PwC: Canada makes paying taxes look easy

By Rob Starr, Content Manager, Big4.com

This year Canada places 8th overall when it comes to its ease of paying taxes for businesses, according to Paying Taxes 2013 – a joint study from PwC, the World Bank and the International Finance Corporation (IFC) that looks at tax regimes in 185 economies around the world. The report highlights Canada planning to achieve an internationally competitive 25% combined federal and provincial corporate income tax rate by the end of the year, and with tax administrators embracing technology to help make it easier and more efficient to file and pay taxes.

Paying Taxes 2013 measures the overall ease of paying taxes for a hypothetical small to medium-sized domestic business by assessing three indicators: number of tax payments per year; time taken to compile returns and submit tax payments; and by calculating companies’ total tax liability as a percentage of pre-tax profits.

Jason Safar, Partner, Tax Services, PwC comments:

One of the biggest reasons for Canada’s current top 10 position is the country’s competitive Total Tax Rate (TTR), which has dropped from 49.1% in 2004 to 26.9% in 2011. “Efforts to make Canada more tax-competitive and create a business-friendly climate are evident with the recent reforms initiated by the provincial and federal governments,”he said. “Canada’s current tax laws have attractive tax regimes, which impact all companies – in particular small-medium sized domestic companies. With companies benefiting from a special reduced corporate income tax rate, this not only results in a lower Total Tax Rate, but leads to a decline in the number of hours spent by companies to fulfill tax obligations.”