PwC has submitted its tax proposals to Finance Minister Jim Flaherty as part of his pre-budget consultations, including a recommendation that the federal government continue with the planned reduction of corporate income tax rates. These tax cuts will make Canada’s tax rate on business investment the lowest among G7 countries by 2012.
According to PwC’s recent report Paying Taxes 2011, business tax rates in Canada were reduced to a low of 29.2% last (compared to 49.1% in 2006), helping our global total tax rate ranking rise from 103 in 2009 to 37 in 2010 (out of 183 countries). 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 based on its number of tax payments, the time it takes to comply and its total tax rate.
More Key Proposals from PwC’s Tax Group
Provide better access to foreign markets for Canadian business. The government should increase its efforts to enter into trade agreements and tax treaties with emerging markets in Asia, South America and Africa to help Canadian business have greater access to these rapidly growing markets.
“PwC is urging the Finance Minister to commence negotiations to sign a tax treaty with Hong Kong, the gateway to Asia and a hub for many Canadian businesses with interests in that part of the world,” says Nick Pantaleo, PwC’s Canadian National Tax Services Leader. “Canadian companies should have the ability to keep pace with foreign competitors of countries that already have agreements with Hong Kong.”
Guard against currency value manipulations. PwC also recommends that the federal government take a more active stance and participate with other nation’s governments in a joint effort to pressure countries that are artificially reducing the value of their currency in order to maintain their growth. “The manipulation of currency value is short-lived and disruptive to the international market place, making Canada’s exports more expensive” says Pantaleo.
Reduce the red tape and costs associated with income tax reporting. There has been a significant increase in the administration costs associated with the rising amount of financial and other information that Canadian taxpayers must report for income tax purposes. However for most taxpayers, this has not resulted in quality audit results and quicker reporting times. “We recommend that there be a review of the existing information reporting requirements and if they can’t be traced to improved tax administration processes they should be eliminated and avoided in the future if real benefits cannot be established,” says Pantaleo.
2011 Federal Budget
PwC has a team of tax specialists available for comment regarding the upcoming federal budget. Please contact Kiran Chauhan, (416) 947-8983, [email protected] or David Rowney, (416) 365-8858, [email protected] for more information.
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