Doing Business 2011 Paying Taxes

Transcription

1 Doing Business 011 Paying Taxes Marcin Piątkowski Senior Economist Warsaw, Poland November, 010 1

2 Paying Taxes as part of a broader project The Doing Business project measures business regulations taking the perspective of a local entrepreneur 11 indicators (9 included in the overall ease of doing business ranking) Starting a Business Trading Across Borders Dealing with Construction Permits Registering property Getting Credit Paying Taxes Enforcing Contracts Closing a Business Employing Workers Getting Electricity Protecting Investors Objectives of Paying Taxes 011 Provide comparable data across 1 economies Facilitate benchmarking of tax systems from business point of view Enable in-depth analysis of results DOES NOT measure fiscal health, macroeconomic conditions of revenue collection or public service provision from taxes

3 Why do tax rates matter for SMEs? Recent firm surveys show that companies find tax rates to be among the top 4 constraints to their business Research has found that small and medium-sized enterprises contribute to job creation and growth BUT do not add much to tax revenue Keeping tax rates on SMEs reasonable can encourage development of private sector and the formal registration of businesses

4 Why it matters: Size of informal sector is associated with ease of paying taxes Informal sector share of GDP High Low Least difficult Most difficult Economies ranked by ease of paying taxes, quintiles Note: Relationships are significant at the 1% level and remain significant when controlling for income per capita Source: Doing Business database; Schneider and Buehn (009) 4

5 Key findings this year? Paying taxes is getting easier despite the crisis Corporate income tax is only one of many taxes business pays. Tax reform continues to remain high on governments agenda: In the past years: 115 economies reduced the burden on companies - over 0% of economies studied In Paying Taxes 011: 40 economies Tax compliance has become easier around the world since 004 Tunisia and Cape Verde improved most in this year s Paying Taxes study Eastern Europe and Central Asia is the region with the most tax reforms for the 4 th year in a row and has seen the biggest improvement in all sub-indicators Paying taxes is easiest and cheapest in high income economies a. As measured by Doing Business 5

6 Tax reforms implemented by more than 0% of economies in the past years DB00 DB007 DB00 DB009 DB010 DB011 Eastern Europe & Central Asia (5 economies) Total: 5 Sub-Saharan Africa (4 economies) OECD high income (0 economies) 4 40 Latin America & Caribbean ( economies) East Asia & Pacific (4 economies) 5 Middle East & North Africa (1 economies) South Asia ( economies) 4 11 Note: A Doing Business reform is counted as 1 reform per reforming economy per year. Source: Doing Business database.

7 Overview of Paying Taxes 011 results Global top thirty this year 1. Maldives 11. Kiribati 1. Botswana. Qatar 1. Mauritius. Brunei Darussalam. Hong Kong, China 1. Denmark. Malaysia 4. Singapore 14. Bahrain 4. South Africa 5. United Arab Emirates 15. Luxembourg 5. Malawi. Saudi Arabia 1. Switzerland. New Zealand 7. Ireland 17. United Kingdom 7. Netherlands. Oman 1. Norway. West Bank and Gaza 9. Kuwait 19. Vanuatu 9. Jordan 10. Canada 0. Timor-Leste 0. Estonia 7

8 What has worked to ease compliance? Electronic filing and payments 1 out of 1 countries have implemented some form of electronic compliance system Some concerns: Data security, access to computer facilities, electronic commerce legislation One tax per tax base 50 out of 1 economies follow this good practice It reduces the time spent filling out forms and the complexity in calculating the different taxes on the same base Economy example: Ireland has one tax per tax base and allows online filing Tax Payments Time Statutory rate Taxable base Corporate income tax 1 Online % taxable profits Social security contributions 1 Online 10.% gross salaries Value added tax (VAT) 1 Online 0 1.5% value added Property tax 1 Annual - Varies Capital gains 0 Paid jointly - 5.0% gain Road tax 1 Annual - various rate vehicle weight Vehicle tax 1 Annual - EUR 50 fixed fee Stamp duty (insurance contracts) 1 One Contract % insurance premium Tax on check transactions 1-50c per check Fuel tax 1 include in fuel price Total 9 7

9 9