PwC: Tax reforms continue worldwide

By Rob Starr, Content Manager, Big4.com

Worldwide governments continue to reform their tax systems despite the recent economic uncertainty, according to a report issued by PwC, the World Bank and the IFC in Johannesburg recently.

South Africa’s tax system continues to be ranked number one among the BRICS (Brazil, Russia, India China, and South Africa) economies for its efficiency and in easing the compliance burden for taxpayers. This year South Africa’s worldwide ranking rose four points from 36 to 32 out of the 185 economies that took part in the study. Charles de Wet, PwC Tax Partner, says: “The high ranking was largely due to the success with electronic filing and the way returns are submitted and paid through efiling, resulting in nine kinds of payment being included for South Africa’s total tax.”

The Total Tax Rate measures the burden of all the taxes that a company must pay in relation to its commercial profit. Therefore all kinds of taxes that impose a cost on the business are considered, such as property taxes, labour taxes, and other payments that do not require filing, such as a dividend tax, capital gains tax, environmental tax, financial transaction tax, and vehicle and road tax.

The global average for a medium company is a Total Tax Rate of 44.7 percent, 27.2 payments, and spending 267 hours to comply with its tax requirements. In the eight years since the study began, the time to comply has fallen by 54 hours, almost seven working days, and the number of payments has declined by more than six, while the Total Tax Rate has fallen nearly 1 percentage point for each year.