Spain Country article, page 104 European Union & European Free Trade Association (EU & EFTA). The following economies are included in our analysis of EU & EFTA: Austria; Belgium; Bulgaria; Croatia; Cyprus; Czech Republic; Denmark; Estonia; Finland; France; Germany; Greece; Hungary; Iceland; Ireland; Italy; Latvia; Lithuania; Luxembourg; Malta; Netherlands; Norway; Poland; Portugal; Romania; San Marino; Slovak Republic; Slovenia; Spain; Sweden; Switzerland; United Kingdom The regional analyses: EU & EFTA 95 Figure 3.39 In the last two The sub-indicator trends for the EU & EFTA years the Total Line: Time (hours) Tax Rate and Bar: Total Tax Rate (%) Bar: Number of payments time to comply have remained 250 249 241 236 Ġat, while the 224 216 203 number of 191 191 payments has 46.6 45.2 44.6 43.9 43.2 42.9 42.5 42.3 42.5 continued to fall 21.4 19.5 18.9 17.8 17.3 16.9 16.7 12.8 12.1 2004 2005 2006 2007 2008 2009 2010 2011 2012 The trend data in Figure 3.39 includes only those economies for which data is available for all years of the study and therefore the ĺgures differ from the regional averages for 2012. The economies that are excluded are: Cyprus, Luxembourg, Malta, San Marino Source: PwC Paying Taxes 2014 analysis The nine year trends for the The average time to comply in the EU & EFTA region region has fallen consistently from 250 Figure 3.39 shows that the three Paying hours in 2004 to 19122 hours in 2012. Taxes sub-indicators for the EU & EFTA Almost a third of this reduction is due region have fallen over the nine years to reforms in the Czech Republic which of the study, however, in recent years included the introduction of mandatory the fall in Total Tax Rate has slowed. electronic ğling, the uniğcation of certain taxes and the simpliğcation of The average Total Tax Rate for this tax processes. In the region there were region has fallen from 46.6% in 2004 6 other economies that reduced their to 42.3% in 2010, but in 2011 the rate time to comply by over 100 hours over increased marginally. Despite this the 9 years of the study. Again, the increase, the 2012 average Total Tax introduction, widespread adoption and Rate for the region remains just below improvement of electronic ğling and the world average. payment systems are the most common reasons for the reductions. Of the 28 economies which were included in all 9 years of the study, The average time to comply for this 24 have reduced their Total Tax region is still well below the world Rates since 2004 by an average of 5 average and it is the second lowest percentage points. The remaining for the time to comply, after the four economies increased their MiddlebEast. Total Tax Rates by an average of 1.4bpercentage points. Bulgaria had the The average number of payments in greatest overall fall in Total Tax Rate the region has also fallen steadily over of 17.5 percentage points, being the the 9 years of the study dropping from cumulative result of gradual reductions 21.4 payments in 2004 to 12.122 in between 2004 and 2010. The next 2012. Abquarter of the reduction is due largest reductions in Total Tax Rate are to reforms in Romania including the found in Greece, Italy and Romania introduction of electronic ğling and at 10.0, 11.0 and 12.9 percentage payment and the uniğcation of social pointsbrespectively. security contribution returns. Croatia, Latvia and Poland each reduced their payments by more than 20 over the 9byears. 22 In this section the trend averages are calculated only for those economies that have been included in all nine years of the study to ensure that we represent a true trend. The trend data for 2012 will therefore differ from 2012 data which includes all economies. The economies excluded from the Eu & EFTA trend data are: Cyprus, Luxembourg, Malta and San Marino 96 Paying Taxes 2014. PwC commentary The Total Tax Rate in the Over the last 9 years across the region, In 2012 labour EU &bEFTA the greatest single reduction for any Figure 3.40 shows how the Total Tax economy and any type of tax was a taxes account for Rate in the EU & EFTA region breaks reduction of 15.6 percentage points more than 65% of down into the three main components in labour taxes in Bulgaria due to a of proğt taxes, labour taxes and ‘other’ series of reductions in employer’s social the Total Tax Rate taxes. It shows that over the 9 years of security contributions. Despite the study labour taxes and social security reductions, in 2012 labour taxes still contributions have consistently accounted for 73% of the Total Tax accounted for between 63% and 66% Rate in Bulgaria. The only signiğcant of the Total Tax Rate in this region. increase in labour taxes was in Iceland There are four economies where labour due to increases in social security and taxes account for a far smaller share of pension contributions. Total Tax Rate, namely Denmark, the United Kingdom, Malta and Norway. Greece and Italy have both reduced proğt taxes by just over 10 percentage The majority of movements in all three points since 2004 by reducing the tax categories have been relatively headline rates of corporate taxes. small. Since 2004, all three key There are 17 other economies that have elements of the Total Tax Rate have also reduced their proğt tax rates, by fallen, proğt taxes by 2.3 percentage an average of 2.9 percentage points points, labour taxes and mandatory over the 9 years. contributions by 1.4 percentage points, and ‘other’ taxes show a 0.5 percentage The magnitude of the reductions in point reduction. These movements ‘other’ taxes has been moderate, with are consistent with the global pattern the most signiğcant change being and the growing importance of an 8.3 percentage point reduction labourbtaxes. inbLithuania. Looking at the most recent year, proğt taxes increased, labour taxes remained steady and ‘other’ taxes decreased as explained below. Figure 3.40 Trend in Total Tax Rate in EU & EFTA by type of tax Total Tax Rate (%) 30 Labour taxes 25 20 15 Profit taxes 10 5 Other taxes 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The regional analyses: EU & EFTA 97 Figure 3.41 Two economies Signiĺcant movements in Total Tax Rate between 2011 and 2012 – the EU & EFTA in the region Decrease Total Tax Rate Increase have broadened their proğt tax Spain 19.9 bases leading to Germany 3.5 increases in their -1.9 Italy Total Tax Rates -2.0 Croatia -17.0 Estonia Source: PwC Paying Taxes 2014 analysis Figure 3.41 shows the EU & EFTA • New rules were introduced in Italy economies that have had the most that allow more expenses to be signiğcant movement in Total Tax treated as tax deductible for proğt Rate between 2011 and 2012. Only 5 tax purposes. In particular, the out of the 32 economies in this region regional tax (Imposta Regionale had signiğcant changes in the Total sulle Attività Produttive (IRAP)) Tax Rate. The reforms affected all of relating to employee expenses the major types of tax with proğt tax as well as 3% of paid-in capital reforms having the biggest impact on can both now be treated as tax the Total Tax Rate. deductible. • As explained on page 104 Spain has • The major change in Estonia was broadened its proğt tax base and as the abolition of the local municipal a result its Total Tax Rate increased sales tax which signiğcantly by 19.9 percentage points. This reduced the Total Tax Rate from is mainly driven by the repeal of 66.4% to 49.4%. a tax rule that granted 100% tax depreciation for certain ğxed assets • The decrease in Croatia’s Total in the year of purchase. This has Tax Rate was largely due to the been replaced by the standard tax reduction in the employer’s health depreciation rates. insurance contribution, which reduced by 2 percentage points • Germany also broadened its from 15% to 13%. proğt tax base by amending tax depreciation rules for non-current assets acquired after 31 December 2009 from a declining balance to a straight line method. This resulted in the 3.5 percentage point increase in the Total Tax Rate shown in Figure 3.41. 98 Paying Taxes 2014. PwC commentary The time to comply in EU & EFTA Only the Czech Republic has Figure 3.43 shows the EU & EFTA Figure 3.42 shows the breakdown signiğcantly reduced the time to economies that have had the most in the time to comply since 2004 for comply across all three types of tax signiğcant movement in time to comply the three key tax elements for the thanks to a number of simpliğcations between 2011 and 2012. Out of the 32 EU & EFTA region. While globally to the processes and administration economies in the region, only Germany consumption taxes have tended to for tax compliance, coupled with recorded a signiğcant change. be the most time consuming, in this the introduction, improvement region labour taxes and mandatory and adoption of electronic ğling In Germany, balance sheet data now contributions have consistently andbpayment. has to be submitted electronically to required the largest amount of time the tax authorities in a pre-değned to comply. But these taxes have also There are 11 economies in the region structure and the additional work shown the greatest reduction in time that have reduced their time to comply relating to the preparation of this required which has helped to drive the with labour taxes and mandatory has increased the time to comply by global trend. contributions by over 40 hours. 11bhours. Electronic ğling and payment systems Overall, the time to comply has fallen account for much of the reduction in signiğcantly over the nine years of the time to comply with labour taxes, the study, though the rate of decline though there are other reforms such as has slowed in the last year. The total the availability of simpler compliance reduction in the regional average processes for smaller companies in since 2004 amounts to 59 hours. thebNetherlands. Almost 60% of this decrease relates to improvements made in the time Bulgaria and Spain are the only to comply with labour taxes and economies besides the Czech mandatory contributions; less than 7% Republic to have signiğcant of the reduction relates to corporate reductions in the time to comply income taxes. withbconsumptionbtaxes. Figure 3.42 Trend in time to comply in the EU & EFTA by type of tax Introduction of Time to comply (hours) electronic ğling 140 and payment has affected labour 120 taxes the most 100 Labour taxes 80 Consumption 60 taxes Corporate 40 income tax 20 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis Figure 3.43 Signiĺcant movements in time to comply between 2011 and 2012 – the EU & EFTA Decrease Time Increase Germany 11 Source: PwC Paying Taxes 2014 analysis The regional analyses: EU & EFTA 99 Figure 3.44 Reduction in Trend in the number of tax payments in the EU & EFTA by type of tax tax payments Number of payments driven by reforms 12 to Romanian social security contributions 10 Other taxes 8 6 4 Labour taxes 2 Profit taxes 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The number of payments in the The drop in labour tax payments EU & EFTA between 2010 and 2011 is driven by Figure 3.44 shows the trend for the Romania adopting electronic ğling and EU & EFTA region since 2004 in the introducing a uniğed return for social number of tax payments split by the security contributions. This reduced three main types of tax. ‘Other’ taxes, labour tax payments in Romania by which include VAT, environmental 72. In addition to the reduction in taxes and local taxes, have consistently Romania, 10 other economies have accounted for the highest number of reduced their labour tax payments payments. This is consistent with the by at least 11 payments since 2004. global picture, and remains the case Only Finland and Poland have reduced inb2012. proğt tax payments signiğcantly, while Poland, Latvia and Croatia have The dramatic reduction in the number reduced payments of ‘other’ taxes by at of payments for labour taxes and least 10 payments. mandatory contributions was the main driver for the reduction in the overall This region has the lowest average average number of payments for the number of payments apart from North region. It has fallen by 73% for these America; this is mainly due to the taxes from 8.5 payments in 2004 to widespread adoption of the electronic 2.3 in 2012. The number of payments ğling and payment. The majority of for proğt taxes fell by 1.2 payments companies in 29 of the 32 economies in (48%) and ‘other’ taxes reduced by 1.8 the region use electronic systems to ğle payments (17%) over the same period. and pay their taxes. 100 Paying Taxes 2014. PwC commentary Figure 3.45 shows the EU & EFTA Figure 3.45 economies that have had the most Signiĺcant movements in number of payments between 2011 and 2012 – the EU & EFTA signiğcant movement in number of payments between 2011 and 2012. Decrease Payments Increase Only three economies had signiğcant changes in the number of payments in -2 Romania the region. The reforms mainly reduced -3 Iceland the number of payments of labour taxes and mandatorybcontributions. -11 Croatia Source: PwC Paying Taxes 2014 analysis • In 2012, Croatia fully implemented the e-ğling and e-payment of social security contributions which allows joint payments and reduced the number of payments from 12 to only 1. • The decrease in payments for Iceland was due to the abolition of the weight distance tax, and the improvement made in Romania was driven by changing the quarterly payments for company tax to twice yearly payments from the beginning of 2012. Electronic ğling and payment reduces Croatia’s tax payments The regional analyses: EU & EFTA 101 Portugal 2014 should be a turning point for Portugal Jaime Esteves In the Paying Taxes 2014 study the While the number of tax payments ranking for Portugal has fallen by 4 in Portugal compares well with the PwC Portugal places to 81. Our case study company global average (only 21 economies in has not however found it harder to pay the study have fewer payments), the its taxes in Portugal. The fall is the country still has a long way to go to result of other economies introducing achieve a similar position for the time tax reforms and other measures that to comply sub-indicator. With 275 have improved their tax systems hours required every year to deal with and as a consequence their ranking. the tax system, the average is above the Portugal is not alone in struggling to world average. This does not compare attract foreign investment, to increase well with other European economies competitiveness and in implementing such as Luxembourg which with 55 measures to help improve its hours takes the least amount of time in economicbenvironment. the EU. Portugal’s neighbour Spain also performs better in terms of the time to Since the last study, Portugal has comply sub-indicator, taking 167 hours. maintained the number of tax This illustrates a recurring theme of payments at 8 per year, and also the the Paying Taxes studies; that while time to comply – currently at 275 changes to the Total Tax Rate, are often hours. This compares with the 328 necessary, they are not sufğcient on hours ğrst reported in Paying Taxes their own to maintain or improve an 2006. Portugal has reduced its Total economy’s ease of paying taxes ranking Tax Rate to 42.3%; but with a fall of in the study. Changes in the compliance only 1.5 percentage points since the burden are also needed and can often ğrst Paying Taxes back in 2006. have a more signiğcantbimpact. 102 Paying Taxes 2014. PwC commentary 42.3 275 8 Total Tax Time Number of Rate (%) (hours) payments Looking forward, it is hoped that • the introduction of a participation Despite the current economic and future Paying Taxes reports will reĠect exemption regime exempting ğnancial dif ğculties that Portugal substantial changes which will Ġow dividends and capital gains in is facing, and recognising that more from corporate income tax reforms general from corporate income tax needs to be done, a reduction in the that are expected to be approved in • an optional exemption regime for corporate income tax rate as early as 2013 and which will apply from 2014. permanent establishments abroad 2014, and a reduction in the time to These reforms are aimed at simplifying • an extension of the existing tax comply, both afforded by the corporate the tax system and lowering the tax exemption for inbound dividends income tax reform, should improve the burden. Portugal is taking important • changes to the requirements for ease of paying taxes in Portugal in the steps towards improving its tax group taxation near future. system with a view to becoming • a patent box regime for intangibles, morebcompetitive. providing for a relief from taxation of 50%, and One reform that is expected to affect • an extension to 12 years of the the case study company results is the period in which tax losses can be gradual reduction of the standard carried forward. corporate income rate in the short term. Currently 25%, the rate will be While the focus for Portuguese lowered to 23% in 2014 and 21% in companies has shifted from a purely 2015 with it reaching between 17% domestic perspective to a more and 19% in 2016. international one as companies seek to take advantage of business There are also a number of reforms opportunities around the world, the which will be important for goal for the Portuguese Government encouraging investment, but which is to make Portugal an attractive will not affect the Paying Taxes sub- destination for doing business. indicators owing to the fact pattern Portuguese companies must be able of our case study company. These to compete with their international reformsbinclude: peers, and at the same time there is a need to provide foreign investors with the conditions that encourage them to invest in Portugal and to consider using Portugal as a hub for investments in other countries such as the Portuguese speaking African countries and the regional integration areas of which they are members. The regional analyses: EU & EFTA 103 Spain New measures to increase government revenues Mario Lara The demand for a reduction in Spain’s Looking wider than the fact pattern of public değcit has led to the adoption the Paying Taxes case study company, PwC Spain of measures intended to increase to companies whose net turnover in the tax revenues. Corporate income tax previous year exceeded €20 million, collections had fallen by almost 60% the offsetting of prior-year tax losses between 2007 and 2012 and therefore has been limited as they may now it was evident that certain aspects of only be used to offset up to 50% of taxation had to be reformed to increase taxable proğts arising in the current revenue. These measures are clearly year (25% if turnover in the previous reĠected in the Total Tax Rate sub- tax period exceeded €60 million). indicator for 2012, which we already This means that companies with expect to increase still further in the signiğcant brought forward tax-losses near future. The public değcit stood will have to pay corporate income tax. at 6.98% in 2012, compared to 8.96% There have also been reductions in in 2011. If, however, we add to this the additional tax deductions that can the cost of the bank restructuring, be claimed on some expenses such as the değcit reached 10.64% of GDP.23 expenses arising from research and An increase in ğscal pressure seems developmentbactivities. almost inevitable if the değcit is to be reduced to a ğgure close to 3%, In line with regimes in other countries, within the framework of a stagnant a 30% EBITDA 24 limitation has been economy with over 25% of the working introduced on the deductibility for tax populationbunemployed. purposes of interest and other ğnance costs above €1 million. This limitation The measure that has most increased affects ğnancial expenses irrespective the ğscal pressure on companies in of whether they derive from internal or 2012 has been the elimination, with external borrowing. effect from 31 March 2012, of the enhanced depreciation regime that applied to new tangible ğxed assets and property investments. This measure, in force since 2009, allowed companies to claim upfront tax depreciation on new assets and investments, thereby reducing corporate income tax in those years in which investments were made. 23 Programa de estabilidad 2013-2016 Available from: http://www.minhap.gob.es/es-ES/Estadistica%20e%20Informes/Paginas/estadisticaseinformes.aspx 24 Earnings before interest, taxation, depreciation and amortisation 104 Paying Taxes 2014. PwC commentary 58.6 167 8 Total Tax Time Number of Rate (%) (hours) payments Looking at measures introduced more Certain measures are temporary and recently and which have yet to affect are intended to be applied only until the case study company, the 2013 Spain’s economic stability and growth Budget Law has increased the tax base get back on track. The economic by limiting the tax deductibility of situation in Spain suggests that some depreciation charges during 2013 and of these measures will be extended 2014 to 70% of the amounts that would and other new measures will be have qualiğed for a tax deduction prior introduced, some of which are already to the approval of the measure. being considered by the Spanish legislative chambers. The regime for the payment of advance instalments of corporate tax Given the overriding need to increase has undergone signiğcant change tax revenues, the Spanish Government with the introduction of minimum has had limited scope to introduce tax payments based on the accounting incentives to boost economic activity. proğt for the period, rather than on There are however a couple of targeted the estimated taxable proğt for the reforms worth noting, namely the period. A company with accounting reduction of corporate income tax proğts, but no taxable proğts, e.g. by 10 or 15 percentage points for due to the use of brought forward two years for newly incorporated losses, or due to non-taxable dividend companies from 2013, as well as the income, will still have to make introduction of certain deductions for payments of corporate tax. Although the reinvestment of proğts. such payments will be deducted from the ğnal tax assessment, they require Spain has opted to seek increased tax earlier payment of tax liabilities and revenue to stabilise its public accounts have an adverse impact on companies’ and this increased ğscal pressure is cashbĠows. reĠected in the Total Tax Rate for 2012. We hope that this tax effort is While VAT does not have an impact worthwhile and that we will soon see a on the Total Tax Rate of the case return to economic growth. study company, in a wider context it is interesting to note the changes that the Spanish Government has made to the scope of indirect taxation. With effect from 1 September 2012, the standard rate of VAT was increased from 18% to 21%, while the reduced rate increased from 8% to 10%. The regional analyses: EU & EFTA 105 Sweden A stable position in Paying Taxes, but an active debate around tax Magnus Johnsson The Paying Taxes sub-indicators for However, while the rate of corporate Sweden have remained stable for a income tax has a high public proğle, PwC Sweden number of years, but this does not corporate income tax is a relatively mean the area of corporate taxation is small part of Sweden’s Total Tax Rate. quiet. On the contrary, in recent years Just less than 16 percentage points there has been much public debate relate to corporate income taxes on a wide range of issues and new while just over 35 percentage points legislation has been introduced. relate to labour taxes and mandatory contributions. Over the nine years When it comes to compliance and of Paying Taxes the Total Tax Rate administration, the Swedish tax system for labour taxes and mandatory is functioning well. With only four contributions has dropped slightly payments per year, Sweden is almost at from 36.9% in 2004 to 35.5% in the top of the number of payments sub- 2012. In 2012, the Total Tax Rate indicator. The low number of payments stayed at 52.0% for the fourth year in comes from extensive use of electronic a row and so remains well above the ğling and an ability to make joint globalbaverage. payments. In 2012, 67% of Sweden’s companies ğled their tax returns At present the entire Swedish corporate electronically, up from 60% in 2011. tax system is currently being reviewed by a government appointed committee. In response to a need to offer a The stated aim of the review is to competitive environment, corporate broaden the tax base and to create income taxes have been sharply neutrality between equity and debt. reduced in past years. A cut from 28% to 26.3% in 2009 was followed by a further cut to 22%, applicable from 1 January 2013. Sweden’s corporate income tax rate is now just below the European Union average of 23%. 106 Paying Taxes 2014. PwC commentary 52.0 122 4 Total Tax Time Number of Rate (%) (hours) payments The review was initiated in 2011 and ğnal reports are due to be published by March 2014. Meanwhile, some changes in corporate taxation have already been introduced or are under way: • Following a public debate on tax planning and private ownership of tax-ğnanced enterprises, such as schools and homes for the elderly, new legislation was introduced in 2013 that means that interest is no longer deductible for tax purposes if it arises on shareholder loans that are used to ğnance acquisitions. • In 2013, the Swedish Parliament adopted a Government proposal to change certain rules for companies with a limited number of active individual shareholders. Previously, all shareholders in such companies could treat some of their income as capital income for tax purposes. From 1 January 2014 the rules will only apply to shareholders who own more than 4% of a company. Following criticism from Sweden’s Council on Legislation, the Government did not proceed with a previous proposal on a higher salary withdrawal requirement. The regional analyses: EU & EFTA 107 United Kingdom Maintaining trust in the tax system to help encourage growth Kevin Nicholson Over the period covered by the Paying As one of the most open economies Taxes study we have experienced some in the world, the UK has to work hard PwC United Kingdom of the most challenging economic at retaining and attracting business conditions of recent times. After a as a source of both jobs and tax period of signiğcant growth, the severe revenues. This has strong implications recession left us with the need to deal for the tax base, which includes not with a long term structural değcit, only corporation tax but all of the an ageing population and a shift taxes that are driven from corporate globally in the balance of economic activity. The process of corporate power. Along with these issues three tax reform in the UK has been going additional factors have become the on throughout the nine years of the focus of the tax debate both in the UK Paying Taxes study, led by successive and internationally: globalisation of Governments with the aim of making business; economies competing for tax the UK’s tax system competitive. revenue; and the arrival of the digital The current system in the UK, which age. All of these however get us to one broadly seeks to tax economic proğts key reality; government has a need for made in the UK but not beyond, is now increased tax revenue streams for the broadly coherent in the context of a long term and the challenge is how best truly globalised business world and to achieve this and at the same time compares reasonably well with other to provide a tax system which is both similarbeconomies. trusted and which helps to encourage economic activity a globalised world. The UK now has a relatively low corporation tax rate which is also the result of the policy of successive governments. This has seen the rate fall from in excess of 50% in the last century and it is planned to reach 20% for the year beginning 1 April 2015. Incentives such as the patent box have also been implemented to help keep the UK “open for business”, attract investment and to create employment and economic activity which in turn should produce a broader and more stable tax base. 108 Paying Taxes 2014. PwC commentary 34.0 110 8 Total Tax Time Number of Rate (%) (hours) payments It is expected that receipts from As regards the results for the UK in the So the UK currently has an attractive corporation tax may reduce in the short World Bank Paying Taxes study, since tax system, but that is not to say that term, but as has been seen in studies the 2012 study the position has been there is no more to be done. we have conducted in the UK , it is improving so that this year the UK also expected that this will be offset ranks 14 in the list of 189 economies Beyond the fact pattern of the Paying by increases in other taxes,25 which included. It is the Total Tax Rate that Taxes company there are many have proved to be more stable as being has had the most signiğcant impact dif ğcult issues still to address in the less dependent on proğts. The aim is on the result. The gradual fall in the international arena, not least of which also for there to be a larger population statutory rate for corporation tax is is the public concern as to how the of business taxpayers paying reĠected in the study and has helped international system currently works. corporation tax (and other taxes) for to reduce the overall Total Tax Rate to This takes us back to the issues of the longer term and some recent public 34.0% in this year’s study, and with globalisation and the advent of the announcements of companies moving, further reductions in the corporation digital age. The UK Government is or returning, to the UK are early tax rate still to take effect, we can actively participating in the review of indicators of this working. expect the overall rate to fall further. the system, and in the meantime it will need to ensure that domestic tax law is One of the most attractive aspects The number of payments has remained kept up to date and consistent and that of any tax system for international constant at eight reĠecting the position HMRC is properly resourced to ensure investors is stability. The approach of of one proğt tax (corporation tax), one the tax due under the law is collected. government in laying out its corporate labour tax on the employer (national Maintaining trust in the system, the tax road map for reform has helped in insurance contributions) and six professionalism and integrity of HMRC this respect, as has the model adopted other taxes including VAT, business and securing the support of business by the UK tax authorities, Her Majesty’s rates, landğll tax, vehicle excise tax, and the public, is critical. Revenue and Customs, (HMRC) and insurance premium tax and fuel duty. its risk based approach to dealing with taxpayer issues. The number of hours required to comply with corporation tax, labour taxes (including national insurance contributions, employee income taxes and VAT) has also remained constant at 110 hours. 25 Total Tax Contribution for The Hundred Group 2012 The regional analyses: EU & EFTA 109 The regional analyses Middle East On average, in the Middle East The region has the lowest Total region the Paying Taxes case Tax Rate and time to comply. It study company has a Total also has the lowest number of Tax Rate of 23.7%, makes 17.6 payments after North America tax payments and takes 159 and the EU & EFTA. hours to comply with its tax obligations. Over the nine years of the study there has been very little Labour taxes and mandatory movement in any of the three contributions are signiğcant sub-indicators. accounting for 59% of the Total Tax Rate, 56% of the time to comply and 59% of taxbpayments. 110 Paying Taxes 2014. PwC commentary 23.7 159 17.6 Total Tax Time Number of Rate (%) (hours) payments Middle East Regional article, page 116 The following economies are included in our analysis of the Middle East: Bahrain; Iran, Islamic Rep.; Iraq; Jordan; Kuwait; Lebanon; Oman; Qatar; Saudi Arabia; Syrian Arab Republic; United Arab Emirates; West Bank and Gaza; Yemen, Rep. The regional analyses: Middle East 111 The nine year trends in the The region has had the lowest average All three sub- MiddlebEast Total Tax Rate throughout the nine As shown by Figure 3.46, the three years of the study. indicators have Paying Taxes sub-indicators for the been almost Middle East region have remained very The average time to comply has stable over the nine years of the study. increased by three hours since 2004 unchanged since while the number of payments has 2005 The average Total Tax Rate for this dropped by two. region fell from 41.4% in 2004 to 28.0% in 2005, largely driven by the abolition of the last cascading sales tax in the region in the Republic of Yemen. There was a small dip in the rate in 2010, due to reforms in Jordan. The average Total Tax Rate for the region has only moved marginally since 2010. Figure 3.46 The sub-indicator trends for the Middle East Line: Time (hours) Bar: Total Tax Rate (%) Bar: Number of payments 179 180 180 180 180 181 180 181 178 41.4 28.0 28.0 27.7 27.1 27.1 25.8 25.5 25.7 21.5 21.5 21.5 21.5 21.5 21.3 21.2 19.3 19.3 2004 2005 2006 2007 2008 2009 2010 2011 2012 The trend data includes only those economies for which data is available for all years of the study and therefore the ĺgures differ from the regional averages for 2012. The economies that are excluded are: Bahrain and Qatar Source: PwC Paying Taxes 2014 analysis 112 Paying Taxes 2014. PwC commentary The Total Tax Rate in the Figure 3.47 also shows that other than Since 2005 MiddlebEast the large reduction in ‘other’ taxes as Figure 3.47 shows how the Total Tax a result of abolishing cascading sales labour taxes Rate in the Middle East breaks down tax in the Republic of Yemen in 2005, have increased between the three main components the trend has stayed relatively stable. of proğt taxes, labour taxes and There have been some small decreases marginally while ‘other’ taxes. It shows that over in proğt taxes since 2004 and a slight proğt taxes the nine years of study the labour rise in labour taxes since 2010, but no taxes and mandatory contributions signiğcant reforms. havebfallen component has been the largest element of the average Total Tax The fall in the proğt tax element of the Rate. This component accounted for Total Tax Rate between 2007 and 2008 50% of the average Total Tax Rate in was due to accelerated tax depreciation 2005, increasing gradually to 56% of becoming generally available to the average Total Tax Rate by 2012. all companies in Lebanon. The fall The trend for a falling proğt taxes between 2009 and 2010 was due to proportion and a growing labour tax the abolition in Jordan of educational, element is consistent with the global vocational and support funds and the pattern, as is the reduction in ‘other’ reduction, also in Jordan, of rates of taxes borne. corporate income tax and property transfer tax. Only in West Bank and Gaza are no labour taxes or mandatory There are no signiğcant movements contributions levied on the case study inb2012. company, while in Qatar, Kuwait and Bahrain, labour taxes are the only taxes borne by the case study company. Figure 3.47 Trend in Total Tax Rate in Middle East by type of tax Total Tax Rate (%) 15 Labour taxes Profit taxes 10 5 Other taxes 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The regional analyses: Middle East 113 The time to comply in the In the Middle East, the average time to The average MiddlebEast comply for all types of tax has stayed Figure 3.48 shows the breakdown in almost the same over the nine years of time to comply the time to comply since 2004 for the the study. is virtually three key types of tax for the Middle East. On average, labour taxes and There are no signiğcant movements unchanged mandatory contributions consistently inb2012. sinceb2004 take the most time to comply with ğling obligations. This agrees with the fact that labour taxes account for the greatest share of the Total Tax Rate in the region, but shows a different position to the global picture where consumption taxes are seen to take the most time onbaverage. Figure 3.48 Trend in time to comply in the Middle East by type of tax Time to comply (hours) 120 Labour 100 taxes 80 60 Corporate income tax 40 Consumption taxes 20 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis 114 Paying Taxes 2014. PwC commentary The number of payments in the This region has the lowest average Middle East number of payments apart from North Figure 3.49 shows the breakdown in America and the EU & EFTA; this is the number of payments since 2004 mainly due to relatively low number and the three key components of this of taxes in this region as well as the for the Middle East. On average, labour increasing use of electronic ğling taxes account for the greatest number and payment in some economies in of payments in the region. thebregion. The major improvement made in There are no signiğcant movements labour tax payments in 2011 was inb2012. the main driver for the reduction in the average number of payments sub-indicator overall. This was due to Saudi Arabia and the United Arab Emirates which both introduced online payment systems for social security contributions. Figure 3.49 Trend in the number of tax payments in the Middle East by type of tax Number of payments 14 12 Labour taxes 10 8 Other taxes 6 4 Profit taxes 2 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The regional analyses: Middle East 115 Middle East Middle East economies are looking to make changes Wadih AbouNasr The Middle East tax environment The Middle East has also witnessed an continues to evolve as governments expansion of the tax treaty network in PwC Lebanon in both carbon and non-carbon based a number of economies, particularly economies, look to align themselves the United Arab Emirates and Saudi with other economies. They are Arabia, along with staff capacity actively looking to strengthen their building to allow tax authorities ğscal frameworks by introducing to tackle international tax issues. measures to reduce complexity. However, with effective tax rates lower than the average worldwide rates and Although none of the Middle East the expansion of treaty networks, the economies introduced signiğcant tax main challenge for governments in changes or new tax legislation over the Middle East will be to maintain the past year, most governments are relatively low tax rates especially given introducing or looking to introduce the recent OECD recommendations compliance simpliğcation measures on greater tax transparency and through electronic ğling and restoration of tax fairness. This e-payment. Most recently Lebanon would certainly be raised in the light has introduced compulsory e-ğling of the coordinated efforts between and e-payment of salaries tax and OECD and non-OECD economies to VAT for large tax payers, while Qatar, ğght tax evasion, notably through Saudi Arabia and Oman are working treatybbeneğts. on draft legislation to introduce similarbmeasures. In this context, and as there is increased scrutiny by various Recent trends in tax reforms in the stakeholders, it will be interesting to region also show a shift towards a see whether governments in the region, more territorial approach to taxation such as the United Arab Emirates or with withholding taxes and permanent Bahrain, who so far have not taxed establishment issues being at the corporate proğts while allowing treaty forefront of developments. beneğts to companies established there, would introduce a corporate tax in order to align with worldwide as well as regional tax proğles. Such a measure could also be driven by a desire for these economies to diversify their sources of revenues beyond the hydrocarbon revenue stream. 116 Paying Taxes 2014. PwC commentary 23.7 159 17.6 Total Tax Time Number of Rate (%) (hours) payments Governments in the Middle East While VAT has been under discussion consider the Paying Taxes sub- in the Gulf region for some years now, indicators to be important. Economies the Gulf Cooperation Council (GCC) like Qatar, which have been identiğed states have recently taken concrete in previous Paying Taxes reports steps in this regard through the as having tax systems that are establishment of a common platform easy to comply with, are looking for a common VAT framework law, to further streamline and simplify which aims to harmonise the various their compliance requirements, VAT systems across the GCC. No notably through the introduction of doubt such a measure will constitute e-ğling systems. Similarly, Oman has a signiğcant source of revenues for embarked on a series of simpliğcation most GCC states in line with their measures, although the time to objective to decrease their reliance comply increased by six hours in on revenues from hydrocarbons. The 2012 due to the additional reporting introduction of a VAT system in the and ğling requirements of the new GCC would certainly result in an regime. Kuwait has introduced new additional compliance burden and compliance measures, including a governments will need to ensure self-assessment scheme, to ease and that simple and ef ğcient VAT systems accelerate reporting and compliance, are implemented which encourage but the changes in Kuwait have not yet voluntary compliance and which affected the case study company. keep the cost of implementation to a minimum forbbusiness. In their desire to continue to be simple and ef ğcient places to do business, while retaining low headline rates of tax, Middle East economies are expected to continue their efforts to balance their need for sustainable tax revenues and the need to continue to attract investment. The regional analyses: Middle East 117 The regional analyses North America In 2012, on average in North High levels of corporate income America our case study tax drive the Total Tax Rate in company had an average Total the United States, labour taxes Tax Rate of 41.4% which is and mandatory contributions below of the world average are signiğcant in Mexico while 43.1%. However for 2012 generally lower tax rates apply there is an increase of 0.2 in Canada. percentage points driven by Mexico changing its social All economies in this region securitybrate. have implemented online ğling and payment systems resulting All three sub-indicators for the in a reduction of 122 hours in region are below the world the average time to comply over average, but this disguises the nine years of the study. some signiğcant differences between the three economies The average number of which make up this region. payments for the region is 8.3, well below the world average of 26.7 and the lowest of anybregion. 118 Paying Taxes 2014. PwC commentary 41.4 213 8.3 Total Tax Time Number of Rate (%) (hours) payments Canada Country article, page 124 The following economies are included in our analysis of North America: Canada; Mexico; United States The regional analyses: North America 119 Figure 3.50 Since 2006 The sub-indicator trends for North America the three sub- indicators for this Line: Time (hours) Bar: Total Tax Rate (%) region have been Bar: Number of payments below the world average. The 335 335 310 time to comply 285 274 and the number 241 of payments 49.7 222 214 213 have fallen 48.5 47.6 47.3 46.5 41.6 signiğcantly, 41.7 41.2 41.4 but the fall in the Total Tax Ratebhas been 15.3 15.3 15.3 15.3 more modest 8.3 8.3 8.3 8.3 8.3 2004 2005 2006 2007 2008 2009 2010 2011 2012 The 3 North American economies have all participated in all years of the Paying Taxes study and are therefore all included in the trend analysis. Source: PwC Paying Taxes 2014 analysis The nine year trends in All three economies have electronic NorthbAmerica ğling and payment, which is the main Figure 3.50 shows the trend in the reason for the consistent decline in three Paying Taxes sub-indicators since the time to comply. From 2004 there 2004. Since 2010 proğt taxes have has been an average decrease of 122 accounted for almost 50% of both the in the hours spent on tax compliance Total Tax Rate and the time to comply for the case study company. Mexico for the region. accounts for 62% of the fall thanks to reforms that made paying taxes easier Over the nine years of study the by introducing electronic systems for average Total Tax Rate has fallen payroll tax, property tax and social by 8.3 percentage points, driven by security taxes. Canada with a total drop in the proğt tax element of the Total Tax Rate The average number of payments has of 20.7 percentage points. On the dropped from 15.3 payments in 2004 other hand, all three economies have to 8.3 payments in 2012. The number experienced increases in labour taxes of payments is the lowest of any region, and mandatory contributions and and well below the world average. The Canada and the United States show three economies have around eight small decreases in ‘other’ taxes. payments each in 2012, with 48% being payments of ‘other’ taxes, 36% being payments of labour taxes and mandatory contributions and 16% related to proğt taxes. 120 Paying Taxes 2014. PwC commentary Figure 3.51 Proğt taxes have Trend in Total Tax Rate in North America by type of tax fallen the most Total Tax Rate (%) but are still the 30 largest element of the Total TaxbRate 25 20 Profit taxes Labour taxes 15 10 Other taxes 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The Total Tax Rate in Neither labour nor ‘other’ taxes have NorthbAmerica shown signiğcant movement since Figure 3.51 shows how the Total Tax 2004. For labour taxes the Total Tax Rate breaks down into the three main Rate was largely Ġat until 2009, with components of proğt taxes, labour a small increase seen in recent years. taxes and ‘other’ taxes. This increase arises as Mexico changed its social security rates. Mexico has the The average proğt tax Total Tax Rate highest Total Tax Rate for labour taxes declined steadily with a fall of 2.5 in the region at 28.2%. percentage points between 2004 and 2008, followed by a large fall in 2009 ‘Other’ taxes fell from an average of which reduced the average proğt tax 6.2% in 2004 to an average of 4.9% Total Tax Rate for the region by nearly in 2012 due to several small changes a ğfth. The 2009 rate reduction was including reductions in property tax in largely the result of changes in Canada Canada and in the United States. where the governments of Ontario and Canada jointly committed to harmonise The pattern of these regional trends is State and Federal corporate income consistent with the global trends. tax bases and reporting and there were slight reductions in the rates of State and Federal corporate income taxes. The regional analyses: North America 121 Figure 3.52 Trend in time to comply in North America by type of tax Across the nine Time to comply (hours) years of study the 180 three economies have fully 160 implemented 140 electronic ğling and payment, leading to 120 Corporate 100 income tax substantial reductions in the time to comply 80 Consumption taxes 60 Labour taxes 40 20 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The time to comply in The trend in consumption taxes can NorthbAmerica similarly be explained by a number Figure 3.52 shows the breakdown of of reforms introduced in Mexico with the time to comply in North America new reporting rules in 2007 and new since 2004 split by the type of tax. requirements for VAT. The amount of time to comply with consumption taxes The three elements of the time to has subsequently fallen. comply have moved signiğcantly since 2004 due to a number of reforms in The change in the time to comply the region. The economy in North with labour taxes accounts for around America making the most reforms 48% of the total fall in the time to has been Mexico, with substantial comply with all taxes across the region. movements for both corporate This reduction in the time to comply income taxes and labour taxes and with labour taxes has been driven by mandatorybcontributions. Mexico as part of the same reforms mentionedbabove. Corporate income taxes have consistently required the most time While the fall in time required for to comply in this region, but between labour taxes is consistent with the 2006 and 2009 the time required to global trend, the increase in time comply with corporate income taxes required for corporate income taxes fell sharply, driven by the increased in the last year is out of line with the use of electronic ğling and payment in global pattern. the United States in 2007. In Mexico there were several reforms; additional reporting requirements due to the introduction of a business Ġat tax increased the time requirements, while advances in online accounting and ğling systems and payments have subsequently reduced the timebrequired. 122 Paying Taxes 2014. PwC commentary Figure 3.53 Trend in number of payments in North America by type of tax The number Number of payments of payments 8 has declined signiğcantly since 7 2004; labour tax 6 payments have fallenbmost. 5 Other taxes 4 Labour taxes 3 2 Profit taxes 1 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The number of payments in The largest reduction in the number NorthbAmerica of payments occurred between 2007 Figure 3.53 shows the breakdown in and 2008 when Mexico reduced its the number of tax payments since 2004 payments by 21, split between ‘other’ for the North America region split by taxes with 5 fewer payments, and the type of tax. There is a signiğcant labour taxes with 16 fewer payments. fall of ğve payments for labour taxes. This is the result of electronic systems For both proğt taxes and ‘other’ taxes, for social security payments which the drop across the nine year period became widely available, alleviating has been around one payment. the need for taxpayers to make payments in person at the bank. Since 2009 there have been no new reforms which have reduced the number of payments. The regional analyses: North America 123 Canada Government and business working together to improve the tax system Lincoln Schreiner The Paying Taxes report has generated This report also highlights the impact media attention in Canada over recent of so-called ‘ğxed taxes’ that apply to PwC Canada years as the tax system which applies a business, such as property tax and to the case study company has changed payroll taxes. Fixed taxes must be paid and the ranking has improved. The regardless of whether the business changes that we have seen demonstrate makes a proğt. They are rarely visible that Canadian government agencies in a proğt and loss account, so most and small privately owned businesses business owners do not clearly see the appear to be working together to make total tax borne which is paid to city and the tax burden lighter and to ensure provincial bodies in addition to federal that the annual tax compliance process government bodies. is easy for those businesses. Here is a breakdown of the taxes borne Canada has now been in the top ten of for the calendar year to 31 December the rankings for the last three studies. 2012, for the previous year (2011), and There are two major factors producing for the ğrst year of the study (2004) for Canada’s high ranking for this type our case study company – a privately of business. First is the signiğcantly owned small manufacturing business reduced corporate income tax rate operating within the city of Toronto. on the ğrst CAD500,000 of annual Canadian proğts made by a privately 2012 2011 2004 owned corporation. Second is Canada’s Proĺt taxes 6.6% 6.8% 27.2% sustained effort to simplify electronic People taxes 12.9% 12.7% 12.4% reporting, ğling and payment, and the Property taxes 4.8% 5.1% 7.9% tax regulatory and compliance aspects Total 24.3% 24.6% 47.5% of running a business (‘tax red-tape’). 124 Paying Taxes 2014. PwC commentary 24.3 131 8 Total Tax Time Number of Rate (%) (hours) payments The table clearly shows how the proğt The improvements mentioned signify tax has fallen signiğcantly since 2004 that more after-tax free cash Ġow is and how this has continued in the last available for reinvestment to continue year, in part because of the on-going growing a business in Canada than in tax rate reductions proposed by the most other economies – including the federal and Ontario governments. USA. Privately owned small business People taxes comprise the business in Canada should take comfort: the portion of federal employment ranking demonstrates that Canadian insurance and the Canada Pension government agencies support and Plan, plus the business portion of encourage the creation of more Ontario workplace safety insurance suchbbusinesses. and employer health tax. Falling corporate income taxes and stable This year the Paying Taxes publication if not rising labour taxes borne by is being launched in Canada providing companies are consistent with what is a good opportunity for the government being seen globally. and business to engage in constructive discussion around these results and Continuing simpliğcation of tax red- the future developments that can tape remains important, but given bebexpected. the current economic climate, the key priority for business today should be tax rate stability. The September 2013 announcement that the federal government will ‘cap’ employer employment insurance rates until 2016 is the type of tax stability that should be welcomed by businesses in Canada with a substantial number ofbemployees. The regional analyses: North America 125 The regional analyses South America The average Total Tax Rate for Consumption taxes have 2012 is 52.7% which is higher always required the most time than the world average of to comply in this region. 43.1% and is the second highest of any region apart from Africa. In 2012, despite the high time to comply, the average of In 2012, the average time number of payments for this to comply across the South region of 24.2 is slightly below America region is 618 hours, the world average of 26.7. which is signiğcantly higher ‘Other’ taxes account for 50% than the world average of 268 of tax payments in 2012. largely driven by Brazil with 2,600 hours and Bolivia with Since 2004, a number of fairly 1,025bhours. small reforms have reduced the average of Total Tax Rate by 4.1 South America remains percentage points. the region with the highest time to comply, despite the The average time to comply has introduction of electronic ğling declined just by 41 hours since and payment capabilities in 2004, which maintains the several economies. region as having the highest average time to comply with almost 350 hours above the world average in 2012. 126 Paying Taxes 2014. PwC commentary 52.7 618 24.2 Total Tax Time Number of Rate (%) (hours) payments Colombia Country article, page 136 Bolivia Country article, page 134 The following economies are included in our analysis of South America: Argentina; Bolivia; Brazil; Chile; Colombia; Ecuador; Guyana; Paraguay; Peru; Suriname; Uruguay; Venezuela, R.B. The regional analyses: South America 127 The nine year trends for Since 2004 the region’s average Total The average time to comply in the SouthbAmerica Tax Rate has always been above the region is 618 hours, which is the Despite the fact that the region has the world average. Only Paraguay and highest average of any region and highest time to comply of all regions, Uruguay have shown signiğcant more than double the world average. and the second highest Total Tax reductions in Total Tax Rate during This high average is driven by four Rate, decreases since 2004 have been the period. Between 2004 and 2006 economies (Bolivia, Brazil, Ecuador moderate as shown in Figure 3.54. Paraguay’s Total Tax Rate fell by 19.4 and República Bolivariana de Between 2009 and 2011 the Total percentage points due to changes in Venezuela). As shown in Figure 3.50, Tax Rate increased by almost one proğt taxes. Uruguay has abolished the average time to comply for the percentage point before falling again its sales tax and reduced ‘other’ taxes region has reduced by just 41 hours in 2012. Of the three sub-indicators, resulting in an overall reduction of 29.4 since 2004. the number of payments has shown the percentage points in its Total Tax Rate greatest decline, in percentage terms, since 2004. The average number of payments for and has been below the world average this region at 24.2 is the only sub- since 2005. Between 2009 and 2011 half the indicator which is below the world economies in the region increased average. But the range of results is In South America the Total Tax their Total Tax Rate. Over this period, very diverse across the region. In Rate varies greatly between the 12 República Bolivariana de Venezuela half the economies the case study economies included in the region, with increased its rate signiğcantly by company makes more payments than the maximum Total Tax Rate being ten percentage points driven largely the world average, while in the other 107.8% in Argentina and the lowest by doubling its municipal economic economies it makes fewer payments. Total Tax Rate being 27.7% in Chile. activities tax. Since 2004 the average number of Five economies, including Argentina, payments has fallen steadily by a total have a Total Tax Rate over 60%. of 11.8bpayments. Figure 3.54 The sub-indicator trends for South America Line: Time (hours) Bar: Total Tax Rate (%) Bar: Number of payments 659 659 644 645 638 641 635 619 618 56.8 56.0 55.5 52.9 52.9 52.2 52.5 53.1 52.7 36.0 32.4 32.3 28.3 27.4 27.3 26.3 24.8 24.2 2004 2005 2006 2007 2008 2009 2010 2011 2012 The 12 South American economies have all participated in all years of the Paying Taxes study and are therefore all included in the trend analysis. Source: PwC Paying Taxes 2014 analysis 128 Paying Taxes 2014. PwC commentary All three sub-indicators have fallen over the nine years of the study, but the rate of decline has been slow in recent years The regional analyses: South America 129 Figure 3.55 Trend in Total Tax Rate in South America by type of tax Since 2004, proğt Total Tax Rate (%) taxes and ‘other’ 25 taxes have fallen, while labour taxes have risen 20 Other taxes marginally Labour taxes Profit taxes 15 10 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis The Total Tax Rate in The proğt tax element of the Total SouthbAmerica Tax Rate Ġuctuated signiğcantly Figure 3.55 shows how the Total Tax during the period, but overall has Rate breaks down into the three main fallen on average by 1.9 percentage components of proğt taxes, labour points since 2004. Prior to 2008, taxes and ‘other’ taxes. From 2008 the proğt taxes accounted for a greater proportions accounted for by these proportion of the Total Tax Rate components have changed very little. than did labour taxes. Since 2008 Proğt taxes account for the lowest proğt taxes accounted for a smaller proportion, followed by labour taxes proportion of the Total Tax Rate than with ‘other’ taxes being the largest labour taxes, which is consistent with element. This shows a very different the global trend. The decrease in proğt emphasis from the global position taxes between 2004 and 2006 was where labour taxes are now the largest driven largely by Paraguay reducing and ‘other’ taxes the smallest, but the its corporate income tax rate, with a trends in the tax rates for proğt taxes total fall of 19.5 percentage points in and labour taxes have been similar to the proğt tax component of its Total the global trends. TaxbRate. The labour tax average has been the most stable over the nine years of the study. Six of the twelve economies in the region have shown changes in the labour tax element of their Total Tax Rates since 2004, but the changes are generally small and arise from changes in the rate or the thresholds of labour taxes and social security contributions. The main drivers of the region’s changes in the period from 2006 to 2008 are changes to various labour taxes and social security contributions in Brazil and Uruguay. 130 Paying Taxes 2014. PwC commentary Figure 3.56 Signiĺcant movements in Total Tax Rate between 2011 and 2012 – South America Decrease Total Tax Rate Increase -3.4 Guyana -10.5 Source: PwC Paying Taxes 2014 analysis The rise in the proğts tax Total Tax As shown in Figure 3.56 in 2012 Rate between 2006 and 2007 can be Guyana reduced its corporate attributed to increases in Uruguay and income tax rate from 45% to 40% for República Bolivariana de Venezuela. commercial companies and from 35% In Uruguay changes to the corporate to 30% for non-commercial companies. income tax regime increased the proğt tax element of the Total Tax Rate by 12.2 percentage points, although there was no change in the statutory rate of corporate income tax. In the following year, this statutory rate fell from 30% to 25% accounting for a signiğcant part of the overall fall in the average proğt tax rate for the region. For the nine years of the study ‘other’ taxes have been largest component of the Total Tax Rate in South America, and these taxes have also seen the largest changes. One signiğcant change was the abolition of a sales tax (COFIS) in Uruguay in 2007. The República Bolivariana de Venezuela has been responsible for other signiğcant changes as it has, since 2004, introduced several taxes, abolished Only Guyana has shown a a tax on ğnancial transactions, and doubled the municipal economic signiğcant movement in its Total activies tax. Tax Rate inb2012 The regional analyses: South America 131 The time to comply in Colombia has been the economy in The fall in time SouthbAmerica the region with the greatest reduction Figure 3.57 shows the breakdown in in the time to comply, falling by 253 to comply has the time to comply since 2004 split by hours since 2004. A substantial fall been small and the type of tax. Consumption taxes was recorded in 2006 followed by have consistently required the most smaller reductions in subsequent years driven by just time to comply which is consistent with as electronic systems were improved twobeconomies the global picture. These taxes have and increasingly became used by the needed almost 50% of the total hours majority of businesses for speciğc taxes used in paying taxes in South America, or sizes of company. The reduction was which is above the global average for evident across all three types of tax. the proportion of time required for consumption taxes. Also consistent The next most signiğcant decline in with the global trends, the time to time to comply has been seen in Peru comply with labour taxes has fallen where the sub-indicator has gradually thebmost. fallen by a total of 131 hours since 2007. Again this is largely due to the Of the 12 economies in this region, introduction and increased use of there are 8 with electronic ğling electronic ğling and payment, and systems that are used by the majority taxbsoftware. of companies. Bolivia and República Bolivariana de Venezuela both have In the last year the movement in electronic ğling and payment systems, the time to comply has been very but these are not available for all taxes small with no signiğcant changes and are not yet used by the majority tobhighlight. of taxpayers. The introduction of electronic ğling and payment systems however has not led to the substantial drop in time to comply that we have seen in many other regions. Figure 3.57 Trend in time to comply in South America by type of tax Time to comply (hours) 350 300 Consumption taxes 250 Labour 200 taxes 150 Corporate income tax 100 50 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis 132 Paying Taxes 2014. PwC commentary The number of payments in economies, social security contributions SouthbAmerica and labour taxes can be paid jointly. Labour taxes and Figure 3.58 shows the breakdown in the Only Colombia and Argentina have number of payments since 2004 split had larger reductions in payments ‘other’ taxes have by the type of tax. In this region 13% than Uruguay due to the introduction driven the fall of the sub-indicator for the number of and adoption of online ğling and payments relates to proğt taxes, 37% to paymentbsystems. in payments in labour tax payments and the remaining thisbregion 50% to payments of ‘other’ taxes. In As with the global trend, the average the region all 12 economies have VAT of number of payments of labour taxes or a sales tax which is paid monthly. In has fallen signiğcantly, reducing from República Bolivariana de Venezuela the 13.9 payments in 2004 to 9.0 payments case study company must also make in 2009. This fall is due largely to the monthly payments of property tax. implementation in Colombia of an integrated form for online social security Most of the economies in this region contribution payments unifying in a have one proğt tax payment per year single online payment all contributions under the Paying Taxes methodology, to Social Security, the Welfare Security but República Bolivariana de Venezuela System and Labour Risk Insurance. The signiğcantly increases the average with number of labour tax payments has not 13 payments. changed since 2009. In Uruguay, from 2011, it has been In Paraguay, as shown in Figure 3.59, possible to pay corporate income tax, the number of corporate income tax and VAT and capital tax jointly, resulting in VAT payments has reduced due to the a drop of 24 payments. Furthermore, introduction half way through 2012 of in Uruguay, as in the majority of the electronic ğling and payment systems. Figure 3.58 Trend in the number of tax payments in South America split by type of tax Number of payments 20 15 Other taxes 10 Labour taxes 5 Profit taxes 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: PwC Paying Taxes 2014 analysis Figure 3.59 Signiĺcant movements in the number of tax payments between 2011 and 2012 – South America Decrease Payments Increase -7 Paraguay Source: PwC Paying Taxes 2014 analysis The regional analyses: South America 133 Bolivia Bolivia is collecting more tax, but there is a high compliance cost Eduardo Aramayo 1986 was a turning point for tax in The new Bolivian State Political Bolivia. In that year Law 843 was Constitution approved in early PwC Bolivia approved which implemented profound 2009 changed the structure of ğscal reform and established a modern the Bolivian state from a single tax system in Bolivia. While this tax national government to a structure reform has been modiğed over recent with different levels of government years, these modiğcations have not (e.g. municipal, departmental and distorted the main objective of the central governments). These levels of original law to create a coherent and government each have the capacity to uniğed tax system. Since 2005, tax create, manage and collect their own collections have grown steadily and taxes in accordance with the ‘law of have become an important part of creation of taxes’, though to date the government revenues. This increase in exercise of this power has been limited. tax collections has however imposed The changes to the constitution have a substantial compliance burden. At also opened up the possibility for the 1,025 hours Bolivia has the second Bolivian government to change the highest time to comply of any economy essential principle of taxation from a in the study, it has one of the highest territorial basis towards a worldwide Total Tax Rates and only 29 economies tax system, though again there has have more tax payments, in view of been little practical change in this area. a lack of the use of electronic ğling If these changes were to result in new andbpayment. laws being made in practice, it could increase the complexity of the Bolivian The Bolivian tax system has been tax system still further. strongly impacted by the Bolivian Tax Code (BTC) which was approved in 2003. It established a set of mechanisms that helped with the inspection, control and veriğcation of taxpayers by the tax authorities. 134 Paying Taxes 2014. PwC commentary 83.4 1025 42 Total Tax Time Number of Rate (%) (hours) payments In another move which could increase One change that has been made to To conclude, Bolivia is going through complexity, legislators have also assist taxpayers is the adoption of an important moment in its economic approved laws that allow new taxes a mechanism that allows taxpayers growth cycle and tax collection has to be levied on economic activities to appeal decisions before the tax played a major role in increasing the not previously captured. Bolivia now administration, encouraging an revenues available to government. has taxes that arise on participation administrative recourse instead of a There is however a pressing need in gambling, business promotions judicial recourse as taxpayers must to make tax compliance less time and ğnancial transactions in foreign settle their tax debts (including the consuming in order to ensure that this currency. In addition, the Bolivian disputed amounts) before they can growth in tax revenues continues, government has approved laws to appeal before the tax court. that a tax environment is created that apply additional income taxes (i.e. is conducive to economic growth and surtax) to speciğc industries which In spite of the difğculty of paying investment and, ğnally, that more have demonstrated economic growth taxes in Bolivia, there has been taxpayers are encouraged to become such as the mining and ğnancial an increase, mainly in legal entity formally registered. servicesbsectors. taxpayers, in the number of formally registered taxpayers. The Ministry Further changes to tax legislation are of Economy has reported that the currently going through the legislative number of registered taxpayers has approval process. This includes a increased by nearly 15% during the new law on mining, changes to the 2012 ğscal year compared to the commercial code and other changes previous ğscal year, reaching a level that will bring new formal and of approximately 302,000 registered material tax obligations. There is also active taxpayers. If paying taxes could the potential for Bolivia to apply new be made easier, with fewer payments transfer pricing regulations in the short and less time required to comply with to medium term, along with anti-abuse tax obligations, it would reduce the tax legislation to help further expand burden on these taxpayers and may taxbcollection. encourage more companies to become registered active taxpayers. The regional analyses: South America 135 Colombia New legislation to reğne existing rules and counter tax evasion Eliana Bernal Many signiğcant changes to the There were also changes to the capital Colombian tax system were introduced gains tax regime. A 10% withholding PwC Colombia at the end of last year. But while rate will now apply if a seller owns modiğcations made in previous years an asset for more than two years. were clearly reĠected in the Paying These changes have been made Taxes results, these latest changes to favour direct sales rather than do not affect the case study company encouraging the complex tax planning given its speciğc fact pattern. The arrangements and reorganisations changes largely relate to improving which were sometimes used by the legislation connected with companies seeking to avoid the corporate reorganisations, permanent previous 33% rate. establishments and thin capitalisation rules; legislation which in some cases New thin capitalisation rules have also was perceived to be operating in a way been introduced. The new regime which had not been anticipated. These disallows a tax deduction for interest latest reforms are an important part if the debt exceeds three times the net of the reform process in Colombia to equity at the end of the preceding tax combat tax avoidance and tax evasion. year. However, we see challenges in applying this new legislation as it is not Rules concerning certain group completely clear how the calculation reorganisations including mergers and of the non-deductible portion of the spin-offs, have been tightened to close interest cost should be performed. loopholes and to close down certain tax planning options. This has left only a few well değned instances where the reorganisation of companies can be carried out tax neutrally. 136 Paying Taxes 2014. PwC commentary 76.0 203 10 Total Tax Time Number of Rate (%) (hours) payments The Congress has implemented several measures to deal with tax evasion. An important addition to legislation now requires that all transactions must have suf ğcient substance and reality to ensure that any expenses related to a set of transactions can be deducted. The legislation also enables the tax authorities to ignore tax planning structures if their only purpose is to save tax. So the agenda around tax reform in Colombia is very active, but as mentioned these reforms are not affecting the Paying Taxes results which have remained broadly stable for the last three studies. The compliance indicators at 203 hours and 10 payments compare favourably with the global averages and those of the South America region. The Total Tax Rate remains high, including signiğcant elements related to municipal taxes and mandatory contributions which add to the corporate income tax. We can expect some useful discussions when the South American Paying Taxes launch is held in Bogota this year. The regional analyses: South America 137 Appendix 1 Methodology and example calculations for each of the Paying Taxes sub-indicators 138 Paying Taxes 2014 138 Paying Taxes 2014 Paying Taxes records the taxes and For example, value added taxes are The World Bank and IFC overall mandatory contributions that a generally excluded (provided they are ranking for the ease of paying taxes medium-size company must pay in a not irrecoverable) because they do is the simple average of the percentile given year as well as measuring the not affect the accounting proğts of the rankings for each of the sub-indicators, administrative burden of paying taxes business – that is, they are not reĠected but a threshold is applied to the Total and contributions. The project was in the income statement. They are, Tax Rate. The threshold is değned developed and implemented as part however, included for the purpose of as the highest Total Tax Rate among of the Doing Business project by the the compliance measures (time and the top 15% of economies in the World Bank and IFC in cooperation payments), as they add to the burden of ranking on the Total Tax Rate. It is with PwC. Taxes and contributions complying with the tax system. calculated and adjusted on a yearly measured include the proğt or basis. This year’s threshold is 25.5%. corporate income tax, mandatory The Paying Taxes study uses the All economies with a Total Tax Rate contributions and labour taxes paid by Doing Business case scenario to below this threshold receive the same the employer, property taxes, property measure the taxes and contributions score as the economy at the threshold. transfer taxes, dividend tax, capital paid by a standardised business The threshold is not based on any gains tax, ğnancial transactions tax, and the complexity of an economy’s economic theory of an “optimal tax waste collection taxes, vehicle and tax compliance system. This case rate” that minimises distortions or road taxes, and any other small taxes study scenario uses a set of ğnancial maximises ef ğciency in the tax system or fees. statements and assumptions about of an economy overall. Instead, it transactions made over the course of is mainly empirical in nature, set Paying Taxes measures all taxes and the year. In each economy tax experts at the lower end of the distribution contributions that are government from a number of different ğrms of tax rates levied on medium-size mandated (at any level – federal, (including PwC) compute the taxes and enterprises in the manufacturing state or local) and that apply to the mandatory contributions due in their sector as observed through the Paying standardised business and have an jurisdiction based on the standardised Taxes sub-indicators. This reduces impact in its ğnancial statements. In case study facts. Information is also the bias in the sub-indicators toward doing so, Paying Taxes goes beyond compiled on the frequency of ğling economies that do not need to levy the traditional değnition of a tax. As and payments, as well as on the time signiğcant taxes on companies like the değned for the purposes of government taken to comply with tax laws in an Doing Business standardised case study national accounts, taxes include only economy. To make the data comparable company because they raise public compulsory, unrequited payments across economies, several assumptions revenue in other ways – for example, to general government. Paying Taxes about the business and the taxes and through taxes on foreign companies, departs from this değnition because it contributions arebused. through taxes on sectors other than measures imposed charges that affect manufacturing or from natural business accounts, not government resources (all of which are outside the accounts, the main difference relates scope of the methodology). to labour contributions. The Paying Taxes measure includes government- mandated contributions paid by the employer to a requited private pension fund or workers’ insurance fund. The indicator includes, for example, Australia’s compulsory superannuation guarantee and workers’ compensation insurance. For the purpose of calculating the Total Tax Rate (değned below), only taxes borne are included. Appendix 1: Methodology 139 Assumptions about the business • Has 60 employees – 4 managers, • Is subject to a series of detailed The business: 8 assistants and 48 workers. All assumptions on expenses and are nationals, and one manager is transactions to further standardise • Is a limited liability, taxable also an owner. The company pays the case. All ğnancial statement company. If there is more than one for additional medical insurance variables are proportional to type of limited liability company for employees (not mandated by income per capita. For example, in the economy, the limited any law) as an additional beneğt. the owner who is also a manager liability form most common among In addition, in some economies spends 10% of income per capita domestic ğrms is chosen. The reimbursable business travel and on travelling for the company most common form is reported client entertainment expenses are (20% of this owner’s expenses by incorporation lawyers or the considered fringe beneğts. Where are purely private, 20% are for statistical of ğce. applicable, it is assumed that the entertaining customers and 60% for company pays the fringe beneğt tax businessbtravel). • Started operations on 1 January on this expense or that the beneğt 2011. At that time the company becomes taxable income for the Assumptions about the taxes purchased all the assets shown employee. The case study assumes andbcontributions in its balance sheet and hired all no additional salary additions for • All the taxes and contributions itsbworkers. meals, transportation, education recorded are those paid in the or others. Therefore, even when second year of operation (calendar • Operates in the economy’s largest such beneğts are frequent, they year 2012). A tax or contribution business city. are not added to or removed is considered distinct if it has a from the taxable gross salaries different name or is collected • Is 100% domestically owned and to arrive at the labour tax or by a different agency. Taxes and has ğve owners, all of whom are contributionbcalculation. contributions with the same name natural persons. and agency, but charged at different • Has a turnover of 1,050 times rates depending on the business, • At the end of 2011, has a start- income per capita. are counted as the same tax or up capital of 102 times income contribution. perbcapita. • Makes a loss in the ğrst year of operation. • The number of times the company • Performs general industrial or pays taxes and contributions in commercial activities. Speciğcally, • Has a gross margin (pre-tax) of a year is the number of different it produces ceramic Ġowerpots 20% (that is, sales are 120% of the taxes or contributions multiplied and sells them at retail. It does not cost of goods sold). by the frequency of payment (or participate in foreign trade (no withholding) for each tax. The import or export) and does not • Distributes 50% of its net proğts as frequency of payment includes handle products subject to a special dividends to the owners at the end advance payments (or withholding) tax regime, for example, liquor of the second year. as well as regular payments orbtobacco. (orbwithholding). • Sells one of its plots of land at • At the beginning of 2012, owns a proğt at the beginning of the two plots of land, one building, secondbyear. machinery, of ğce equipment, computers and one truck and leases • Has annual fuel costs for its trucks one truck. equal to twice income per capita. • Does not qualify for investment incentives or any beneğts apart from those related to the age or size of the company. 140 Paying Taxes 2014 The Paying Taxes sub-indicators The Total Tax Rate calculation for Russian Federation Total Tax Rate RUR ‘000 RUR ‘000 The Total Tax Rate measures the 3URƄWEHIRUHWD[ 3%7 5,006 amount of taxes and mandatory Addback above the line taxes borne: contributions borne by the business in Social security insurance 286 the second year of operation, expressed Accidents tax 246 as a share of commercial proğt. Paying Pension fund contribution 2,169 Taxes 2014 reports the Total Tax Rate Federal obligatory medical insurance fund contributions 503 for calendar year 2012. The total Property tax 407 amount of taxes borne is the sum of all Transport tax 9 the different taxes and contributions Land tax 114 payable after accounting for allowable 3,734 deductions and exemptions. The taxes withheld (such as personal income 3URƄWEHIRUHDOOWD[HVERUQHFRPPHUFLDOSURƄW 8,740 tax) or collected by the company Corporate income tax on PBT after necessary adjustments (699) and remitted to the tax authorities Above the line taxes borne (3,734) (such as value added tax, sales tax or Total taxes borne (4,433) goods and service tax) but not borne Proĺt after tax 4,307 by the company are excluded. The 7RWDO7D[5DWH 7RWDOWD[HVERUQHFRPPHUFLDOSURƄW 50.7% taxes included can be divided into ğve categories: proğt or corporate income tax, mandatory contributions and labour taxes paid by the employer (in respect of which all mandatory contributions are included, even if paid to a private entity such as a requited pension fund), property taxes, turnover taxes and other taxes (such as municipal fees and vehicle taxes). The Total Tax Rate is designed to provide a comprehensive measure of the cost of all the taxes a business bears. It differs from the statutory tax rate, which merely provides the factor to be applied to the tax base. In computing the Total Tax Rate, the actual tax payable is divided by commercial proğt. Appendix 1: Methodology 141 Commercial proğt is essentially net In Paying Taxes 2014, there has been proğt before all taxes borne. It differs a methodology change for fuel tax. from the conventional proğt before Fuel taxes are no longer being included tax, reported in ğnancial statements. in the Total Tax Rate calculation In computing proğt before tax, many because of the difğculty of computing of the taxes borne by a ğrm are these taxes in a consistent way across deductible. In computing commercial all economies covered. The fuel tax proğt, these taxes are not deductible. amounts are in most cases very small, Commercial proğt therefore presents and measuring these amounts is often a clear picture of the actual proğt of a complicated because they depend on business before any of the taxes it bears fuel consumption. The impact on the in the course of the ğscal year. Total Tax Rate is not considered to be material, and to ensure consistency in Commercial proğt is computed as the trends all prior year data has been sales minus cost of goods sold, minus adjusted. The fuel tax is still included gross salaries, minus administrative in the number of payments sub- expenses, minus other expenses, indicator to recognise the existence minus provisions, plus capital gains of the tax. (from the property sale) minus interest expense, plus interest income and minus commercial depreciation. To compute the commercial depreciation, a straight-line depreciation method is applied, with the following rates: 0% for the land, 5% for the building, 10% for the machinery, 33% for the computers, 20% for the of ğce equipment, 20% for the truck and 10% for business development expenses. Commercial proğt amounts to 59.4 times income per capita. The methodology for calculating the Total Tax Rate is broadly consistent with the Total Tax Contribution framework developed by PwC and the calculation within this framework for taxes borne. But while the work undertaken by PwC is usually based on data received from the largest companies in the economy, Doing Business focuses on a case study for a standardised medium-size company. 142 Paying Taxes 2014 Tax payments &RORPELD1XPEHURISD\PHQWV The tax payments sub-indicator :RUOG%DQN Actual reĠects the total number of taxes and 7D[W\SH indicator SD\PHQWV 1RWHV contributions paid, the method of Corporate income tax 1 2 Online ĺling payment, the frequency of payment, Value added tax (VAT) 1 6 Online ĺling the frequency of ğling and the Municipal tax 1 6 Online ĺling number of agencies involved for this Real estate tax 1 1 standardised case study company Urban boundary tax 1 1 during the second year of operation. Financial transactions tax 1 1 It includes taxes withheld by the Social security contributions 1 12 Online ĺling company, such as sales tax, value Welfare security system 0 12 Paid jointly added tax and employee-borne labour Labour risk insurance 0 12 Paid jointly taxes. These taxes are traditionally Payroll tax 0 12 Paid jointly collected by the company from the Vehicle tax 1 1 consumer or employee on behalf of Stamp duty 1 1 the tax agencies. Although they do Fuel tax 1 1 Embedded in payments not affect the income statements to third parties of the company, they add to the Total 10 68 administrative burden of complying with the tax system and so are included in the tax payments measure. The number of payments takes into account electronic ğling. Where full electronic ğling and payment is allowed and it is used by the majority of medium-size businesses in the economy, the tax is counted as paid once a year even if ğlings and payments are more frequent. For payments made through third parties, such as tax on interest paid by a ğnancial institution or fuel tax paid by a fuel distributor, only one payment is included even if payments are morebfrequent. Appendix 1: Methodology 143 Time 1LJHULD7LPHWRFRPSO\ Time is recorded in hours per year. &RUSRUDWH &RQVXPSWLRQ The sub-indicator measures the time LQFRPHWD[ /DERXUWD[HV tax Total taken to prepare, ğle and pay three Compliance process major types of taxes and contributions: 3UHSDUDWLRQ corporate income tax, consumption Data gathering from internal 120 126 30 tax including value added or sales tax, sources (for example accounting and labour taxes, including payroll records) if held taxes and mandatory contributions. Additional analysis of 120 120 60 Preparation time includes the time accounting information to to collect all information necessary highlight tax sensitive}items to compute the tax payable and to Actual calculation of tax liability 40 40 12 including data inputting into calculate the amount payable. If software/spreadsheets or hard separate accounting books must be copy records kept for tax purposes – or separate Time spent maintaining/ updating accounting systems for calculations made – the time associated changes in tax rates and rules with these processes is included. Total 280 286 102 668 This extra time is included only if Filing the regular accounting work is not Completion of tax return forms 8 10 12 enough to fulğl the tax accounting Time spent submitting forms to 10 12 24 requirements. Filing time includes tax authority, which may include the time to complete all necessary time for electronic ĺling, waiting tax return forms and ğle the relevant time at tax authority of ĺce etc returns at the tax authority. Payment Total 18 22 36 76 time considers the hours needed to 3D\PHQW make the payment online or at the Calculations of tax payments 40 40 12 required including if necessary tax authorities. Where taxes and extraction of data from contributions are paid in person, the accounting records time includes delays while waiting. Analysis of forecast data and 30 0 0 associated calculations if advance payments are}required Time to make the necessary 30 48 12 tax payments, either online or at the tax authority of ĺce (include time for waiting in line and travel if necessary) Total 100 88 24 212 Grand total 398 396 162 956 144 Paying Taxes 2014 World Bank and IFC’s distance to Calculating the distance to frontier The difference between an economy’s frontier measure for each economy involves two distance to frontier score in any A drawback of the ease of paying taxes main steps. First, the Paying Taxes previous year and its score on the ranking is that it can measure the indicator’s scores are normalised to Paying Taxes indicator in 2012 regulatory performance of economies a common unit except for the Total illustrates the extent to which the only relative to the performance of Tax Rate. Number of payments and economy has closed the gap to the others. It does not provide information time are rescaled to (max ũ y)/(max frontier over time. And in any given on how the absolute quality of the ũ min), with the minimum value year the score measures how far regulatory environment is improving (min) representing the frontier – the an economy is from the highest over time. Nor does it provide highest performance on that indicator performance at that time. information on how large the gaps are across all economies since 2004. For between economies at a single point the Total Tax Rate, consistent with The distance to frontier measure inbtime. the calculation of the rankings, the can also be used for comparisons frontier is değned as the Total Tax Rate across economies in the same year, The distance to frontier measure is at the 15th percentile of the overall complementing the ease of paying designed to address both shortcomings, distribution of Total Tax Rates for all taxes ranking. complementing the ease of paying years. Second, for each economy the taxes ranking. This measure illustrates scores obtained are aggregated through the distance of an economy to the simple averaging into one distance to “frontier,” and the change in the frontier score. An economy’s distance measure over time shows the extent to to frontier is indicated on a scale from which the economy has closed this gap. 0 to 100, where 0 represents the lowest The frontier is a score derived from the performance and 100 thebfrontier. most efğcient practice or highest score achieved on the Paying Taxes indicators The maximum (max) and minimum by any economy since 2004. In Paying (min) observed values are computed Taxes, for example, Hong Kong for all economies included in the Doing SAR, (China) and Saudi Arabia have Business sample since 2004 and for all achieved the highest performance on years (from 2004 to 2012). The year the number of payments (3 payments), 2004 was chosen as the baseline for Maldives on time (0 hours) and Canada the economy sample because it was the on the Total Tax Rate (26.2%).28 ğrst year in which data were available for the majority of economies (a total of 174). To mitigate the effects of extreme outliers in the distributions of the rescaled data, the maximum (max) is değned as the 95th percentile of the pooled data for all economies and allbyears. 28 There are economies with lower Total Tax Rate than Canada. However as in the ease of paying taxes, a threshold is applied at the 15 percentile. Appendix 1: Methodology 145 Appendix 2 Economy sub-indicator results by region Which economies are most relevant to you? Use our comparative modeller, www.pwc.com/payingtaxesmodeller to create your own comparisons from all the economies andbregions. 146 Paying Taxes 2014 146 Paying Taxes 2014 Economy sub-indicator results by region: Africa Total Tax Rate (%) Zambia 1.2 10.4 3.5 15.1 Lesotho 13.1 2.9 16.0 Namibia 17.7 1.0 3.1 21.8 Ghana 22.0 0.7 0.2 22.9 Botswana 21.7 3.7 25.4 Seychelles 23.3 1.7 0.7 25.7 Liberia 18.3 5.4 2.9 26.6 Mauritius 10.6 10.3 7.3 28.2 South Sudan 7.1 19.2 2.4 28.7 Rwanda 21.9 5.6 2.4 29.9 South Africa 21.9 4.1 4.1 30.1 Libya 20.8 10.5 0.3 31.6 Sierra Leone 18.2 11.3 2.9 32.4 São Tomé and Príncipe 22.1 6.8 3.6 32.5 Ethiopia 26.0 4.2 3.2 33.4 Nigeria 22.3 10.8 0.7 33.8 Malawi 20.7 9.6 4.6 34.9 Zimbabwe 20.8 5.1 9.4 35.3 Madagascar 14.0 20.3 1.5 35.8 Sudan 13.8 19.2 3.1 36.1 Swaziland 28.2 4.0 4.3 36. 5 Uganda 25.2 11.3 0.1 36.6 Cape Verde 18.0 18.5 0.7 37.2 Mozambique 30.9 4.5 2.1 37.5 Djibouti 17.7 17.7 2.4 37.8 Egypt, Arab Rep. 13.2 25.8 3.6 42.6 Gabon 18.4 22.7 2.4 43.5 Burkina Faso 15.2 22.6 6.1 43.9 Equatorial Guinea 25.4 18.7 44.1 Kenya 28.2 6.8 9.2 44.2 Tanzania 20.4 18.0 6.5 44.9 Guinea-Bissau 14.9 24.8 6.2 45.9 Côte d'Ivoire 8.8 22.1 15.5 46.4 Niger 21.5 20.1 6.4 48.0 Senegal 18.0 24.0 6.5 48.5 Cameroon 30.0 18.3 0.5 48.8 Togo 9.3 27.1 13.0 49.4 Mali 9.6 34.3 5.6 49.5 Morocco 25.2 22.7 1.7 49.6 Burundi 38.6 10.2 2.8 51.6 Angola 25.2 9.0 17.9 52.1 Tunisia 15.4 25.2 21.8 62.4 Congo, Rep. 31.3 32.5 63.8 Benin 14.8 27.3 23.8 65.9 Mauritania 17.6 50.6 68.2 Algeria 6.6 29.6 35.7 71.9 Chad 31.3 28.4 14.1 73.8 Eritrea 8.8 75.7 84.5 Central African Republic 19.8 67.8 87.6 Guinea 17.2 27.8 46.2 91.2 Congo, Dem. Rep. 58.9 7.9 51.3 118.1 Comoros 31.4 186.5 217.9 Gambia, The 6.1 12.8 264.3 283.2 Profit taxes Africa average (52.9) Labour taxes Other taxes Appendix 2: Country sub-indicator results by region 147 Economy sub-indicator results by region: Africa Time to comply (hours) Seychelles 40 36 76 Djibouti 30 36 16 82 Comoros 4 48 48 100 Swaziland 8 48 54 110 Rwanda 19 36 58 113 Tunisia 64 30 50 144 Liberia 60 60 31 151 Botswana 40 40 72 152 Mauritius 36 48 68 152 Malawi 67 78 30 175 Tanzania 62 54 60 176 Sudan 70 70 40 180 Madagascar 9 72 102 183 Zambia 63 60 60 183 Cape Verde 35 85 66 186 South Africa 100 50 50 200 Guinea-Bissau 160 24 24 208 Uganda 41 66 102 209 Eritrea 24 96 96 216 South Sudan 56 78 84 218 Ghana 40 88 96 224 Mozambique 50 60 120 230 Morocco 70 42 120 232 Zimbabwe 78 96 68 242 Benin 30 120 120 270 Burkina Faso 30 120 120 270 Côte d'Ivoire 30 120 120 270 Mali 30 120 120 270 Niger 30 120 120 270 Togo 30 120 120 270 Burundi 76 48 150 274 Angola 75 125 82 282 Ethiopia 150 132 24 306 Kenya 43 51 214 308 Namibia 40 46 228 314 Lesotho 70 104 150 324 Congo, Dem. Rep. 116 124 108 348 Sierra Leone 15 168 170 353 Gambia, The 40 96 240 376 Egypt, Arab Rep. 69 165 158 392 São Tomé and Príncipe 40 192 192 424 Guinea 32 192 216 440 Algeria 152 110 189 451 Central African Republic 24 240 219 483 Gabon 137 131 220 488 Equatorial Guinea 145 160 187 492 Congo, Rep. 275 146 181 602 Cameroon 174 162 294 630 Senegal 114 96 434 644 Mauritania 120 96 480 696 Chad 300 216 216 732 Libya 679 210 889 Nigeria 398 396 162 956 Corporate income tax Africa average (320) Labour taxes Consumption taxes 148 Paying Taxes 2014 Economy sub-indicator results by region: Africa Number of payments Morocco 11 4 6 South Africa 1 2 4 7 Mauritius 11 6 8 Tunisia 1 4 3 8 Rwanda 4 4 9 17 Libya 4 12 3 19 Madagascar 1 8 14 23 Burundi 6 4 15 25 Gabon 3 4 19 26 Seychelles 12 12 3 27 Algeria 12 17 29 Egypt, Arab Rep. 1 12 16 29 Angola 4 12 14 30 Cape Verde 3 13 14 30 Eritrea 2 12 16 30 Ethiopia 2 12 16 30 Uganda 3 12 16 31 Congo, Dem. Rep. 1 16 15 32 Ghana 6 12 14 32 Comoros 3 12 18 33 Lesotho 5 12 16 33 Liberia 5 12 16 33 Sierra Leone 5 12 16 33 Swaziland 2 13 18 33 Botswana 6 13 15 34 Djibouti 5 12 18 35 Malawi 5 13 17 35 Mali 4 24 7 35 South Sudan 5 12 19 36 Mauritania 1 13 23 37 Mozambique 7 12 18 37 Namibia 3 12 22 37 Zambia 5 13 20 38 Kenya 5 14 22 41 Niger 3 14 24 41 São Tomé and Príncipe 2 12 28 42 Sudan 2 12 28 42 Cameroon 13 12 19 44 Burkina Faso 1 24 20 45 Equatorial Guinea 1 24 21 46 Guinea-Bissau 5 12 29 46 Nigeria 2 26 19 47 Tanzania 5 24 19 48 Congo, Rep. 5 24 20 49 Zimbabwe 5 14 30 49 Gambia, The 5 13 32 50 Togo 5 24 21 50 Chad 12 24 18 54 Benin 5 24 26 55 Central African Republic 4 24 28 56 Guinea 3 36 18 57 Senegal 3 36 20 59 Côte d'Ivoire 3 24 35 62 Profit taxes Africa average (36.1) Labour taxes Other taxes Appendix 2: Country sub-indicator results by region 149 Economy sub-indicator results by region: Asia Paciğc Total Tax Rate (%) Vanuatu 4.5 3.9 8.4 Timor-Leste 11.0 11.0 Brunei Darussalam 7.6 8.5 16.1 Samoa 11.9 7.0 18.9 Cambodia 19.1 0.1 2.2 21.4 Hong Kong SAR, China 17.5 5.3 0.1 22.9 Mongolia 10.2 12.4 2.0 24.6 Solomon Islands 15.2 8.5 1.2 24.9 Lao PDR 20.5 5.6 0.7 26.8 Singapore 4.9 17.6 4.6 27.1 Korea, Rep. 14.2 13.4 0.3 27.9 Maldives 11.7 7.9 9.3 28.9 Tonga 22.9 5.6 1.1 29.6 Thailand 22.5 4.0 3.3 29.8 Fiji 20.5 10.4 0.3 31.2 Nepal 17.2 11.3 3.0 31.5 Kiribati 23.3 8.5 31.8 Indonesia 18.1 10.8 3.3 32.2 New Zealand 29.9 3.1 1.6 34.6 Pakistan 18.0 15.1 1.6 34.7 Bangladesh 25.7 9.3 35.0 Taiwan, China 12.6 19.0 3.4 35.0 Vietnam 11.4 23.7 0.1 35.2 Afghanistan 36.3 36.3 Malaysia 19.3 15.6 1.4 36.3 Bhutan 36.3 4.5 40.8 Papua New Guinea 22.0 11.7 8.4 42.1 Philippines 19.6 10.8 14.1 44.5 Australia 26.2 20.2 0.6 47.0 Myanmar 26.6 22.3 48.9 Japan 27.2 17.9 4.6 49.7 Sri Lanka 1.0 16.9 37.2 55.1 Micronesia, Fed. Sts. 7.9 52.0 59.9 India 24.4 20.7 17.7 62.8 China 6.2 49.6 7.9 63.7 Marshall Islands 11.8 53.0 64.8 Palau 65.8 9.3 0.1 75.2 Profit taxes Asia Pacific average (36.4) Labour taxes Other taxes 150 Paying Taxes 2014 Economy sub-indicator results by region: Asia Paciğc Time to comply (hours) Hong Kong SAR, China 50 28 78 Solomon Islands 8 30 42 80 Singapore 32 10 40 82 Brunei Darussalam 66 30 96 Australia 37 18 50 105 Kiribati 48 72 120 Vanuatu 24 96 120 Marshall Islands 96 32 128 Micronesia, Fed. Sts. 96 32 128 Malaysia 26 77 30 133 Palau 46 96 142 New Zealand 34 59 59 152 Myanmar 32 25 98 155 Cambodia 23 84 66 173 Tonga 8 30 144 182 Fiji 57 68 60 185 Korea, Rep. 82 80 25 187 Mongolia 57 63 72 192 Philippines 42 38 113 193 Papua New Guinea 153 8 46 207 Sri Lanka 16 52 142 210 Taiwan, China 161 27 33 221 Samoa 48 96 80 224 India 45 93 105 243 Indonesia 75 94 90 259 Thailand 160 48 56 264 Bhutan 250 24 274 Afghanistan 77 120 78 275 Timor-Leste 132 144 276 Bangladesh 140 162 302 China 70 142 106 318 Nepal 120 84 122 326 Japan 155 140 35 330 Lao PDR 138 42 182 362 Maldives 96 88 229 413 Pakistan 40 40 497 577 Vietnam 217 335 320 872 Corporate income tax Asia Pacific average (232) Labour taxes Consumption taxes Appendix 2: Country sub-indicator results by region 151 Economy sub-indicator results by region: Asia Paciğc Number of payments Hong Kong SAR, China 1 1 1 3 Singapore 1 1 3 5 China 2 1 4 7 Kiribati 5 2 7 New Zealand 1 2 5 8 Korea, Rep. 1 2 7 10 Australia 1 4 6 11 Palau 4 4 3 11 Taiwan, China 2 3 7 12 Malaysia 2 2 9 13 Japan 2 2 10 14 Timor-Leste 5 12 1 18 Bhutan 2 13 4 19 Afghanistan 1 12 7 20 Bangladesh 5 15 20 Marshall Islands 16 5 21 Micronesia, Fed. Sts. 4 17 21 Thailand 2 13 7 22 Brunei Darussalam 1 24 2 27 Maldives 3 12 15 30 Tonga 1 12 17 30 Myanmar 5 12 14 31 Vanuatu 12 19 31 Papua New Guinea 1 13 18 32 Vietnam 6 12 14 32 India 2 24 7 33 Lao PDR 4 12 18 34 Nepal 4 12 18 34 Solomon Islands 5 12 17 34 Philippines 1 25 10 36 Samoa 5 24 8 37 Fiji 5 18 15 38 Cambodia 12 12 16 40 Mongolia 12 12 17 41 Pakistan 5 25 17 47 Indonesia 13 24 15 52 Sri Lanka 5 24 29 58 Profit taxes Asia Pacific average (25.4) Labour taxes Other taxes 152 Paying Taxes 2014 Economy sub-indicator results by region: Central America & The Carribean Total Tax Rate (%) Trinidad and Tobago 21.6 5.8 1.7 29.1 Belize 24.7 7.0 1.5 33.2 St. Lucia 25.8 5.6 3.2 34.6 Dominica 26.0 7.9 3.2 37.1 El Salvador 20.4 17.2 0.5 38.1 St. Vincent and the Grenadines 30.2 5.1 3.4 38.7 Honduras 26.1 5.1 8.0 39.2 Haiti 23.8 12.4 4.2 40.4 Panama 11.4 19.8 9.3 40.5 Barbados 25.5 12.3 3.0 40.8 Guatemala 25.9 14.3 0.7 40.9 Antigua and Barbuda 26.2 9.5 5.3 41.0 Dominican Republic 23.7 18.6 1.2 43.5 Jamaica 26.4 12.9 5.0 44.3 Grenada 27.6 5.6 12.1 45.3 Bahamas, The 6.1 40.5 46.6 Puerto Rico 15.8 14.4 20.5 50.7 St. Kitts and Nevis 32.2 11.3 8.4 51.9 Costa Rica 19.2 29.5 6.6 55.3 Nicaragua 23.0 20.3 21.6 64.9 Profit taxes Central America & Labour taxes The Carribean average (42.8) Other taxes Time to comply (hours) Bahamas, The 48 10 58 St. Lucia 11 51 35 97 St. Vincent and the Grenadines 14 49 45 108 Dominica 15 48 54 117 Grenada 32 72 36 140 Belize 27 60 60 147 Haiti 40 72 72 184 St. Kitts and Nevis 27 128 48 203 Antigua and Barbuda 23 136 48 207 Nicaragua 67 76 64 207 Trinidad and Tobago 45 75 90 210 Puerto Rico 80 60 78 218 Honduras 35 93 96 224 Costa Rica 18 100 108 226 Barbados 27 162 48 237 El Salvador 128 96 96 320 Dominican Republic 82 80 162 324 Guatemala 44 126 156 326 Jamaica 30 290 48 368 Panama 83 144 190 417 Corporate income tax Central America & Labour taxes The Carribean average (217) Consumption taxes Appendix 2: Country sub-indicator results by region 153 Economy sub-indicator results by region: Central America & The Carribean Number of payments Guatemala 1 1 5 7 Dominican Republic 1 4 4 9 Puerto Rico 5 6 5 16 Bahamas, The 12 6 18 Costa Rica 4 1 17 22 Barbados 4 12 12 28 Belize 12 1 16 29 Grenada 1 12 17 30 St. Lucia 1 12 19 32 Jamaica 4 12 20 36 St. Kitts and Nevis 4 12 20 36 St. Vincent and the Grenadines 4 12 20 36 Dominica 5 12 20 37 Trinidad and Tobago 4 24 11 39 Nicaragua 1 24 17 42 Haiti 6 25 16 47 Honduras 5 13 29 47 Panama 5 16 31 52 El Salvador 13 24 16 53 Antigua and Barbuda 13 24 20 57 Profit taxes Central America & Labour taxes The Carribean average (33.7) Other taxes 154 Paying Taxes 2014 Economy sub-indicator results by region: Central Asia & Eastern Europe Total Tax Rate (%) Macedonia, FYR 6.3 1.9 8.2 Kosovo 9.1 5.6 0.7 15.4 Georgia 14.3 2.1 16.4 Montenegro 7.2 12.8 0.9 20.9 Bosnia and Herzegovina 7.0 15.9 2.6 25.5 Kazakhstan 15.9 11.2 1.5 28.6 Israel 23.3 4.7 1.9 29.9 Albania 9.4 18.8 3.5 31.7 Kyrgyz Republic 6.2 19.5 7.7 33.4 Serbia 11.6 23.0 2.2 36.8 Armenia 15.0 23.0 0.8 38.8 Azerbaijan 12.9 24.8 2.3 40.0 Turkey 18.1 18.8 3.3 40.2 Moldova 9.6 30.6 0.2 40.4 Russian Federation 8.0 36.7 6.0 50.7 Belarus 13.4 39.0 1.6 54.0 Ukraine 11.2 43.1 0.6 54.9 Tajikistan 28.5 57.5 86.0 Uzbekistan 0.8 28.2 70.3 99.3 Profit taxes Central Asia & Eastern Europe average (39.5) Labour taxes Other taxes Time to comply (hours) Macedonia, FYR 19 56 44 119 Kosovo 32 41 89 162 Russian Federation 60 76 41 177 Moldova 42 94 45 181 Kazakhstan 75 70 43 188 Uzbekistan 66 69 70 205 Kyrgyz Republic 60 71 79 210 Azerbaijan 60 97 57 214 Tajikistan 80 48 96 224 Turkey 49 80 97 226 Israel 110 60 65 235 Serbia 48 126 105 279 Georgia 109 56 115 280 Belarus 157 88 74 319 Montenegro 43 98 179 320 Albania 119 94 144 357 Armenia 121 162 97 380 Ukraine 100 140 150 390 Bosnia and Herzegovina 68 81 258 407 Corporate income tax Central Asia & Labour taxes Eastern Europe average (256) Consumption taxes Appendix 2: Country sub-indicator results by region 155 Economy sub-indicator results by region: Central Asia & Eastern Europe Number of payments Georgia 11 3 5 Kazakhstan 11 5 7 Russian Federation 1 2 4 7 Armenia 11 8 10 Belarus 1 5 4 10 Turkey 11 9 11 Azerbaijan 1 12 5 18 Ukraine 1 24 3 28 Macedonia, FYR 12 1 16 29 Montenegro 1 12 16 29 Moldova 1 25 5 31 Israel 2 12 19 33 Kosovo 5 12 16 33 Bosnia and Herzegovina 12 1 27 40 Uzbekistan 8 12 21 41 Albania 13 12 17 42 Kyrgyz Republic 5 12 34 51 Serbia 12 12 42 66 Tajikistan 11 12 46 69 Profit taxes Central Asia & Eastern Europe average (29.5) Labour taxes Other taxes 156 Paying Taxes 2014 Economy sub-indicator results by region: EU & EFTA Total Tax Rate (%) Croatia 17.9 1.9 19.8 Luxembourg 4.1 16.0 0.6 20.7 Cyprus 9.1 12.0 1.4 22.5 Ireland 12.3 12.1 1.3 25.7 Denmark 20.3 3.6 3.1 27.0 Bulgaria 4.9 20.2 2.6 27.7 Switzerland 9.2 17.8 2.1 29.1 Iceland 9.0 18.0 2.9 29.9 Slovenia 12.9 18.2 1.4 32.5 United Kingdom 21.6 10.6 1.8 34.0 Latvia 4.9 27.3 3.7 35.9 Netherlands 20.8 18.2 0.3 39.3 Finland 14.1 24.5 1.2 39.8 Norway 24.8 15.9 40.7 Malta 29.7 10.7 0.6 41.0 Poland 14.1 26.0 1.5 41.6 San Marino 12.4 29.4 0.4 42.2 Portugal 15.1 26.7 0.5 42.3 Romania 10.3 31.5 1.1 42.9 Lithuania 6.0 35.2 1.9 43.1 Greece 11.2 32.0 0.8 44.0 Slovak Republic 7.0 39.6 0.6 47.2 Czech Republic 7.7 38.4 2.0 48.1 Estonia 8.1 39.4 1.9 49.4 23.0 Germany 23.0 21.8 4.6 49.4 Hungary 11.6 34.6 3.5 49.7 Sweden 16.0 35.5 0.5 52.0 Austria 15.3 34.7 2.4 52.4 Belgium 6.4 50.3 0.8 57.5 Spain 21.2 36.8 0.6 58.6 France 8.7 51.7 4.3 64.7 Italy 20.3 43.4 2.1 65.8 Profit taxes EU & EFTA average (41.1) Labour taxes Other taxes Appendix 2: Country sub-indicator results by region 157 Economy sub-indicator results by region: EU & EFTA Time to comply (hours) San Marino 4 48 52 Luxembourg 19 14 22 55 Switzerland 15 40 8 63 Ireland 10 40 30 80 Estonia 20 34 27 81 Norway 24 15 44 83 Finland 21 48 24 93 United Kingdom 37 48 25 110 Sweden 50 36 36 122 Netherlands 25 64 34 123 Denmark 25 65 40 130 France 26 80 26 132 Malta 23 92 24 139 Iceland 40 60 40 140 Cyprus 29 78 40 147 Belgium 20 40 100 160 Austria 47 52 67 166 Spain 33 90 44 167 Lithuania 32 85 58 175 Greece 78 46 69 193 Croatia 60 96 40 196 Romania 40 102 58 200 Slovak Republic 42 62 103 207 Germany 41 134 43 218 Slovenia 90 96 74 260 Latvia 31 139 94 264 Italy 39 198 32 269 Portugal 63 116 96 275 Hungary 35 146 96 277 Poland 62 124 100 286 Czech Republic 94 217 102 413 Bulgaria 33 256 165 454 Corporate income tax EU & EFTA average (179) Labour taxes Consumption taxes 158 Paying Taxes 2014 Economy sub-indicator results by region: EU & EFTA Number of payments Norway 1 1 2 4 Sweden 1 1 2 4 Estonia 1 6 7 France 1 2 4 7 Latvia 1 1 5 7 Malta 1 1 5 7 Czech Republic 1 2 5 8 Finland 1 3 4 8 Greece 1 1 6 8 Portugal 1 1 6 8 Spain 1 1 6 8 United Kingdom 1 1 6 8 Germany 2 1 6 9 Ireland 1 1 7 9 Netherlands 1 1 7 9 Denmark 3 1 6 10 Belgium 1 2 8 11 Lithuania 1 2 8 11 Slovenia 1 1 9 11 Austria 1 3 8 12 Hungary 2 2 8 12 Bulgaria 1 1 11 13 Italy 2 1 12 15 Poland 1 1 16 18 Croatia 1 1 17 19 San Marino 3 12 4 19 Switzerland 2 7 10 19 Slovak Republic 1 1 18 20 Luxembourg 5 12 6 23 Iceland 1 13 12 26 Cyprus 5 12 13 30 Romania 4 12 23 39 Profit taxes EU & EFTA average (13.1) Labour taxes Other taxes Appendix 2: Country sub-indicator results by region 159 Economy sub-indicator results by region: Middle East Total Tax Rate (%) Qatar 11.3 11.3 Kuwait 12.4 12.4 Bahrain 13.5 13.5 Saudi Arabia 2.1 12.4 14.5 United Arab Emirates 14.1 0.8 14.9 West Bank and Gaza 16.2 0.3 16.5 Oman 10.0 11.8 0.2 22.0 Iraq 14.2 13.5 0.1 27.8 Jordan 12.8 13.8 2.3 28.9 Lebanon 6.1 24.1 30.2 Yemen, Rep. 20.1 11.3 1.3 32.7 Syrian Arab Republic 20.0 19.3 0.4 39.7 Iran, Islamic Rep. 17.8 25.9 0.4 44.1 Profit taxes Middle East average (23.7) Labour taxes Other taxes Time to comply (hours) United Arab Emirates 12 12 Bahrain 36 36 Qatar 5 36 41 Oman 56 12 68 Saudi Arabia 32 40 72 Kuwait 98 98 Jordan 10 90 51 151 West Bank and Gaza 26 96 48 170 Lebanon 40 100 40 180 Yemen, Rep. 56 72 120 248 Iraq 24 288 312 Syrian Arab Republic 300 36 336 Iran, Islamic Rep.. 32 240 72 344 Corporate income tax Middle East average (159) Labour taxes Consumption taxes Number of payments Saudi Arabia 1 1 1 3 Qatar 1 1 2 4 United Arab Emirates 1 3 4 Kuwait 12 12 Bahrain 12 1 13 Iraq 1 12 13 Oman 1 12 1 14 Lebanon 1 12 6 19 Syrian Arab Republic 2 12 5 19 Iran, Islamic Rep. 1 12 7 20 Jordan 1 12 12 25 West Bank and Gaza 14 12 13 39 Yemen, Rep. 1 24 19 44 Profit taxes Middle East average (17.6) Labour taxes Other taxes 160 Paying Taxes 2014 Economy sub-indicator results by region: North America Total Tax Rate (%) Canada 6.6 12.9 4.8 24.3 United States 27.9 9.9 8.5 46.3 Mexico 24.1 28.2 1.4 53.7 Profit taxes North America average (41.4) Labour taxes Other taxes Time to comply (hours) Canada 45 36 50 131 United States 87 55 33 175 Mexico 170 64 100 334 Corporate income tax North America average (213) Labour taxes Consumption taxes Number of payments Mexico 1 2 3 6 Canada 1 3 4 8 United States 2 4 5 11 Profit taxes North America average (8.3) Labour taxes Other taxes Appendix 2: Country sub-indicator results by region 161 Economy sub-indicator results by region: South America Total Tax Rate (%) Chile 21.2 3.8 2.7 27.7 Suriname 27.9 27.9 Guyana 21.1 8.8 2.6 32.5 Ecuador 16.9 13.7 3.3 33.9 Paraguay 9.6 18.6 6.8 35.0 Peru 23.1 11.0 2.3 36.4 Uruguay 23.6 15.6 2.7 41.9 Venezuela, RB 6.5 18.0 37.2 61.7 Brazil 24.9 39.6 3.8 68.3 Colombia 18.7 28.8 28.5 76.0 Bolivia 18.8 64.6 83.4 Argentina 3.0 29.4 75.4 107.8 Profit taxes South America average (52.7) Labour taxes Other taxes Time to comply (hours) Suriname 48 24 127 199 Colombia 50 87 66 203 Guyana 41 48 167 256 Chile 42 125 124 291 Peru 39 144 110 293 Uruguay 88 114 108 310 Paraguay 144 96 144 384 Argentina 105 84 216 405 Ecuador 108 306 240 654 Venezuela, RB 120 288 384 792 Bolivia 110 507 408 1,025 Brazil 736 490 1,374 2,600 Corporate income tax South America average (618) Labour taxes Consumption taxes Number of payments Chile 1 1 5 7 Ecuador 2 1 5 8 Argentina 1 1 7 9 Brazil 2 2 5 9 Peru 1 2 6 9 Colombia 11 8 10 Paraguay 3 12 13 28 Suriname 4 12 13 29 Uruguay 1 24 8 33 Guyana 6 12 17 35 Bolivia 1 12 29 42 Venezuela, RB 15 28 28 71 Profit taxes South America average (24.2) Labour taxes Other taxes 162 Paying Taxes 2014 Appendix 2: Country sub-indicator results by region 163 Appendix 3 The data tables Table 1: Overall Paying Taxes ranking Table 2: Tax payments Table 3: Time to comply Table 4: Total Tax Rate 164 Paying Taxes 2014 164 Paying Taxes 2014 Table 1: Overall Paying Taxes ranking Table 1: Rankings Table 1: Rankings Economy Overall Rank Economy Overall Rank Afghanistan 98 Ethiopia 109 Albania 146 Fiji 88 Algeria 174 Finland 21 Angola 155 France 52 Antigua and Barbuda 151 Gabon 152 Argentina 153 Gambia, The 184 Armenia 103 Georgia 29 Australia 44 Germany 89 Austria 79 Ghana 68 Azerbaijan 77 Greece 53 Bahamas, The 45 Grenada 90 Bahrain 7 Guatemala 85 Bangladesh 100 Guinea 186 Barbados 112 Guinea-Bissau 153 Belarus 133 Guyana 110 Belgium 76 Haiti 132 Belize 48 Honduras 144 Benin 179 Hong Kong SAR, China 4 Bhutan 104 Hungary 124 Bolivia 185 Iceland 37 Bosnia and Herzegovina 135 India 158 Botswana 47 Indonesia 137 Brazil 159 Iran, Islamic Rep. 139 Brunei Darussalam 20 Iraq 63 Bulgaria 81 Ireland 6 Burkina Faso 160 Israel 93 Burundi 143 Italy 138 Cambodia 65 Jamaica 168 Cameroon 180 Japan 140 Canada 8 Jordan 35 Cape Verde 80 Kazakhstan 18 Central African Republic 188 Kenya 166 Chad 189 Kiribati 10 Chile 38 Korea, Rep. 25 China 120 Kosovo 43 Colombia 104 Kuwait 11 Comoros 123 Kyrgyz Republic 127 Congo, Dem. Rep. 176 Lao PDR 119 Congo, Rep. 183 Latvia 49 Costa Rica 136 Lebanon 39 Côte d'Ivoire 173 Lesotho 101 Croatia 34 Liberia 42 Cyprus 33 Libya 116 Czech Republic 122 Lithuania 56 Denmark 12 Luxembourg 15 Djibouti 66 Macedonia, FYR 26 Dominica 75 Madagascar 61 Dominican Republic 106 Malawi 81 Ecuador 91 Malaysia 36 Egypt, Arab Rep. 148 Maldives 115 El Salvador 165 Mali 157 Equatorial Guinea 177 Malta 27 Eritrea 150 Marshall Islands 96 Estonia 32 Mauritania 181 Appendix 3: The data tables 165 Table 1: Rankings Table 1: Rankings Table 1: Rankings Economy Overall Rank Economy Overall Rank Mauritius 13 Sweden 41 Mexico 118 Switzerland 16 Micronesia, Fed. Sts. 94 Syrian Arab Republic 120 Moldova 95 Taiwan, China 58 Mongolia 74 Tajikistan 178 Montenegro 86 Tanzania 141 Morocco 78 Thailand 70 Mozambique 129 Timor-Leste 55 Myanmar 107 Togo 172 Namibia 114 Tonga 51 Nepal 126 Trinidad and Tobago 97 Netherlands 28 Tunisia 60 New Zealand 23 Turkey 71 Nicaragua 163 Uganda 98 Niger 162 Ukraine 164 Nigeria 170 United Arab Emirates 1 Norway 17 United Kingdom 14 Oman 9 United States 64 Pakistan 166 Uruguay 146 Palau 84 Uzbekistan 168 Panama 175 Vanuatu 30 Papua New Guinea 116 Venezuela, RB 187 Paraguay 125 Vietnam 149 Peru 73 West Bank and Gaza 62 Philippines 131 Yemen, Rep. 129 Poland 113 Zambia 68 Portugal 81 Zimbabwe 142 Puerto Rico 110 Qatar 2 Romania 134 Russian Federation 56 Rwanda 22 Samoa 86 San Marino 40 São Tomé and Príncipe 156 Saudi Arabia 3 Senegal 182 Serbia 161 Seychelles 19 Sierra Leone 128 Singapore 5 Slovak Republic 102 Slovenia 54 Solomon Islands 30 South Africa 24 South Sudan 92 Spain 67 Sri Lanka 171 St. Kitts and Nevis 145 St. Lucia 45 St. Vincent and the Grenadines 72 Sudan 108 Suriname 50 Swaziland 59 166 Paying Taxes 2014 Table 2: Tax payments Table 2: Tax payments Number of payments Economy Total tax payments 3URƄWWD[SD\PHQWV Labour tax payments Other taxes payments Afghanistan 20 1 12 7 Albania 42 13 12 17 Algeria 29 0 12 17 Angola 30 4 12 14 Antigua and Barbuda 57 13 24 20 Argentina 9 1 1 7 Armenia 10 1 1 8 Australia 11 1 4 6 Austria 12 1 3 8 Azerbaijan 18 1 12 5 Bahamas, The 18 0 12 6 Bahrain 13 0 12 1 Bangladesh 20 5 0 15 Barbados 28 4 12 12 Belarus 10 1 5 4 Belgium 11 1 2 8 Belize 29 12 1 16 Benin 55 5 24 26 Bhutan 19 2 13 4 Bolivia 42 1 12 29 Bosnia and Herzegovina 40 12 1 27 Botswana 34 6 13 15 Brazil 9 2 2 5 Brunei Darussalam 27 1 24 2 Bulgaria 13 1 1 11 Burkina Faso 45 1 24 20 Burundi 25 6 4 15 Cambodia 40 12 12 16 Cameroon 44 13 12 19 Canada 8 1 3 4 Cape Verde 30 3 13 14 Central African Republic 56 4 24 28 Chad 54 12 24 18 Chile 7 1 1 5 China 7 2 1 4 Colombia 10 1 1 8 Comoros 33 3 12 18 Congo, Dem. Rep. 32 1 16 15 Congo, Rep. 49 5 24 20 Costa Rica 22 4 1 17 Côte d'Ivoire 62 3 24 35 Croatia 19 1 1 17 Cyprus 30 5 12 13 Czech Republic 8 1 2 5 Denmark 10 3 1 6 Djibouti 35 5 12 18 Dominica 37 5 12 20 Dominican Republic 9 1 4 4 Ecuador 8 2 1 5 Egypt, Arab Rep. 29 1 12 16 El Salvador 53 13 24 16 Equatorial Guinea 46 1 24 21 Eritrea 30 2 12 16 Estonia 7 1 0 6 Ethiopia 30 2 12 16 Fiji 38 5 18 15 Finland 8 1 3 4 France 7 1 2 4 Gabon 26 3 4 19 Gambia, The 50 5 13 32 Georgia 5 1 1 3 Germany 9 2 1 6 Ghana 32 6 12 14 Appendix 3: The data tables 167 Table 2: Tax payments Table 2: Tax payments Number of payments Economy Total tax payments 3URƄWWD[SD\PHQWV Labour tax payments Other taxes payments Greece 8 1 1 6 Grenada 30 1 12 17 Guatemala 7 1 1 5 Guinea 57 3 36 18 Guinea-Bissau 46 5 12 29 Guyana 35 6 12 17 Haiti 47 6 25 16 Honduras 47 5 13 29 Hong Kong SAR, China 3 1 1 1 Hungary 12 2 2 8 Iceland 26 1 13 12 India 33 2 24 7 Indonesia 52 13 24 15 Iran, Islamic Rep. 20 1 12 7 Iraq 13 1 12 0 Ireland 9 1 1 7 Israel 33 2 12 19 Italy 15 2 1 12 Jamaica 36 4 12 20 Japan 14 2 2 10 Jordan 25 1 12 12 Kazakhstan 7 1 1 5 Kenya 41 5 14 22 Kiribati 7 5 2 0 Korea, Rep. 10 1 2 7 Kosovo 33 5 12 16 Kuwait 12 0 12 0 Kyrgyz Republic 51 5 12 34 Lao PDR 34 4 12 18 Latvia 7 1 1 5 Lebanon 19 1 12 6 Lesotho 33 5 12 16 Liberia 33 5 12 16 Libya 19 4 12 3 Lithuania 11 1 2 8 Luxembourg 23 5 12 6 Macedonia, FYR 29 12 1 16 Madagascar 23 1 8 14 Malawi 35 5 13 17 Malaysia 13 2 2 9 Maldives 30 3 12 15 Mali 35 4 24 7 Malta 7 1 1 5 Marshall Islands 21 0 16 5 Mauritania 37 1 13 23 Mauritius 8 1 1 6 Mexico 6 1 2 3 Micronesia, Fed. Sts. 21 0 4 17 Moldova 31 1 25 5 Mongolia 41 12 12 17 Montenegro 29 1 12 16 Morocco 6 1 1 4 Mozambique 37 7 12 18 Myanmar 31 5 12 14 Namibia 37 3 12 22 Nepal 34 4 12 18 Netherlands 9 1 1 7 New Zealand 8 1 2 5 Nicaragua 42 1 24 17 Niger 41 3 14 24 Nigeria 47 2 26 19 Norway 4 1 1 2 Oman 14 1 12 1 168 Paying Taxes 2014 Table 2: Tax payments Table 2: Tax payments Number of payments Economy Total tax payments 3URƄWWD[SD\PHQWV Labour tax payments Other taxes payments Pakistan 47 5 25 17 Palau 11 4 4 3 Panama 52 5 16 31 Papua New Guinea 32 1 13 18 Paraguay 28 3 12 13 Peru 9 1 2 6 Philippines 36 1 25 10 Poland 18 1 1 16 Portugal 8 1 1 6 Puerto Rico 16 5 6 5 Qatar 4 1 1 2 Romania 39 4 12 23 Russian Federation 7 1 2 4 Rwanda 17 4 4 9 Samoa 37 5 24 8 San Marino 19 3 12 4 São Tomé and Príncipe 42 2 12 28 Saudi Arabia 3 1 1 1 Senegal 59 3 36 20 Serbia 66 12 12 42 Seychelles 27 12 12 3 Sierra Leone 33 5 12 16 Singapore 5 1 1 3 Slovak Republic 20 1 1 18 Slovenia 11 1 1 9 Solomon Islands 34 5 12 17 South Africa 7 1 2 4 South Sudan 36 5 12 19 Spain 8 1 1 6 Sri Lanka 58 5 24 29 St. Kitts and Nevis 36 4 12 20 St. Lucia 32 1 12 19 St. Vincent and the Grenadines 36 4 12 20 Sudan 42 2 12 28 Suriname 29 4 12 13 Swaziland 33 2 13 18 Sweden 4 1 1 2 Switzerland 19 2 7 10 Syrian Arab Republic 19 2 12 5 Taiwan, China 12 2 3 7 Tajikistan 69 11 12 46 Tanzania 48 5 24 19 Thailand 22 2 13 7 Timor-Leste 18 5 12 1 Togo 50 5 24 21 Tonga 30 1 12 17 Trinidad and Tobago 39 4 24 11 Tunisia 8 1 4 3 Turkey 11 1 1 9 Uganda 31 3 12 16 Ukraine 28 1 24 3 United Arab Emirates 4 0 1 3 United Kingdom 8 1 1 6 United States 11 2 4 5 Uruguay 33 1 24 8 Uzbekistan 41 8 12 21 Vanuatu 31 0 12 19 Venezuela, RB 71 15 28 28 Vietnam 32 6 12 14 West Bank and Gaza 39 14 12 13 Yemen, Rep. 44 1 24 19 Zambia 38 5 13 20 Zimbabwe 49 5 14 30 Appendix 3: The data tables 169 Table 3: Time to comply Table 3: Time to comply Number of hours Economy Total tax time Corporate income tax time Labour tax time Consumption tax time Afghanistan 275 77 120 78 Albania 357 119 94 144 Algeria 451 152 110 189 Angola 282 75 125 82 Antigua and Barbuda 207 23 136 48 Argentina 405 105 84 216 Armenia 380 121 162 97 Australia 105 37 18 50 Austria 166 47 52 67 Azerbaijan 214 60 97 57 Bahamas, The 58 0 48 10 Bahrain 36 0 36 0 Bangladesh 302 140 0 162 Barbados 237 27 162 48 Belarus 319 157 88 74 Belgium 160 20 40 100 Belize 147 27 60 60 Benin 270 30 120 120 Bhutan 274 250 24 0 Bolivia 1025 110 507 408 Bosnia and Herzegovina 407 68 81 258 Botswana 152 40 40 72 Brazil 2600 736 490 1374 Brunei Darussalam 96 66 30 0 Bulgaria 454 33 256 165 Burkina Faso 270 30 120 120 Burundi 274 76 48 150 Cambodia 173 23 84 66 Cameroon 630 174 162 294 Canada 131 45 36 50 Cape Verde 186 35 85 66 Central African Republic 483 24 240 219 Chad 732 300 216 216 Chile 291 42 125 124 China 318 70 142 106 Colombia 203 50 87 66 Comoros 100 4 48 48 Congo, Dem. Rep. 348 116 124 108 Congo, Rep. 602 275 146 181 Costa Rica 226 18 100 108 Côte d'Ivoire 270 30 120 120 Croatia 196 60 96 40 Cyprus 147 29 78 40 Czech Republic 413 94 217 102 Denmark 130 25 65 40 Djibouti 82 30 36 16 Dominica 117 15 48 54 Dominican Republic 324 82 80 162 Ecuador 654 108 306 240 Egypt, Arab Rep. 392 69 165 158 El Salvador 320 128 96 96 Equatorial Guinea 492 145 160 187 Eritrea 216 24 96 96 Estonia 81 20 34 27 Ethiopia 306 150 132 24 Fiji 185 57 68 60 Finland 93 21 48 24 France 132 26 80 26 Gabon 488 137 131 220 Gambia, The 376 40 96 240 Georgia 280 109 56 115 Germany 218 41 134 43 Ghana 224 40 88 96 170 Paying Taxes 2014 Table 3: Time to comply Table 3: Time to comply Number of hours Economy Total tax time Corporate income tax time Labour tax time Consumption tax time Greece 193 78 46 69 Grenada 140 32 72 36 Guatemala 326 44 126 156 Guinea 440 32 192 216 Guinea-Bissau 208 160 24 24 Guyana 256 41 48 167 Haiti 184 40 72 72 Honduras 224 35 93 96 Hong Kong SAR, China 78 50 28 0 Hungary 277 35 146 96 Iceland 140 40 60 40 India 243 45 93 105 Indonesia 259 75 94 90 Iran, Islamic Rep. 344 32 240 72 Iraq 312 24 288 0 Ireland 80 10 40 30 Israel 235 110 60 65 Italy 269 39 198 32 Jamaica 368 30 290 48 Japan 330 155 140 35 Jordan 151 10 90 51 Kazakhstan 188 75 70 43 Kenya 308 43 51 214 Kiribati 120 48 72 0 Korea, Rep. 187 82 80 25 Kosovo 162 32 41 89 Kuwait 98 0 98 0 Kyrgyz Republic 210 60 71 79 Lao PDR 362 138 42 182 Latvia 264 31 139 94 Lebanon 180 40 100 40 Lesotho 324 70 104 150 Liberia 151 60 60 31 Libya 889 679 210 0 Lithuania 175 32 85 58 Luxembourg 55 19 14 22 Macedonia, FYR 119 19 56 44 Madagascar 183 9 72 102 Malawi 175 67 78 30 Malaysia 133 26 77 30 Maldives 413 96 88 229 Mali 270 30 120 120 Malta 139 23 92 24 Marshall Islands 128 0 96 32 Mauritania 696 120 96 480 Mauritius 152 36 48 68 Mexico 334 170 64 100 Micronesia, Fed. Sts. 128 0 96 32 Moldova 181 42 94 45 Mongolia 192 57 63 72 Montenegro 320 43 98 179 Morocco 232 70 42 120 Mozambique 230 50 60 120 Myanmar 155 32 25 98 Namibia 314 40 46 228 Nepal 326 120 84 122 Netherlands 123 25 64 34 New Zealand 152 34 59 59 Nicaragua 207 67 76 64 Niger 270 30 120 120 Nigeria 956 398 396 162 Norway 83 24 15 44 Oman 68 56 12 0 Appendix 3: The data tables 171 Table 3: Time to comply Table 3: Time to comply Number of hours Economy Total tax time Corporate income tax time Labour tax time Consumption tax time Pakistan 577 40 40 497 Palau 142 46 96 0 Panama 417 83 144 190 Papua New Guinea 207 153 8 46 Paraguay 384 144 96 144 Peru 293 39 144 110 Philippines 193 42 38 113 Poland 286 62 124 100 Portugal 275 63 116 96 Puerto Rico 218 80 60 78 Qatar 41 5 36 0 Romania 200 40 102 58 Russian Federation 177 60 76 41 Rwanda 113 19 36 58 Samoa 224 48 96 80 San Marino 52 4 48 0 São Tomé and Príncipe 424 40 192 192 Saudi Arabia 72 32 40 0 Senegal 644 114 96 434 Serbia 279 48 126 105 Seychelles 76 40 36 0 Sierra Leone 353 15 168 170 Singapore 82 32 10 40 Slovak Republic 207 42 62 103 Slovenia 260 90 96 74 Solomon Islands 80 8 30 42 South Africa 200 100 50 50 South Sudan 218 56 78 84 Spain 167 33 90 44 Sri Lanka 210 16 52 142 St. Kitts and Nevis 203 27 128 48 St. Lucia 97 11 51 35 St. Vincent and the Grenadines 108 14 49 45 Sudan 180 70 70 40 Suriname 199 48 24 127 Swaziland 110 8 48 54 Sweden 122 50 36 36 Switzerland 63 15 40 8 Syrian Arab Republic 336 300 36 0 Taiwan, China 221 161 27 33 Tajikistan 224 80 48 96 Tanzania 176 62 54 60 Thailand 264 160 48 56 Timor-Leste 276 132 144 0 Togo 270 30 120 120 Tonga 182 8 30 144 Trinidad and Tobago 210 45 75 90 Tunisia 144 64 30 50 Turkey 226 49 80 97 Uganda 209 41 66 102 Ukraine 390 100 140 150 United Arab Emirates 12 0 12 0 United Kingdom 110 37 48 25 United States 175 87 55 33 Uruguay 310 88 114 108 Uzbekistan 205 66 69 70 Vanuatu 120 0 24 96 Venezuela, RB 792 120 288 384 Vietnam 872 217 335 320 West Bank and Gaza 170 26 96 48 Yemen, Rep. 248 56 72 120 Zambia 183 63 60 60 Zimbabwe 242 78 96 68 172 Paying Taxes 2014 Table 4: Total Tax Rate Table 4: Total Tax Rate Total Tax Rate Economy Total Tax Rate 3URƄWWD[7RWDO7D[5DWH Labour tax Total Tax Rate Other taxes Total Tax Rate Afghanistan 36.3 0.0 0.0 36.3 Albania 31.7 9.4 18.8 3.5 Algeria 71.9 6.6 29.6 35.7 Angola 52.1 25.2 9.0 17.9 Antigua and Barbuda 41.0 26.2 9.5 5.3 Argentina 107.8 3.0 29.4 75.4 Armenia 38.8 15.0 23.0 0.8 Australia 47.0 26.2 20.2 0.6 Austria 52.4 15.3 34.7 2.4 Azerbaijan 40.0 12.9 24.8 2.3 Bahamas, The 46.6 0.0 6.1 40.5 Bahrain 13.5 0.0 13.5 0.0 Bangladesh 35.0 25.7 0.0 9.3 Barbados 40.8 25.5 12.3 3.0 Belarus 54.0 13.4 39.0 1.6 Belgium 57.5 6.4 50.3 0.8 Belize 33.2 24.7 7.0 1.5 Benin 65.9 14.8 27.3 23.8 Bhutan 40.8 36.3 0.0 4.5 Bolivia 83.4 0.0 18.8 64.6 Bosnia and Herzegovina 25.5 7.0 15.9 2.6 Botswana 25.4 21.7 0.0 3.7 Brazil 68.3 24.9 39.6 3.8 Brunei Darussalam 16.1 7.6 8.5 0.0 Bulgaria 27.7 4.9 20.2 2.6 Burkina Faso 43.9 15.2 22.6 6.1 Burundi 51.6 38.6 10.2 2.8 Cambodia 21.4 19.1 0.1 2.2 Cameroon 48.8 30.0 18.3 0.5 Canada 24.3 6.6 12.9 4.8 Cape Verde 37.2 18.0 18.5 0.7 Central African Republic 87.6 0.0 19.8 67.8 Chad 73.8 31.3 28.4 14.1 Chile 27.7 21.2 3.8 2.7 China 63.7 6.2 49.6 7.9 Colombia 76.0 18.7 28.8 28.5 Comoros 217.9 31.4 0.0 186.5 Congo, Dem. Rep. 118.1 58.9 7.9 51.3 Congo, Rep. 63.8 0.0 31.3 32.5 Costa Rica 55.3 19.2 29.5 6.6 Côte d'Ivoire 46.4 8.8 22.1 15.5 Croatia 19.8 0.0 17.9 1.9 Cyprus 22.5 9.1 12.0 1.4 Czech Republic 48.1 7.7 38.4 2.0 Denmark 27.0 20.3 3.6 3.1 Djibouti 37.8 17.7 17.7 2.4 Dominica 37.1 26.0 7.9 3.2 Dominican Republic 43.5 23.7 18.6 1.2 Ecuador 33.9 16.9 13.7 3.3 Egypt, Arab Rep. 42.6 13.2 25.8 3.6 El Salvador 38.1 20.4 17.2 0.5 Equatorial Guinea 44.1 0.0 25.4 18.7 Eritrea 84.5 8.8 0.0 75.7 Estonia 49.4 8.1 39.4 1.9 Ethiopia 33.4 26.0 4.2 3.2 Fiji 31.2 20.5 10.4 0.3 Finland 39.8 14.1 24.5 1.2 France 64.7 8.7 51.7 4.3 Gabon 43.5 18.4 22.7 2.4 Gambia, The 283.2 6.1 12.8 264.3 Georgia 16.4 14.3 0.0 2.1 Germany 49.4 23.0 21.8 4.6 Ghana 22.9 22.0 0.7 0.2 Appendix 3: The data tables 173 Table 4: Total Tax Rate Table 4: Total Tax Rate Total Tax Rate Economy Total Tax Rate 3URƄWWD[7RWDO7D[5DWH Labour tax Total Tax Rate Other taxes Total Tax Rate Greece 44.0 11.2 32.0 0.8 Grenada 45.3 27.6 5.6 12.1 Guatemala 40.9 25.9 14.3 0.7 Guinea 91.2 17.2 27.8 46.2 Guinea-Bissau 45.9 14.9 24.8 6.2 Guyana 32.5 21.1 8.8 2.6 Haiti 40.4 23.8 12.4 4.2 Honduras 39.2 26.1 5.1 8.0 Hong Kong SAR, China 22.9 17.5 5.3 0.1 Hungary 49.7 11.6 34.6 3.5 Iceland 29.9 9.0 18.0 2.9 India 62.8 24.4 20.7 17.7 Indonesia 32.2 18.1 10.8 3.3 Iran, Islamic Rep. 44.1 17.8 25.9 0.4 Iraq 27.8 14.2 13.5 0.1 Ireland 25.7 12.3 12.1 1.3 Israel 29.9 23.3 4.7 1.9 Italy 65.8 20.3 43.4 2.1 Jamaica 44.3 26.4 12.9 5.0 Japan 49.7 27.2 17.9 4.6 Jordan 28.9 12.8 13.8 2.3 Kazakhstan 28.6 15.9 11.2 1.5 Kenya 44.2 28.2 6.8 9.2 Kiribati 31.8 23.3 8.5 0.0 Korea, Rep. 27.9 14.2 13.4 0.3 Kosovo 15.4 9.1 5.6 0.7 Kuwait 12.4 0.0 12.4 0.0 Kyrgyz Republic 33.4 6.2 19.5 7.7 Lao PDR 26.8 20.5 5.6 0.7 Latvia 35.9 4.9 27.3 3.7 Lebanon 30.2 6.1 24.1 0.0 Lesotho 16.0 13.1 0.0 2.9 Liberia 26.6 18.3 5.4 2.9 Libya 31.6 20.8 10.5 0.3 Lithuania 43.1 6.0 35.2 1.9 Luxembourg 20.7 4.1 16.0 0.6 Macedonia, FYR 8.2 6.3 0.0 1.9 Madagascar 35.8 14.0 20.3 1.5 Malawi 34.9 20.7 9.6 4.6 Malaysia 36.3 19.3 15.6 1.4 Maldives 28.9 11.7 7.9 9.3 Mali 49.5 9.6 34.3 5.6 Malta 41.0 29.7 10.7 0.6 Marshall Islands 64.8 0.0 11.8 53.0 Mauritania 68.2 0.0 17.6 50.6 Mauritius 28.2 10.6 10.3 7.3 Mexico 53.7 24.1 28.2 1.4 Micronesia, Fed. Sts. 59.9 0.0 7.9 52.0 Moldova 40.4 9.6 30.6 0.2 Mongolia 24.6 10.2 12.4 2.0 Montenegro 20.9 7.2 12.8 0.9 Morocco 49.6 25.2 22.7 1.7 Mozambique 37.5 30.9 4.5 2.1 Myanmar 48.9 26.6 0.0 22.3 Namibia 21.8 17.7 1.0 3.1 Nepal 31.5 17.2 11.3 3.0 Netherlands 39.3 20.8 18.2 0.3 New Zealand 34.6 29.9 3.1 1.6 Nicaragua 64.9 23.0 20.3 21.6 Niger 48.0 21.5 20.1 6.4 Nigeria 33.8 22.3 10.8 0.7 Norway 40.7 24.8 15.9 0.0 Oman 22.0 10.0 11.8 0.2 174 Paying Taxes 2014 Table 4: Total Tax Rate Table 4: Total Tax Rate Total Tax Rate Economy Total Tax Rate 3URƄWWD[7RWDO7D[5DWH Labour tax Total Tax Rate Other taxes Total Tax Rate Pakistan 34.7 18.0 15.1 1.6 Palau 75.2 65.8 9.3 0.1 Panama 40.5 11.4 19.8 9.3 Papua New Guinea 42.1 22.0 11.7 8.4 Paraguay 35.0 9.6 18.6 6.8 Peru 36.4 23.1 11.0 2.3 Philippines 44.5 19.6 10.8 14.1 Poland 41.6 14.1 26.0 1.5 Portugal 42.3 15.1 26.7 0.5 Puerto Rico 50.7 15.8 14.4 20.5 Qatar 11.3 0.0 11.3 0.0 Romania 42.9 10.3 31.5 1.1 Russian Federation 50.7 8.0 36.7 6.0 Rwanda 29.9 21.9 5.6 2.4 Samoa 18.9 11.9 7.0 0.0 San Marino 42.2 12.4 29.4 0.4 São Tomé and Príncipe 32.5 22.1 6.8 3.6 Saudi Arabia 14.5 2.1 12.4 0.0 Senegal 48.5 18.0 24.0 6.5 Serbia 36.8 11.6 23.0 2.2 Seychelles 25.7 23.3 1.7 0.7 Sierra Leone 32.4 18.2 11.3 2.9 Singapore 27.1 4.9 17.6 4.6 Slovak Republic 47.2 7.0 39.6 0.6 Slovenia 32.5 12.9 18.2 1.4 Solomon Islands 24.9 15.2 8.5 1.2 South Africa 30.1 21.9 4.1 4.1 South Sudan 28.7 7.1 19.2 2.4 Spain 58.6 21.2 36.8 0.6 Sri Lanka 55.1 1.0 16.9 37.2 St. Kitts and Nevis 51.9 32.2 11.3 8.4 St. Lucia 34.6 25.8 5.6 3.2 St. Vincent and the Grenadines 38.7 30.2 5.1 3.4 Sudan 36.1 13.8 19.2 3.1 Suriname 27.9 27.9 0.0 0.0 Swaziland 36.5 28.2 4.0 4.3 Sweden 52.0 16.0 35.5 0.5 Switzerland 29.1 9.2 17.8 2.1 Syrian Arab Republic 39.7 20.0 19.3 0.4 Taiwan, China 35.0 12.6 19.0 3.4 Tajikistan 86.0 0.0 28.5 57.5 Tanzania 44.9 20.4 18.0 6.5 Thailand 29.8 22.5 4.0 3.3 Timor-Leste 11.0 11.0 0.0 0.0 Togo 49.4 9.3 27.1 13.0 Tonga 29.6 22.9 5.6 1.1 Trinidad and Tobago 29.1 21.6 5.8 1.7 Tunisia 62.4 15.4 25.2 21.8 Turkey 40.2 18.1 18.8 3.3 Uganda 36.6 25.2 11.3 0.1 Ukraine 54.9 11.2 43.1 0.6 United Arab Emirates 14.9 0.0 14.1 0.8 United Kingdom 34.0 21.6 10.6 1.8 United States 46.3 27.9 9.9 8.5 Uruguay 41.9 23.6 15.6 2.7 Uzbekistan 99.3 0.8 28.2 70.3 Vanuatu 8.4 0.0 4.5 3.9 Venezuela, RB 61.7 6.5 18.0 37.2 Vietnam 35.2 11.4 23.7 0.1 West Bank and Gaza 16.5 16.2 0.0 0.3 Yemen, Rep. 32.7 20.1 11.3 1.3 Zambia 15.1 1.2 10.4 3.5 Zimbabwe 35.3 20.8 5.1 9.4 Appendix 3: The data tables 175 World Bank and IFC Paying Taxes team Rita Ramalho Joanna Nasr Nina Paustian Michelle Hanf Valter Deperon Nadia Novik PwC Paying Taxes team Neville Howlett Tom Dane Hong Wang Karla Cortez Jialu Pan 176 Paying Taxes 2014 The Total Tax Rate included in the survey by This publication may be copied and disseminated the World Bank has been calculated using the in its entirety, retaining all featured logos, names, broad principles of the PricewaterhouseCoopers copyright notice and disclaimers. Extracts from methodology. The application of these principles this publication may be copied and disseminated, by the World Bank Group has not been veriĺed, including publication in other documentation, validated or audited by PricewaterhouseCoopers, provided always that the said extracts are duly and therefore, PricewaterhouseCoopers cannot referenced, that the extract is clearly identiĺed as make any representations or warranties with such and that a source notice is used as follows: regard to the accuracy of the information for extracts from any section of this publication generated by the World Bank Group’s models. In except Chapter One, use the source notice: “© addition, the World Bank Group has not veriĺed, 2013 PricewaterhouseCoopers. All rights reserved. validated or audited any information collected Extract from “Paying Taxes 2014” publication, by PricewaterhouseCoopers beyond the scope available on www.pwc.com/payingtaxes”. For of Doing Business Paying Taxes data, and extracts from Chapter One only, use the source therefore, the World Bank Group cannot make notice: “© 2013 The World Bank and International any representations or warranties with regard Finance Corporation. All rights reserved. Extract to the accuracy of the information generated by from “Paying Taxes 2014” publication, available on PricewaterhouseCoopers’ own research. www.pwc.com/payingtaxes”. The World Bank Group’s Doing Business tax All other queries on rights and licenses, including ranking indicator includes two components in subsidiary rights, should be addressed to the addition to the Total Tax Rate. These estimate Of ĺce of the Publisher, The World Bank, 1818 H compliance costs by looking at hours spent on Street NW, Washington, DC 20433, USA; fax: 202- tax work and the number of tax payments made 522-2625; e-mail: pubrights@worldbank.org. in a tax year. These calculations do not follow any PricewaterhouseCoopers methodology © 2013 PricewaterhouseCoopers, the World but do attempt to provide data which is Bank and International Finance Corporation. consistent with the tax compliance cost aspect All rights reserved. “PricewaterhouseCoopers” of the PricewaterhouseCoopers Total Tax refers to the network of member ĺrms of Contribution}framework. PricewaterhouseCoopers International Limited, each of which is a separate and independent The ĺrms of the PricewaterhouseCoopers global legal entity. The World Bank refers to the legally network (www.pwc.com) provide industry-focused separate but af ĺliated international organizations: assurance, tax and advisory services to build International Bank for Reconstruction public trust and enhance value for clients and their and Development and International stakeholders. More than 180,000 people in 158 Development}Association. countries across its network share their thinking, experience and solutions to develop fresh 10/13. Design Services 28324. perspectives and practical advice. This publication has been prepared as general information on matters of interest only, and does not constitute professional advice. No one should act upon the information contained in this publication without obtaining speciĺc professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, neither PricewaterhouseCoopers nor the World Bank Group accept or assume any liability, responsibility or duty of care for any consequences of anyone acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. The World Bank Group does not guarantee the accuracy of the data included in this work. The boundaries, colours, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank Group concerning the legal status of any territory or the endorsement or acceptance of such boundaries. The ĺndings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily reĻect the views of the World Bank, IFC and its Boards of Executive Directors or the governments they represent. Appendix 3: The data tables 177 www.pwc.com/payingtaxes www.doingbusiness.org