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 report said.
“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.
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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,” he added.
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.
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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 taxes.