By Rob Starr, Content Manager, Big4.com
A new report from the World Bank, IFC, and PwC finds that governments continue to reform their tax systems despite global economic uncertainty. The Paying Taxes 2013 study looks at tax regimes in 185 economies and finds that the most common tax reform is the introduction or improvement of online systems for tax compliance, which occurred in 16 economies.
The report finds that on average a medium company pays a Total Tax Rate of 44.7 percent of profits, making 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 percent for each year.
An economic analysis undertaken by PwC senior economic adviser Andrew Sentence and featured in the report shows that in economies where action was taken to reduce complexity in tax administration – both in terms of the number of payments and the time taken to deal with tax matters – there has tended to be higher economic growth.
Reforms continue around the world. However, the report finds that the number of economies reforming has fallen from 35 last year to 31 in the most recent study. The focus continues to be on reducing the administrative burden of the tax system. In 2011, the time to comply fell by an 8-hour day and the number of payments dropped by almost two, while the Total Tax Rate fell by only 0.3 percent.