Paying Taxes 2013

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<p>PoyinToxes2013Tleglobulpictuiewww.pwc.com/payingtaxes2 Paying Taxes 2013PwC*John Preston GlobulHeudolExteinulRelutions,RegulutionundPolicyloiTuxPwC(UK)+44(0)207804264Sjoln.piestonguk.pwc.comAndrew Packman TotulTuxContiibutionLeudeiPwC(UK)+44(0)189SS22104undiew.puckmunguk.pwc.comNeville Howlett DiiectoiExteinulRelutions,TuxPwC(UK)+44(0)2072127964neville.p.lowlettguk.pwc.comTheWorldBonk/IFCAugusto Lopez ClarosDiiectoiGlobul Indicutois undAnulysis.+12024S8894Sulopezcluiosgilc.oigRita RamalhoPiogiumMunugei,DoingBusinessUnit+12024S84139iiumullogilc.oigTea TrumbicPiivuteSectoiDevelopmentSpeciulist+12024730S77ttiumbicgwoildbunk.oigContocts* PwC refers to the network of member rms of PricewterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member rms of the PwC network. 3 .H\WKHPHVDQGQGLQJVForeword 1.H\WKHPHVDQGQGLQJV 3About Paying Taxes 9Chapter 1: Findings of the World Bank and IFCs Doing Business 2013 report 13Chapter 2: PwC commentary 21An economic unulysis 23Tleglobuliesults 29Tleiegionulunulyses: Aliicu 41 Asiu Pucic 57 Centiul Ameiicu &amp; Cuiibbeun 73 Centiul Asiu &amp; Eustein Euiope 85 EU &amp; EFTA 95 MiddleEust 109 Noitl Ameiicu 115 Soutl Ameiicu 123Appendix 1:Metlodology 137Appendix 2:Tledututubles 145Contents1 Paying Taxes 2013ForewordAndrew PackmanTotal Tax Contribution LeaderPwC (UK)Augusto Lopez ClarosDirector, Global Indicators and AnalysisThe World Bank Group2 .H\WKHPHVDQGQGLQJVTlePuyingTuxesindicutois(tleTotulTuxRute,tletimetocomplyundtlenumbeiolpuyments)luvenowbeenpuitoltleWoildBunkGioupDoing Businesspiojectloieigltyeuis,monitoiingtleclungesundieloimsmudetotuxiegimesuioundtlewoild.Tlesimpleuimoltlestudyistosupplybusinessleudeisundpolicymukeiswitliobustdututoenubletuxsystemstobecompuiedonulikeloilikebusis,undtolelpinloimtlediuloguewliclundeiliestledevelopmentoltuxpolicy. Tlestudyisuniqueintlutitnownotonlycoveis18Seconomies,butitulsopiovidesuninsigltintolowtuxsystemsluvedevelopedoveiusignicunt peiiod ol time, using u consistentmetlodology.Tlepeiiodcoveied(2004to2011)lusbeenupuiticuluilytuibulentone.Initiullytleiewusupeiiodol signicunt giowtl, lollowed by unubiuptundseveieeconomicdowntuin.Weuienowinupeiiodolslow,giuduul,butinconsistentiecoveiy.Itisnotsuipiisingtleieloietlutwitltlisvolutileeconomicbuckdiop,tleinteiestintlepuymentsmudebybusinessundieceivedbygoveinmentslusbecomemoieintenseundwidespieud. IntlisyeuispublicutiontleieloieweluvelocussedontletiendstluttlePuyingTuxesdutuslow,botluttleglobullevel,undulsobygeogiupliculiegion.Globullyitisnoweusieiloiims to puy tuxes tlun eiglt yeuis ugo. Botltleudministiutivebuidenundtleuveiugetuxiutesluvedecieusedoveitlispeiiod.Tlestudiesloisometimeluveslownutiendtowuiduloweiingolcoipoiutetuxiutesundubioudeningoltletuxbuse.Inlustyeuispublicutiontlepuceolieloimcontinuedbutwitlunincieusinglocusonimpiovingtleudministiutiveuspectsoltletuxsystem.Tlisyeuisiesultsuiemoiecomplex;udministiutiveieloimsluvecontinued,buttlelullinuveiugeglobultuxiutesseemstoluvestulled;tlismuyindicutetluttuxiutesuiestubilisingustlepiessuie on public nunces continues togiow.Tuxesluvelistoiicullybeenusedusupolicyinstiumentinuvuiietyolwuys, but witl tle continuing dilcult economicenviionment,tletensionbetweentleneedtoiuisetuxievenuesunduttlesumetimetopiovideusystemwliclencouiugeseconomicuctivityisincieusing.Goveinmentsneedtoiuiseievenuestoenubletlemtodiscluigetleiiobligutionstopiovidelundingloiinliustiuctuie,educutionundpublicleultl,undinsomecusestleieisstillmucltodo to ieduce tle signicunt public decits wlicl peisist. Howevei, in u woildwlicllusnowtiulyembiucedglobulisution,somegoveinmentsulsoseeuneedtoputinplucetuxsystemswlicl uie seen to be elcient, cun lelptouttiuctinvestment,undintuincun lelp lostei economic giowtl. A sensiblebusinesstuxsystemisnotjustuboututtiuctivetuxiutesbutulsotuxiuleswlicluiesimpleundeusytocomplywitl.As in pievious editions ol tle Puying Tuxespublicutionweincludeunumbeioluiticlesliomuioundtlewoildwliclgiveluitleiinsigltsonlowgoveinmentsuieuddiessingtleclullengingissuestluttleyluceundsome ol tle specic policies tlut tley uieimplementing.Weluveulsoincludedtleiesultsolsomeudditionulunulysisundeitukentlis yeui. As we now luve eiglt yeuis olPuyingTuxesdutu,weconsideiitsulciently iobust loi u compuiison tobemudewitlsomebioudeimucioeconomicindicesuioundgiowtlundinvestment.Insomeiespectstleiesultsuiepeilupsnotsuipiising,coniming tlut liglei tux buidens uie ussociutedwitlloweiinvestment;tlemoiestiikingiesultistlutieducingtleudministiutivebuidenonbusinessuppeuistobelinkedwitleconomicgiowtlmoiestionglytluncuttingtuxiutes.PuyingTuxessuggeststlutudministiutiveieloimistlepiioiityloigoveinments. WelopetluttlePuyingTuxesstudycontinues to geneiute dutu tlut you nd uselul,butilyouluveunycommentsoileedbuckonlowwecundeveloptlisstudyluitleitlenwewouldbedeligltedtoleuiliomyou.</p> <p>Augusto Lopez ClarosAndrew Packman3 Paying Taxes 2013Key themes ond ndinsIndicutoisuttleglobullevel267louis27.2puyments44.7%TotulTuxRuteOnuveiugeitnowtukesouicusestudycompuny267 hourstocomplywitlitstuxes,itmukes27.2 paymentsundpuysunuveiugeTotulTuxRuteol44.7%.Onuveiugeuciosstleeigltyeuisoltlestudytlecostoltux,tleTotulTuxRute,luslullenbyulmost1%loieuclyeui;tletimetocomplyluslullenby54 hours(sevenduys);undtlenumbeiolpuymentsluslullenby6.5.8% 6.5 54TotulTuxRute Timetocomply(louis)NumbeiolpuymentsWliletletimetocomplyundnumbeiolpuymentsluvecontinued to lull signicuntly in 2011, tle iute ol decline loitleTotulTuxRuteslowed.TleTotulTuxRutelellby0.3%,tlenumbeiollouislellbya dayundtlenumbeiolpuymentsbyulmost2.Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov DecTotulTuxRute-0.3%-1doy2011Timetocomply-2NumbeiolpuymentsIn 2011 tle uveiuge iute ol piot tux lus iemuined ut wlile tleiuteloilubouituxesundsociulcontiibutionsincieusedby0.1%undloiotleituxeslellby0.4%.Lubouituxes+0.1%+/-0%-0.4%PiottuxesOtleituxes2011Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov DecTotulTuxRute4 .H\WKHPHVDQGQGLQJVCoipoiuteincometuxonlypuitoltlebuidenTime TotulTuxRute12% 26% 36%PuymentsCoipoiuteincometuxcontinuestoiepiesentonlypuitoltletuxbuidenonbusinessituccountsloionly12%olpuyments,26%oltimeund36%oltle Totul Tux Rute. Tlis piole lus clunged veiy littleoveitleeigltyeuisoltlestudy.31352010Reforms2011Reloimscontinueuioundtlewoild.HoweveitlenumbeioleconomiesieloimingluslullenliomWKLUW\YHlustyeuitothirty oneintlemostiecentstudy.Tlelocuscontinuestobeonieducingtleudministiutivebuidenoltletuxsystem.Tledistiibutionloitletimetocomplylusulsonuiiowed.In2011132 economiesspentbetween101 and 350 hoursontleiituxcompliunceloitlecusestudycompunycompuiedwitl105 of the economiesin2004.2004105economies2011132economies101-350louis200493economies2011116economiesTotol ToxRotebetween26-50%TleiungeolTotulTuxRutesupplieduioundtlewoildlusnuiiowed.116 economiesintlestudynowluveuiutebetween26 and 50%compuiedto93 economiesin2004.All tliee puying tuxes indicutois luve lullenconsistentlyoveitlepeiiodoltle study ieecting tle ieloims tlut goveinmentsluveimplementedwitluviewtomukingpuyingtuxeseusieiundsoeusingtlebuidenloibusinessundgoveinment.Notsuipiisinglyinuwoildinwliclglobulisutionisbeingembiucedundcompuiisonsuiemoieeusilymudewitlgeogiuplicneiglbouisundeconomicpeeis,tleiungeoltleindicutoisisnuiiowingsuggestingugiuduulmovetowlutmuybepeiceivedusbeingsustuinuble.Tlelucttluttlecompliunceindicutois(tlenumbeiollouisundpuyments)continuetolullsignicuntly, suggests tlut tleie isstillscopeloiimpiovementinmunyeconomiesuioundtlewoild,undtluttlevulueolmukingsuclimpiovementsisundeistood.Howevei,tleieductionintleTotulTux Rute lus slowed ieecting tle needloigoveinmentstodeulwitldilleienteconomicscenuiiosundciicumstunceswliclluveuiisenintlewukeoltleeconomicdowntuin,undtouseuvuiietyolpolicyoptionswlicltleyluveuttleiidisposul.Tlestudycontinuestoslowtlutcoipoiuteincometuxisonlypuitoltlepictuiewlenlookinguttlecontiibutionmudebybusinesstopublic nunces. Tlis is impoitunt loi goveinmentswlenconsideiingtleieloimswliclitleelsuienecessuiyloi tle tux system. And loi compunies tleclullengeistoluveubetteiundeistundingoltlelullextentoltleiicontiibutiontotleeconomyinwlicltleyopeiuteundunubilitytoimpiovetlewuyinwlicltleycommunicuteontux.5HihesttotultuxiuteEfcienttuxsystemsLowestpuymentsHihnumbeiolpuymentsHihestlouisCompliuncecontinuestotukelongestinSoutlAmeiicu(619louis)undtleleustumountoltimeisspentintleMiddleEust(1S8louis).Tlislusbeentlepositionconsistentlytliougltleeigltyeuisoltlestudy.CentiulAsiu&amp;EusteinEuiopelusbeentlebiggestieloimeioveitleeigltyeuisoltlestudy.Economiesintlisiegionluveslowntleluigestlullinbotltletimetocomply(200louis)undnumbeiolpuyments(22.2)undupuitliomtleMiddleEustluvetleluigestlullintleTotulTuxRute(12.6%).TleliglestnumbeiolpuymentsisnowmudeinAliicu(37.0)undtlelowestinNoitlAmeiicu(8.3)lollowedbytleEU&amp;EFTA1(12.8).* The regional classications are different from those used in the World Bank/IFC Doing Business report. For a list of economies in each region please refer to the regional analyses which begin on page 41 1 European Union &amp; European Free Trade Association (EU &amp; EFTA)Tleiegionulpictuie6 .H\WKHPHVDQGQGLQJVBelowtleglobuluveiugesBiestieloimeiLeostdemondintuxsystemsTle2013studyslowstluttleMiddleEusteinstutesluvetleleustdemundingtuxsystemsloiouidomesticcusestudycompuny.TleyluvetlelowestuveiugeTotulTuxRutes(23.6%),tlelowesttimetocomply(1S8louis),buttlepuymentsindicutoi(17.6)suggeststlutimpiovementsuiestillpossibleloielectioniclingundpuyment.TleMiddleEustlusludtlelowestTotulTuxRutesundAliiculustleliglesttliouglouttleeigltyeuisoltlestudy.TleeliminutionoltlecuscudingsulestuxiegimesisimpiovingAliicusposition.TlislusulsolelpedieducetleglobuluveiugeulongwitlluigelullsintleiutesuppliedinCentiulAsiu&amp;EusteinEuiope,undtleMiddleEust.ItisnotsuipiisingtluttleeconomiesintleMiddleEustleutuiesopiominentlyintletopjuiisdictionsoltlePuyingTuxesindicutois.Tliscunluigelybeuttiibutedtotleielutivelylewtuxesleviedontlecusestudycompunyunduieliunceonotleisouicesolgoveinmentievenues.Tleexpectutionistluttliswillclungeusnewievenueiuisingmeusuiesuieintioduced.Tle economies in Centiul Asiu &amp; Eustein Euiope luve led tle cluigeoveitlepeiiodoltlestudytoimpiovetleiituxcompliuncepioceduiesundulsotoieducetleiituxiutes.Wlile tle Totul Tux Rutes loi Aliicu stilluppeuitobeligl,iltletlieecountiieswitlcuscudingsulestuxesuieexcludedtlentleuveiugelullstoulevelwliclisjustubovetlewoilduveiuge,leuvingSoutlAmeiicu us tle iegion witl tle liglest Totul TuxRutes.Soutl Ameiicu is ulso tle iegion wlicldemonstiutestleleuviestcompliuncebuideninteimsoltlelouistocomply.Tlisisdiivenbyumixolcomplicutedtuxsystems,iegimeswliclluvemultiplelevelsolgoveinmentundtuxuutloiities,undwleieieguluiclungestotletuxsystemuiecommon.TledevelopedeconomiesolEuiope und Noitl Ameiicu not suipiisingly luve tle most elcient tuxsystemsbutTotulTuxRutescunbeligl,diiveninmunycusesbynumeiouslubouituxesundsociulcontiibutions.Tle Asiu Pucic economies tend to luveTotulTuxRutestlutuiebelowtlewoilduveiugeundtleyluvecontinuedtolullustleylooktocompeteintlewoildeconomy.7 Paying Taxes 2013A compuiison ol tle Totul Tux Rute indicutoi witl GDP und FDI suggests tlut liglei Totul Tux Rutes loi business uie ussociutedwitlieducedubilityloiuneconomytogiowunduttiuctinwuidinvestment.CompuiingtlecompliunceindicutoisloitletimetocomplyundtlenumbeiolpuymentswitlGDPsuggeststlutuliglleveloludministiutivecomplexityintletuxsystemisussociutedwitllesseconomicgiowtl,undtougieuteidegieetluntletuxcosttlisispuiticuluilytlecuseinielutiontotlenumbeiolpuymentsindicutoi,implyingtlutu ligl numbei ol tuxes, und u luck ol electionic ling und puyment lucilities uie key ieusonsleie. TotolToxRoteInwordinvestmentGDProwthToxAdministrotivecomplexityGDProwthSomeeconomicinsigltsTleeconomicunulysistocompuietlePuyingTuxesindicutoiswitlGiossDomesticPioduct(GDP)undFoieign Diiect Investment (FDI) suggests tlut wlile ligleibusinesstuxutioncunbelinkedtosloweieconomicgiowtlundinteinutionulinvestment,ieducingtleudministiutivebuidenundcomplexityoltletuxsystemcunpotentiullybelinkedtougieuteiclungeinoveiullgiowtl.Tleimplicutionistlutminimisingtletimeundelloitwliclbusinessesneedtospendoncomplyingwitltletuxsystemisequullyimpoituntloigoveinmentswlenconsideiinglowbesttostimuluteundsustuineconomicgiowtl.Ineconomieswleieuctionwustukentoieducecomplexityintuxudministiutionbotlinteimsoltlenumbeiolpuymentsundtletimetukentodeulwitltuxmutteistleielusbeenupositiveclungeoneconomicgiowtl.GDProwthToxodministrotivecomplexity8 .H\WKHPHVDQGQGLQJV9 Paying Taxes 2013Puyingtuxisimpoitunt.Tuxespiovidegoveinmentwitlievenues,undtlosewlopuytlemluveustukeintlesystemundinlowgoveinmentspendsitsmoney.Inviewoltlecuiientglobuleconomicclimute,munygoveinmentsspendingundtuxpolicies uie now constiuined by tle need loi decit ieduction to muintuin tle condence ol nunciul muikets, but tleie is ulso u need to stiike u bulunce wlen setting scul policy. Tux systems cunulsocontiibutetouneconomicenviionmenttlutisuttiuctiveloiinwuidinvestmentundwliclcunlelpdomesticbusinessestogiow. Foi developing economies, tle globul economic downtuin luscieutedunudditionulissuetouddiessustleuidbudgetsoldevelopedeconomiesluvebeencut.Goveinmentsintlesecountiiesneedtoconsideilowtleycunieplucetlislunding.Lookingutlowtleycunimpiovetleiituxsystemssotluttleyuie cupuble ol geneiuting u moie sustuinuble souice ol nuncing tlundebtoiuidisliglontleugendu.Tlepiessuieliomgoveinmentsloituxuutloiitiestogeneiuteligleituxievenuesislikelytocontinuetoincieuse.AboutPoyinToxesondthisreport10 $ERXW3D\LQJ7D[HV11 Paying Taxes 2013TlePuyingTuxesstudylooksuttuxsystemsliomtlebusinesspeispective.Businesspluysunessentiulioleincontiibutingtoeconomicgiowtlundpiospeiitybyemployingwoikeis,impiovingtleskillsundknowledgebuse,buyingliomloculsupplieisundpiovidingulloidublepioductstlutimpiovepeopleslives.Businessulsopuys und geneiutes muny tuxes. As well us coipoiute income tux on piots, businesspuysemploymenttuxes,sociulcontiibutions,indiiecttuxes,piopeitytuxesunduwlolevuiietyolsmulleituxesincludingenviionmentultuxes.TlePuyingTuxesstudyslowstlutcoipoiuteincometuxisleviedonbusinessin179economies,vulueuddedtux (VAT) is collected by business in 1S4economies,unduiungeollubouituxesundsociulcontiibutionsisboineundcollectedbybusinessin184economies.Tuxesboineundcollectedbybusinessuietleieloieimpoituntundtleimpucttluttlesetuxesundtletuxsystemsusedtogeneiutetlemluveonbusinessisulsoimpoituntbotlinteimsoltleiidiiectcost,undinteimsoltlecompliuncecoststluttleyimposeonbusinessusununpuidtuxcollectoiloigoveinment.PuyingTuxesisuuniquestudy.Itpiovidesdutuontuxsystemsuioundtlewoildwitlunubilitytomonitoituxieloim,undnowoveiuneigltyeuipeiiod.Itisuniquebecuuseitgeneiutesusetolindicutoistlutmeusuietlewoildstuxsystemsliomtlepointolviewolbusinessundulsobecuuseitcoveistlelulliungeoltuxespuidin18Seconomies,meusuiinglowbusinesscomplieswitltledilleienttuxluwsundiegulutionsineucleconomy. TlisistleeigltlyeuitluttlePuyingTuxesindicutoisluvebeenincludedintleDoing BusinesspiojectiunbytleWoildBunkGioup.TleindicutoismeusuietleeuseolPuyingTuxesloiusmulltomediumsizeddomesticcompuny,inulloltle18Seconomiestlutitcovei...</p>