Taxes Around the World

Recently passed "fiscal cliff" deal offers a mixed bag for
business owners.  While certain temporary business breaks have been
extended for another year, business owners with pass-through income of
$400,000 and more will still face a tax rate increase.  But how does
US measure against other countries in the matter of business taxes?

 

A recent report prepared by the World Bank in collaboration with
PricewaterhouseCoopers reveals trends in tax rates around the world. The report covers 185 countries and demonstrates tax rate changes over a period of
2004-2011.

 

Overall, the report states that the average tax rate has decreased by 7.7%
from 2006 and by 0.3% since 2011.  On average a global company pays 44.7%
in taxes (US tax - 35%).   Central Asia and Eastern Europe countries were among those that underwent the most reforms over the reported period.  These
regions showed the most significant drop in the total tax rate (over
12.5%).  The major reforms in these countries introduced electronic
tax filing systems, tax rates reductions and filing process simplification.

 

The Middle East has had the lowest tax rates (23.6%) while Africa has
the highest (57.4%). 

 

Another interesting finding was in how the report linked a country's
economic growth to the burdens of filing and paying taxes.  Apparently,
the reduction in the tax rates alone proved to be less effective without
improvement of a country's tax system.  A sound business tax
system calls for a combination of attractive tax rates and simplified tax
rules.  

 

For complete report, please see http://www.pwc.com/gx/en/paying-taxes/assets/pwc-paying-taxes-2013-full-report.pdf