Business tax rates in Canada have been reduced to a low of 29.2% (compared to 49.1% in 2006), helping our total tax rate ranking rise from 103 in 2009 to 37 in 2010 (compared to 105 in 2008, 99 in 2007, 77 in 2006). The ranking is out of the 183 countries included in Paying Taxes 2011, a joint study from PwC, the World Bank and the International Finance Corporation (IFC) which provides a comparison of the ease of paying taxes by tax regimes globally.
The Paying Taxes 2011 report measures the overall ease of paying taxes by assessing three indicators: number of tax payments per year; time taken to compile returns and submit tax payments; and by calculating companies’ total tax liability as a percentage of pre-tax profits.
Canada is in tenth place when it comes to its overall ease of paying taxes, making it the only G20 economy in the Top 10 this year based on the number of tax payments, the time it takes to comply and its total tax rate.
Contributing to Canada’s favourable tax rate ranking are further legislated tax changes and by 2012, Canada will have one of the lowest statutory combined federal and provincial corporate income tax rates in the G7 group of industrialized nations at 25%.
There continue to be ongoing efforts to reduce compliance costs and make the tax system more efficient through initiatives such as harmonized federal and provincial sales tax in Ontario and British Columbia, mandatory online tax returns starting in 2010 for certain companies with annual gross revenues exceeding $1 million; and the potential consolidation of federal and provincial corporate tax returns.
“Canada is moving in the right direction,” says Lincoln Schreiner, Tax Services partner. “The initiatives introduced by the federal and provincial government are aimed at stimulating economic growth, and restoring confidence following the global economic recession. Low corporate tax rates and easing the administrative burden for Canadian taxpayers will continue to be important to remaining internationally competitive.”
According to the study, nearly 60% of the world’s economies have made significant business regulatory changes to ease paying taxes. In the past year, 40 economies have made it easier to pay taxes, with Tunisia improving the most. For economies that are included in both the 2006 and 2011 Paying Taxes studies, the time needed to comply has declined by a week, the tax cost has fallen on average by 5%, and the number of payments has dropped by almost four. In all, 90 economies have reduced taxes on corporate profits since 2006.
For more information, and to access the complete Paying Taxes 2011 report, please visit www.pwc.com/ca/payingtaxes and www.doingbusiness.org/data/exploretopics/paying-taxes.
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For further information:
Kiran Chauhan, PwC
Tel: 416 947 8983
email: [email protected]
David Rowney, PwC
Tel: 416 365 8858
email: [email protected]