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Paying Taxes 2017: The Global Picture

Authors: World Bank Group and PwC
Published: November 17, 2016

Overview

Paying Taxes 2017 a joint annual publication by the World Bank Group and PwC looks at tax regimes in 190 economies and provides an unrivalled global database. This year marks the eleventh year of the publication. The report is based on the Paying Taxes indicator and includes analysis and commentary by the World Bank and PwC. Paying Taxes has historically measured the Total Tax Rate (the cost of all taxes borne, as a % of commercial profit), the time needed to comply with the major taxes (profit taxes, labour taxes and mandatory contributions, and consumption taxes), and the number of tax payments. This year, for the first time, the Paying Taxes study includes a new sub-indicator – the post-filing index. Filing a tax return with the tax authority does not imply agreement of the final tax liability and post-filing processes can be some of the most challenging interactions that a business has with a tax authority and can vary markedly from one jurisdiction to another. The new post-filing index is equally weighted with the three existing sub-indicators in order to determine the overall Paying Taxes ranking. Economies around the world continue to make progress in simplifying and reducing the burden of tax compliance on businesses. The report finds that the Total Tax Rate decreased by 0.1 percentage points to 40.6 percent; time to comply declined by 8 hours to 251 hours per year; and the number of payments made annually to comply with tax rules also fell by 0.8 to 25 payments.

Main Findings

  • On average in 2015, it takes the case study company 251 hours to comply with its taxes, it makes 25 payments and has an average Total Tax Rate of 40.6%.
  • All three sub-indicators have continued to fall in 2015; Total Tax Rate by 0.1% percentage points, time to comply by 8 hours, and number of payments by 0.8.
  • In 2015, 46 reforms that made it easier or less costly to pay taxes were implemented. The most popular reform continues to be the introduction or enhancement of online systems for filing and paying taxes.
  • The small decrease in the Total Tax Rate results from 44 economies increasing taxes while 38 recorded a reduction. It also represents a combination of a decrease in ‘other taxes’ offset by small increases in both profit and labour taxes.
  • In 2015, 162 economies had a VAT system. The post filing index shows that the case study company will receive a VAT refund in 93 of these. The VAT refund is likely to trigger an audit in 65 economies of which 17 will be a comprehensive audit.
  • For those economies where a VAT refund is available, on average it takes our case study company 14.2 hours to comply with the necessary administration, and 21.6 weeks to receive the refund.
  • 180 economies levied corporate income tax in 2015. The post-filing index shows that correcting a corporate income tax return is likely to lead to a tax audit in 74 of these, of which 38 will be a comprehensive audit.
  • On average, it takes the case study company 16.7 hours to correct the error in the corporate income tax return, including responding to an audit if one is triggered. For economies where the correction process triggers an audit, it takes on average 17.3 weeks to complete the audit.
  • The EU & EFTA region performs the best, on average, across the post-filing index with just over 7 hours to claim a VAT refund, almost 15 weeks to receive the refund, almost 5 hours to correct a CIT return and comply with any resulting audit. If a CIT audit takes place, it will last almost 11 weeks.
  • On average, in the Central America & Caribbean region our case study company needs the most time to obtain a VAT refund with almost 20 hours for compliance and an almost 35 week wait to receive the refund.