This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as measures the administrative burden in paying taxes and contributions. The most recent round of data collection for the project was completed on June 30, 2017 covering for the Paying Taxes indicator calendar year 2016 (January 1, 2016 – December 31, 2016).

Last year (Doing Business 2017) the scope of data collection was expanded to better understand the overall tax environment in an economy. The questionnaire was expanded to include new questions on post-filing processes: VAT refund and tax audit. The data shows where postfiling processes and practices work efficiently and what drives the differences in the overall tax compliance cost across economies.

The new section covers both the legal framework and the administrative burden on businesses to comply with postfiling processes.  See the methodology for more information.

Good Practices

- Offering electronic filing and payment
- Keeping it simple: one tax base, one tax
- Adopting self-assessment as an effective tool for tax collection
- Effective tax administration through risk-based audits



An electronic system for filing and paying taxes, if implemented well and used by most taxpayers, benefits both tax authorities and firms. For tax authorities, electronic filing lightens the workload and reduces operational costs—such as the costs of processing, storing and handling tax returns. At the same time, it increases tax compliance and saves time. For taxpayers, electronic filing saves time by reducing calculation errors on tax returns and making it easier to prepare, file and pay taxes (1). Both sides benefit from a reduction in potential incidents of corruption, which are more likely to occur with more frequent contact with tax administration staff (2).

Rolling out an electronic filing and payment system and educating taxpayers in its use are not easy tasks for a government. The necessary infrastructure must be put into place, especially where not all citizens have broadband access. Consider the example of China, where the tax authorities have invested resources and human efforts to improve China's tax filing and payment environment and streamline procedures for handling tax matters:


  • The tax authority introduced the 12366 taxpayer service hot line in 2005 to explain tax policies and rules. The center was upgraded over the years.
  • In 2013, the “Spring Breeze Campaign” was launched to ease tax compliance burden. This increased the cooperation between the Local Tax Bureau (LTB) and the State Administration of Taxation (STB), provided e-notices to taxpayers and reduced the number of tax filings for certain taxpayers.
  • In 2015, the government launched the “Internet + Taxation Initiative” to unlock the potential of big data for taxpayers’ services, such as data sharing among more government bodies, on-line training and e-invoices providing greater efficiency to taxpayers.
  • The B2V reform was completed in 2016 reducing taxpayers' tax cost by billions.
  • The cancellation of the manual VAT invoice verification in 2016 reduced taxpayers’ time to deal with input VAT invoices.

Lastly, in 2016 the Golden Tax III system was introduced to integrate all previous tax-related systems into one, which will standardize tax compliance procedures, eliminate duplicated filing, and improve tax authorities’ efficiency. China is far from the only country to undertake the challenging process of introducing an electronic option.

By 2016, 92 economies had fully implemented electronic filing and payment of taxes.  Sixty-six of them adopted or enhanced their systems in the past 12 years. The region where electronic filing and payment is more widespread is the OECD high-income region where 30 economies out of 32 have such systems in place, followed by Europe and Central Asia (with 22 economies using electronic systems).

This trend is likely to continue. In the next few years many other OECD high-income economies, having introduced requirements for electronic filing and payment for larger businesses, plan to extend them to smaller ones (3).

Electronic filing and payment of taxes has made a big difference for businesses in some economies in Latin America and the Caribbean. For example, in Uruguay, the government adopted the Financial Inclusion Act on May 9, 2014 to establish compulsory electronic payments of national taxes to gradually achieve the increase in the digitalization and the use of the banking services in the country. By April, 2016, most taxpayers were filing and paying taxes online. Additionally, the government added new features to the online platform in the year 2016. Thus, many procedures that were previously done physically in the tax office - such as registration procedures, credit certificates applications, payments and accountant certificates submissions - are now done electronically. Majority of taxpayers can now access the online portal, and, with the system’s improved features, the time to comply with the three major taxes measured in Doing Business have decreased by 81 hours.

In El Salvador, the government has mandated all business taxpayers to file their annual income tax return through one of the available electronic methods (software DET or online processing). The system of presentation and payment of all online taxes was consolidated as well. This has made compliance with tax obligations easier. Additionally, electronic payments are now used by the majority of companies since calendar year 2016. As a result, El Salvador reduced compliance time by 58 hours, and reduced the number of payments by 34.

This brings the number of countries in Latin American and the Caribbean who have electronic filing systems (as defined by the Doing Business Methodology) to 15. The simple fact that an electronic system is available does not of itself guarantee that taxpayers will feel a reduction in compliance time. Often, taxpayers can experience issues with using electronic filing and payment systems, either due to glitches and errors in the system, or due to lack of taxpayer training and guidance. Many tax administrations tackle issues by ongoing updates to their online systems. Argentina has had electronic filing and payment for all major taxes for several years. Improvements made to the electronic system during 2015 which reduced compliance time by 46 hours for businesses during 2015.

Companies saw similar improvements in the ease of tax compliance in other regions also. In Indonesia, where the electronic filing system for health contributions was developed in 2014, and by 2015 was in use by taxpayers for filing and payment. India has further expanded mandatory use of its electronic filing system, expanding mandatory electronic filing to state insurance contributions (ESIC) and social security contributions (EFPO). India has been introducing mandatory electronic filing for various taxes on a phased basis since 2006. 


Some 235 years after Adam Smith proclaimed simplicity to be one of the pillars of the effective tax system, multiple taxation—where the same tax base is subject to more than one tax treatment—appears to be making tax compliance inconvenient and cumbersome for taxpayers in many economies. (4) Multiple taxation increases the cost of doing business for firms because it increases the number of payments they must make and frequently the compliance time as well. Different forms have to be filled out, often requiring different methods for calculating the tax. In Haiti, for example, the case study business is subject to the local tax on profit in addition to the corporate income tax. Multiple taxation also complicates tax administration for tax authorities and increases the cost of revenue administration for governments. And it risks damaging investor confidence in an economy.

Fifty economies have one tax per tax base for taxes measured by Doing Business. This keeps things simple. Having more types of taxes requires more interaction between businesses and tax agencies. It also complicates tax compliance.

Businesses in the Republic of Korea no longer need to do separate calculations for property taxes and city planning taxes that are levied on the same base starting from 2010. They were merged with other taxes. And thanks to an effort aimed at unifying social security laws and administration, businesses can now file and pay 4 labor taxes and contributions jointly. This freed them from the requirement to file additional returns and bear additional tax compliance costs.

In the past 12 years 53 economies eliminated and merged some taxes to simplify tax compliance and reduce costs for firms. Another way to make compliance easier when firms are subject to numerous taxes is to allow joint filing and payment of taxes levied on the same base. Firms in Colombia face 4 different taxes on salaries—but can meet these tax obligations by filing 1 form and making 1 payment for all 4 different taxes each month. In most OECD high-income economies taxes levied on the same base are paid and filed jointly, and as a result the average number of payments across all economies in this group is only 11. Compare this with the average of 24 payments across all 190 economies covered by Doing Business. Joint filing and payment of taxes is not widespread in Latin America and the Caribbean and South Asia, where the average is 29 payments and 28.5 payments respectively, or in Sub-Saharan Africa, where the average is 37.  


Driven by a desire to reduce administrative costs for tax authorities and aided by modern technology, most economies have adopted the principle of self-assessment. Taxpayers determine their own liability under the law and pay the correct amount. For governments, computer systems and software for self-assessment, if they function well, ensure effective quality control. Self-assessment systems generally make it possible to collect taxes earlier and reduce the likelihood of disputes over tax assessments (5). They also lessen the discretionary powers of tax officials and reduce opportunities for corruption (6). To be effective, however, self-assessment needs to be properly introduced and implemented, with transparent rules, an automated reporting process, penalties for noncompliance and risk assessment procedures for audit processes.

Economies that have introduced their tax system recently or undertaken major revision of their tax regulations have tended to adopt self-assessment principles. These include all economies in Eastern Europe and Central Asia and almost two-thirds in East Asia and the Pacific, the Middle East and North Africa, and South Asia.


Several studies show that tax administration and tax policy affect the level of informality and productivity in an economy. A higher tax burden contributes to the prevalence of informality. Informal firms are the ones that avoid to pay the full amount of tax due. Through tax evasion, informal firms enjoy a relative cost advantage over their tax-compliant competitors. This amounts to a potentially large subsidy that allows informal firms to stay in business despite low productivity, increasing their weight in the economy at the expense of more productive firms (7). IMF empirical analysis using firm-level data for manufacturing in emerging markets confirms that firms that report only 30% of their sales are less productive than 100% compliant firms (8).

A strong tax administration mitigates the effect of high tax burden. Efficient and effective tax administrations help lowering the level of informality; therefore, tax-compliant and more productive firms can gain market share, boosting productivity for the entire business environment. Several measures can be adopted to strengthen the tax administration. Amongst all, is the importance of efficient tax audits. Tax audits are essential to promote reliable reporting. However, audits are more efficient when they are risk-based and when tax auditors are well trained (9). El Salvador is an example of country where a risk-based audit system has been introduced. In calendar year 2016, the chance of a corporate income tax audit by the tax authorities decreased to a low probability in case of an underpayment or self-reported error in the returns. This decrease is due to the tax administrations’ move to a different audit assessment criteria focusing on larger-size companies, which the Doing Business case study does not consider. Thailand is another good example of risk-based audit system: the system does not flag for an audit cases where there is an error in the tax return and an underpayment of tax liability due.


1. Che Azmi, Anna, and Yusniza Kamarulzaman. 2010. “Adoption of Tax E-filing: A Conceptual Paper.” African Journal of Business Management 4 (5): 599–603. 
2. James, Sebastian. 2009. A Handbook for Tax Simplification. Washington, DC: International Finance Corporation. Available at 
3. World Bank Group, Investment Climate Advisory Services, Global Tax Team. 
4. Smith, Adam. 1776. An Inquiry into the Nature and Causes of the Wealth of Nations. Facsimile of the 1st ed. Amherst, NY: Prometheus Books, 1991. 
5. OECD Forum on Tax Administration. 2011. Tax Administration in OECD and Selected Non-OECD Countries: Comparative Information Series (2010). Paris: OECD. 
6. Imam, Patrick A., and Davina F. Jacobs. 2007. “Effect of Corruption on Tax Revenues in the Middle East.” IMF Working Paper WP/07/270, International Monetary Fund, Washington, DC. 
7. Fajnzylber, P., 2007. “Informality, Productivity and the Firm”, in Informality: Exit and Exclusion. 
8. Fiscal Monitor, Achieving More with Less, April 2017, International Monetary Fund. 
9. Khwaja, M. S., R. Awasthi, J. Loeprick, 2011, ”Risk-Based Tax Audits Approaches and Country Experiences”, World Bank, Washington, DC.