A new report, launched today by the World Bank, IFC and PricewaterhouseCoopers, shows that tax authorities worldwide are overhauling tax systems by reducing taxes, streamlining administrative processes and modernizing payment systems. Paying Taxes 2009, the third report in an annual series, is expected to prompt further dialogue between governments and businesses on improving tax systems.
With the current global economic turmoil, economies around the world will be finding that tax revenues are coming under pressure. This will cause them to examine the effectiveness of their tax systems – not just the rates that they charge but the way the systems work. The aim of the Doing Business project is to provide an objective basis for improving the regulatory environment for business, informing the analysis of regulatory burden and providing insight for reformers.
The report draws on the Doing Business 2009 report that measures the ease of paying taxes for mid-size domestic companies in 181 economies, analyses tax systems and tracks related reform efforts. It includes examples of how 18 economies have made use of data from the previous global Doing Business reports and provides insight into discussions with governments and other stakeholders generated by earlier Paying Taxes reports.
The report draws on the Doing Business 2009 report that measures the ease of paying taxes for mid-size domestic companies in 181 economies, analyses tax systems and tracks related reform efforts. It includes examples of how 18 economies have made use of data from the previous global Doing Business reports and provides insight into discussions with governments and other stakeholders generated by earlier Paying Taxes reports.
Paying Taxes 2009 finds that in 2007/08:
• Thirty-six economies made it easier to pay taxes. This year’s top reformer is the Dominican Republic. Malaysia is the runner-up.
• The most popular reforms were reducing corporate income tax rates (in 21 economies) and improving electronic filing and payments systems efficiency (in 12 economies).
• Eight economies reduced the number of taxes paid by business.
• On average, corporate income tax accounts for only 13 percent of tax payments, 26 percent of compliance time, and 37 percent of the total tax rate (tax cost to the case study company).
• Employment taxes account for 34 percent of the total tax rate, taking into account only amounts borne by the employer. Employment taxes are particularly prevalent in the European Union and account for 65 percent of the total tax rate for the case study company in the region.
• On average, 36 percent of the overall time to comply with tax systems and 48 percent of the number of tax payments are spent on consumption taxes.
Susan Symons, PricewaterhouseCoopers LLP partner, said, “Corporate income tax reform has had a positive impact for government and business in a number of economies, yet these benefits could be multiplied if tax reform is looked at in its entirety. Tax reform should include all business taxes - not just corporate income tax. It should include all administrative aspects and the relationships between government and business generally. These are all fundamental to effective tax systems.”
Rita Ramalho, World Bank-IFC economist, said, “Countries are easing the complexity of their tax system and reducing the cost burden for businesses. Since 2004, average total tax rates have been reduced by 3 percent and time to comply with taxes decreased by 5 percent. This reform effort can broaden the tax base and increase tax revenues.”
For more information about Paying Taxes, visit www.doingbusiness.org/taxes
• Thirty-six economies made it easier to pay taxes. This year’s top reformer is the Dominican Republic. Malaysia is the runner-up.
• The most popular reforms were reducing corporate income tax rates (in 21 economies) and improving electronic filing and payments systems efficiency (in 12 economies).
• Eight economies reduced the number of taxes paid by business.
• On average, corporate income tax accounts for only 13 percent of tax payments, 26 percent of compliance time, and 37 percent of the total tax rate (tax cost to the case study company).
• Employment taxes account for 34 percent of the total tax rate, taking into account only amounts borne by the employer. Employment taxes are particularly prevalent in the European Union and account for 65 percent of the total tax rate for the case study company in the region.
• On average, 36 percent of the overall time to comply with tax systems and 48 percent of the number of tax payments are spent on consumption taxes.
Susan Symons, PricewaterhouseCoopers LLP partner, said, “Corporate income tax reform has had a positive impact for government and business in a number of economies, yet these benefits could be multiplied if tax reform is looked at in its entirety. Tax reform should include all business taxes - not just corporate income tax. It should include all administrative aspects and the relationships between government and business generally. These are all fundamental to effective tax systems.”
Rita Ramalho, World Bank-IFC economist, said, “Countries are easing the complexity of their tax system and reducing the cost burden for businesses. Since 2004, average total tax rates have been reduced by 3 percent and time to comply with taxes decreased by 5 percent. This reform effort can broaden the tax base and increase tax revenues.”
For more information about Paying Taxes, visit www.doingbusiness.org/taxes
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