Room for improvement: Canada ranks 99th in global tax survey

    TORONTO, Nov. 29 /CNW/ - While Canada ranks 99th out of 178 for total tax
rate and fairs moderately well in ease of paying taxes and administering taxes
there is room for improvement in Canada's corporate taxation system. The study
from the World Bank, IFC, and PricewaterhouseCoopers (PwC) Paying Taxes 2008,
concludes that there is a win-win opportunity for governments and firms if
governments simplify tax systems, ease the compliance cost on business, and
reduce tax rates.
    The study allows direct comparison of tax systems from around the world.
It shows how businesses are affected not only by tax rates, but also by the
procedural burden of compliance. The report focuses on the number of tax
payments made, the time it takes to comply, and the cost of taxes, which is
measured by the total tax rate. The total tax rate (TTR) covers five types of
taxes that firms pay: profit, social, property, turnover, and other taxes,
such as municipal fees and fuel taxes. The steps, time, and cost indicators
are used to determine the overall ease of paying taxes.
    Canada's ranking this year may seem a step backwards from its 2006
ranking of 77th out of 175. However, according to Tom O'Brien, a PwC Canada
tax partner "Since this years report has been written, there has been the
elimination of the Canadian Federal Large Corporation Tax which represents a
real savings for many corporations operating in Canada. And, with decreases in
Federal and some provincial corporate income tax rates announced for 2007 to
2010, and the harmonization of the Ontario and Canadian Corporate tax systems,
Canada's total tax rate ranking is expected to improve in the near future."
    The top ranking countries with the lowest total tax rate are Vanatu, the
Maldives and the United Arab Emirates. The highest are Sierra Leone, Burundi
and Gambia. In comparison, the US lands at the 102 spot and the United Kingdom
at 52. Seven of the 10 countries in the world with the highest
    TTRs are African countries, and it is largely the impact of these seven
countries, and the sales and turnover taxes, that drive the average TTR for
the sub Saharan African countries to nearly 70% - the highest of any
geographical grouping.
    In terms of time to comply Canada is 28th and 15th for number of
payments. These results are a reflection of the overall efficiency of the
Canadian tax system, which features a globally competitive Revenue Agency and
incorporates technology such as the internet and electronic banking to
increase the ease of remitting tax payments and complying with Federal and
provincial tax legislation. The ease of paying taxes can range from filing a
single online form in Sweden to making 124 payments a year in Belarus. In
fact, countries in the former Soviet and Eastern bloc account for six of the
bottom 10 countries in terms of the number of tax payments a company has to
    Four of the bottom 10 countries have a TTR above 100% of commercial
profits. That means that a company with sales of 120% of cost of goods sold
cannot make enough profit to pay all the business taxes. Seven of the bottom
10 countries have to pay taxes at least once a week and spend at least 65 days
per year in the process.
    O'Brien notes, "There is good news: paying taxes is now easier,
especially in Eastern Europe and Central Asia, which had the most reforms in
2006- 07. Revenues are growing as well. For example, the Czech Republic saw
its tax revenue rise by 2% after reducing the corporate income tax between
2004 and 2005. This is part of a longer global trend - the tax burden on
businesses has decreased every year since 1985."
    This year, 31 economies improved their business tax systems, and 65 have
done so over the past three years. Bulgaria was the top reformer, and Turkey
was runner-up.

    PricewaterhouseCoopers ( provides industry-focused assurance,
tax and advisory services to build public trust and enhance value for its
clients and their stakeholders. More than 146,000 people in 150 countries
across our network share their thinking, experience and solutions to develop
fresh perspectives and practical advice. Now celebrating 100 years of
excellence in Canada, PricewaterhouseCoopers LLP ( and its
related entities have more than 5,200 partners and staff in offices across the
    "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP, an Ontario
limited liability partnership, or, as the context requires, the
PricewaterhouseCoopers global network or other member firms of the network,
each of which is a separate and independent legal entity.

For further information:

For further information: Contact: Carolyn Forest, PricewaterhouseCoopers
LLP, (416) 814-5730,

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