30 gennaio 2013

The 8th edition of the Paying Taxes report for the year 2013 has been published by World Bank Group Doing Business. And the UK’s global tax ranking improves to 16! The report analyses three key indicators for tax efficiency of 185 countries: the total tax rate, the time to comply with tax regulations and the number of payments. On average it now takes a company 267 hours to comply with its taxes; it makes 27.2 payments and pays a total tax rate of 44.7%. These results are globally an improvement compared to previous years and all indicators have fallen consistently over the period of the study, reflecting the reforms that governments have implemented with a view to making paying taxes easier: in the eight years since the study began the total tax rate has fallen by almost 1%; the time to comply by 54 hours (seven days); and the number of payments by 6.5. Improvements in the compliance indicators are understood by many economies around the world as important factors towards growth. The economies in the Middle East (The United Arab Emirates ranked 1, Qatar 2 and Saudi Arabia 3) as well as Hong Kong 4 and Singapore 5, feature very prominently in the top jurisdictions. It is the World Bank opinion that this can largely be attributed to the relatively few taxes levied and a reliance on other sources of government revenues. On the other hand the developed economies of Europe and North America not surprisingly have the most efficient tax systems but Total Tax Rates can be high, driven in many cases by numerous labour taxes and social contributions. In the report, the relative simplicity of the UK tax system was compared with other economies. A medium-sized UK business has to only make eight tax payments a year (compared to 27.2 as global average) and spend 110 hours on tax compliance (267 hours globally). The total tax rate is 35.5% compared with the global average of 44.7%. These figures allowed the UK to be ranked 16th globally and 9th in Europe. The UK tax system is particularly appreciated for its efficiency and for the easy interface with the tax authorities. Returns and payments can be processed electronically as well as the majority of information is of easy access for tax agents. Ease of doing business is one of the UK’s strong points. The results of the report were strongly linked in the UK with the reduction of the corporation tax rate (20% for small companies and 24% for the year end 31.3.2013) and the impact of National Insurance Contribution. It is interesting to analyse the global ranking of some neighbouring countries: Ireland is better off ranked 6, Switzerland 18, France 53, Germany 72 and down towards the bottom we find Italy ranked 131. If we compare the results of this study with the indicator of GDP growth we can easily appreciate that higher Total Tax Rates for business are associated with reduced ability for an economy to grow, as well as the high level of administrative complexity in the tax system is associated with less economic growth.