February 3, 2016

10th annual Paying Taxes report ranks Canada in global top 10 for ease of paying taxes

TORONTO--According to the latest Paying Taxes report, released by PwC and the World Bank Group, Canada continues to lead when it comes to the ease of paying taxes compared to its global counterparts. The report measures the overall ease of paying taxes for small to medium-sized domestic businesses based on the number of tax payments per year, the time required to compile returns and submit tax payments, as well as companies' total tax liability as a percentage of pre-tax profits.

The report found that on average, Canadian companies had a Total Tax Rate of 21.1% of commercial profits compared to a global average of 40.8%. Canada's Total Tax Rate also falls below the North American average. Mexico's Total Tax Rate is 51.7% while the United States comes in at 43.9%. In 2014, 46 economies exhibited an increase in their Total Tax Rate, while the Tax Rate decreased in 41 economies.

"The Canadian government is committed to creating a tax-competitive and business-friendly environment for small-medium sized domestic companies," says Peter Van Dijk, PwC Canadian Tax Policy leader, PwC Canada. "The implementation of various tax programs help to support and encourage the creation of more such businesses."

On average, Canadian companies make eight tax payments per year and take 131 hours to comply with their tax requirements. These numbers fall below the global average of 25.6 payments and 261 hours respectively. Electronic filing continues to have a significant impact in easing the burden of tax administration.

Paying taxes became easier for medium sized companies globally, but the focus has moved from reducing tax rates for companies to embracing technology and relieving their compliance burden.

Paying Taxes 2014 Rankings: G7 nations

Canada's 9th place ranking makes it the easiest country to pay taxes amongst the G7 nations based on the number of tax payments, the time it takes to comply and its Total Tax Rate (TTR).

Notes: Paying Taxes 2016 measures all mandatory taxes and contributions that a medium-size company must pay in a given year. Taxes and contributions measured include the profit or corporate income tax, social contributions and labour taxes paid by the employer, property taxes, property transfer taxes, dividend tax, capital gains tax, financial transactions tax, waste collection taxes, vehicle and road taxes, and other small taxes or fees.
The Paying Taxes annual report builds on the World Bank Group's Doing Business reports' chapter on Paying Taxes.

The World Bank Group plays a key role in the global effort to end extreme poverty and boost shared prosperity. It consists of five institutions: the World Bank, including the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA); the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Working together in more than 100 countries, these institutions provide financing, advice, and other solutions that enable countries to address the most urgent challenges of development.

PwC Canada helps organizations and individuals create the value they're looking for. More than 6,500 partners and staff in offices across the country are committed to delivering quality in assurance, tax, consulting and deals services. PwC Canada is a member of the PwC network of firms with more than 195,000 people in 157 countries.