Tax Index with the support of the InMind research company EBA Tax INDEX 2 nd wave, results of the 2-3 quarter 2012 Conducted by the EBA with the support

Tax Index with the support of theInMind research company

EBA Tax INDEX2nd wave,

results of the 2-3 quarter 2012

Conducted by the EBA

with the support of

InMind research company

November 2012


2

Project MethodologyThe presented results of EBA Tax Index are based on the results of the 2nd wave of the expert survey, conducted among EBA members.

Methodology: EBA Tax Index means the evaluation of 4 factors of tax conditions for doing business:

• Evaluation of quality of the tax legislation

• Evaluation of complication/ease of the tax administration

• Evaluation of the fiscal pressure level

• Evaluation of quality of the tax service

To define the level of each of the 4 factors a 5-point scale was used, where 1 and 5 are the extreme opposite evaluations of the factor.

When calculating the integral tax index, means of each factor and its weight were used.

Factors’ weights are defined by expert evaluations of EBA Tax Committee members:

tax legislation– 15%; tax administration – 40%; fiscal pressure – 30%; quality of tax service – 15%.


3

Report noticeThe results are presented by each of 4 factors, in particular:

• Mean of each factor

• Numeric value, which divides the upper half of the sample from the lower part (median)

The results are also segmented by company size in accordance to Commercial Code of Ukraine:

– Small enterprises: 50 or less employees, gross income – less than UAH 70 million during the financial year 2011

– Medium enterprises: 50 to 250 employees, gross income – UAH 70 to 100 million during the financial year 2011

– Large enterprises: more than 250 employees, gross income – більше UAH 100 million during the financial year 2011

Participants: 59 representatives of EBA member companies

Timeframes: the data is collected in October-November 2012 and reflects the situation in 2-3 quarter 2012

Research Conduction: The research is conducted by the EBA, analytic support provided by InMind research company


4

Overall results

1 wave, 2011

2 wave, ІІ-ІІІ quarter 2012

TAX INDEX(integral rate)

1,90 2,42

Tax legislation 1,76 2,32

Easiness of tax administration 1,62 2,32

Fiscal pressure 2,11 2,56

Quality of tax service 2,36 2,53

Minimum Index value – 1, maximum – 5.


2011 II-III/20121

2

3

4

5

1.90

2.42

1.76

2.32

1.62

2.322.11

2.56

2.36

2.53

TAX INDEXTax legislationEasiness of tax administrationFiscal pressureQuality of tax service

NEUTRAL VALUES ZONE

NEGATIVEVALUESZONE

POSITIVEVALUESZONE

Overall results - chart


6

EBA Tax INDEX:

Components


7

Tax Legislation

Mean2,32

Median2,00

Evaluations by 5-point scale with extreme values:

1 – tax regime was profoundly preventing your company’s progress:

5 – tax regime was definitely promoting your company’s business progress

Question: To what extent tax regime was facilitating investments and your company’s activity in 2-3 quarter 2012?

Means of evaluation of tax legislation depending on the enterprise size

1

2

3

4

5

26%

34%

39%

7%

2%

Negativevalues

Neutral value

Positive values

Small N=14 Medium N=13 Large N=321

2

3

4

5

2.57 2.54 2.10


8

Ease of Tax Administration

Mean2,32

Median2,00


1 – very complicated

5 – very easy

Question:

Could you, please evaluate the complication/easiness of tax accounting and tax administration in 2-3 quarter 2012?

Means of evaluation of ease of tax administration depending on the enterprise size

Negativevalues

Neutral value

Positive values

1

2

3

4

5

22%

32%

37%

8%

0%


2

3

4

5

2.57 2.54 2.13


9

Fiscal Pressure

Mean2,56

Median3,00


1 – fiscal pressure caused significant difficulties in company’s activity

5 – there were no signs of fiscal pressure at all in the activity of the company

Question: Could you, please evaluate fiscal pressure on your company in 2-3 quarter 2012?

Means of evaluation of the fiscal pressure level depending on the enterprise size

1

2

3

4

5

25%

22%

29%

19%

5%

Negativevalues

Neutral value

Positive values


2

3

4

5

3.21 2.77

2.19


10

Tax Service

Mean2,53

Median3,00


1 – complete dissatisfaction by the quality of the received service

5 – complete satisfaction by the received service

Question: Could you please estimate the quality of the service your company received from tax bodies in 2-3 quarter 2012 ( by the quality of the service you should understand the stuffs’ affability and competence, the transparency of the received answers, the operational efficiency and convenience of the declaration submitting process etc.)?

Means of evaluation of the tax service depending on the enterprise size

1

2

3

4

5

22%

27%

32%

14%

5%

Negativevalues

Neutral value

Positive values


2

3

4

5

2.71 2.69 2.38


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EBA Tax INDEX:

Auxiliary Indicators


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Effective Tax Rate: Tax Reform Impact

Change of the effective tax rate in 2-3 quarter 2012

Definition:

Effective tax rate – ratio of the income as to the financial accounting and the income as to the tax report

17%

31%52%

Unchanged

Increased

Reduced


13

Fiscal Pressure Manifestation

Which evidence of the fiscal pressure have you experienced in 2-3 quarter 2012?

“Proposals” to pay the taxes in advance

Groundless information requests

Heavy inspections

Receiving “tasks” as for budget filling

Refusals or artificial barriers while submitting declaration

Preconceived verdicts of court and tax bodies

Use of force by taxmen (the so-called 'mask shows')

Other

There were no signs of fiscal pressure

77%

50%

42%

41%

37%

33%

14%

16%

4%

83%

51%

29%

46%

27%

31%

0%

4%

3%

II-III/20122011

0

1

2

3

4

5

6

7

21%

20%

14%

12%

8%

5%

3%

17%

42%

12%

8%

14%

3%

3%

3%

14%

II-III/2012

2011

No inspections

7 and more inspections

Number of tax inspections in your company in 2-3 quarter 2012


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Documents

Tax Index with the support of the InMind research company EBA Tax INDEX 2 nd wave, results of the 2-3 quarter 2012 Conducted by the EBA with the support