Companies finding it easier to pay taxes, says PWC & WB
28 November 2014
Posted by: Author: Nicole Cassandra Naidoo
Author: Nicole Cassandra Naidoo (CNBC Africa)
Paying taxes has become easier over the past year for medium-sized companies around the world, according to a new report.
The Paying Taxes 2015 study, released
by the World Bank (WB) and PricewaterhouseCoopers (PwC), also revealed that the
time it takes such a company to meet its tax obligations dropped by four hours
on average in 2013.
"Over the ten years of the study, 78
per cent of the 189 economies covered in the report made significant changes to
their tax regimes at least once. The time and the number of payments required
to comply with tax obligations have fallen over the ten-year period,” the
"The fastest rate of decline for the
total tax rate occurred during the financial crisis from 2008-2010 with an
average decline of 1.8 percentage points per year during that period. The rate
of decline then started slowing in 2011.”
South Africa in particular, saw its
total tax rate decline further in 2013, falling from 30.1 per cent to 28.8 per
cent. Overall, South Africa’s worldwide paying tax ranking dropped from
24th position to 19.
(WATCH VIDEO: Tax practices in South Africa)
However, its tax system continues to
be ranked number one among the BRICS economies in terms of its efficiency and
easing the compliance burden for taxpayers.
Kyle Mandy, PwC head of national tax
technical, said, "Both the fall in the total tax rate and the improved ranking
can largely be attributed to the changes made in the Paying
Taxes methodology, rather than tax reforms.”
"These changes have been made in response
to calls for the data to remain current, to take into account the potential for
differences in the tax systems across the larger economies in the study, and to
more closely reflect the improvements that are made when implementing reform,”
The report also showed that the
average Total Tax Rate across African economies has dropped by 6.3 percentage
points with Africa now having the second highest tax cost of the regions.
(READ MORE: PwC increases its African investment footprint)
Paul de Chalain, PwC head of tax for
Africa, said, "The latest results from the Paying Taxes study show that
many countries are continuing to make progress in tax reform, but there is
still scope to streamline and simplify tax systems.”
"Tax reform is set to remain an
important topic for governments around the world for some years to come, and
this will include the need to take on board the proposals from the OECD to
modernise the international tax system to cater for today’s globalised
business,” he added.
The top reformer for the third
consecutive year is the United Arab Emirates where the time to comply is the
lowest. The highest number of hours to comply is still taken by Brazil where it
takes 2,600 hours, with more than half of this time being spent on consumption
This article first appeared on cnbcafrica.com.