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.

Doing Business Reforms


Properly developed, effective taxation systems are crucial for a well-functioning society. In most economies, taxes are the main source of revenue to fund public spending on education, health care, public transport, infrastructure and social programs, among others. Tax policy is one of the most contentious areas of public policy. A large body of theoretical and empirical work examines the effects of high tax rates and complex fiscal systems. Although determining the optimal tax system can be challenging because context matters when economies want to maximize their welfare, there is less uncertainty—from both theoretical and empirical perspectives— about the distortionary effects of high taxes and cumbersome tax systems. A good tax system should ensure that taxes are proportionate and certain (not arbitrary) and that the method of paying taxes is convenient to taxpayers. Lastly, taxes should be easy to administer and collect.

El Salvador made the greatest advances in tax payment systems in 2016/17. Following regulatory changes, all companies are now required to submit their tax returns electronically. Electronic payments are now used by a majority of companies in El Salvador for profit taxes, value added taxes and labor taxes, including mandatory contributions. The tax administration also moved to a different assessment criteria for selecting companies for a tax audit, with its focus now primarily on larger companies. Low-risk companies and small businesses would not be selected for a tax audit in the case of an underpayment or self-reporting an error in the corporate income tax return.

The most common feature of reforms in the area of paying taxes over the past year was the implementation or enhancement of electronic filing and payment systems. Besides El Salvador, 16 other economies—Botswana, Brunei Darussalam, India, Indonesia, Kenya, Lithuania, Maldives, Morocco, New Zealand, the Philippines, Rwanda, Saudi Arabia, Uruguay, Uzbekistan, Vietnam and Zambia—introduced or enhanced systems for filing and paying taxes online. India eased tax compliance on businesses by implementing an online platform for the electronic payment of the Employee Provident Fund and introducing administrative measures to ease corporate income tax compliance.

The use of electronic tax filing and payment systems has increased substantially since 2006, with the most notable progress in the economies of Europe and Central Asia. Sub-Saharan Africa remains the region with the smallest share of economies using electronic filing or payments. However, in 2016 the use of online systems for filing and payment of taxes resulted in efficiency gains in several economies in the region, including Botswana, Kenya, Rwanda and Zambia. Angola, Mauritania, Senegal and Togo are improving their systems to enable taxpayers to shift from manual to online filing of tax returns in the near future.

Other economies directed efforts at reducing the financial burden of taxes on businesses and keeping tax rates at a reasonable level to encourage private sector development. With the objective of promoting more stable employment conditions, Italy exempted employers from social security contributions for a maximum of 36 months for hires with open-ended contracts from January 1, 2015 to December 31, 2015. Japan reduced the corporate income tax rate at the national level from 25.5% to 23.9% for tax years beginning on or after April 1, 2015. The Bahamas reduced the rate of stamp duty on land sales from 10% in 2015 to 2.5% in 2016.


= Doing Business reform making it easier to do business. = Change making it more difficult to do business.