Canada’s tax system well ahead of G8 and BRIC economies, places in Top 15 of global rankings

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TORONTO, Feb 13, 2012—The Canadian business tax rate has been reduced to a low of 28.8% resulting in a total tax rate ranking of 39 for Canada out of the 183 economies included in Paying Taxes 2012, 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. Paying Taxes 2012 measures the overall ease of paying taxes for a hypothetical small to medium-sized domestic business 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.

The study revealed that Canada’s business tax rate is significantly lower than the U.S. rate of 46.7% which gives the U.S. a total tax rate (TTR) ranking of 131. Canada scored significantly lower, and the U.S. scored higher than the global average TTR of 44.8%.

Paying Taxes 2012: Global average (183 economies)

 

Global Average

Canada

Number of tax payments 28.5 8
Number of hours to comply with tax affairs 277 hours 131 hours
Tax costs of commercial profits 44.8% 28.8%

Canada’s Ranking

Canada is in 11th place when it comes to its overall rank in ease of paying taxes, making it the easiest country to pay taxes in the G8 based on the number of tax payments, the time it takes to comply and its total tax rate.

Paying Taxes 2012 Rankings: Some of the G8

Economy

Overall (rank)

Tax Payments (rank)

Time to Comply (rank)

Total Tax Rate (rank)

Canada 11 17 37 39
United Kingdom 18 17 24 82
France 55 11 38 164
United States 69 40 66 131
Germany 86 44 88 130

Canada’s 11th place ranking is also well ahead of the BRIC economies, where Russia and China rank 102nd and 121st respectively for overall ease of paying taxes. Brazil has the lowest ranking in the time it takes to comply, placing 183rd with 2600 hours, compared to Canada’s rank of 37th at 131 hours.

Paying Taxes 2012 Rankings: The BRIC economies

Economy

Overall (rank)

Tax Payments (rank)

Time to Comply (rank)

Total Tax Rate (rank)

Russia 102 29 128 132
China 121 11 155 161
India 147 111 107 156
Brazil 150 29 183 168

CEOs globally say role of tax policy is “significant”

According to PwC’s 15th Annual Global CEO Survey which surveyed 1,258 business leaders in 60 countries from September 2011 to December 2011, tax policy plays a more important role than immigration policy when it comes to CEOs site decisions across national borders. According to the study, 44% of CEOs globally said tax policy was a significant factor in their site decisions, compared to 17% who said that immigration policy is an important factor.

“Canada must compete with other nations for global business investment,” says Lincoln Schreiner, Tax services partner. “A competitive business environment needs an aggressive and efficient tax system which includes competitive tax rates, tax rules that recognize modern business structures and practices, and reduced compliance burdens.”

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.

2012 Federal Budget

PwC has a team of tax specialists available for comment regarding the upcoming federal budget. Please contact Kiran Chauhan, +1 416 947 8983, or via Email, or David Rowney, +1 416 365 8858, or via Email, for more information.

PwC’s full letter of federal budget recommendations (http://www.pwc.com/ca/budget) and Paying Taxes 2012 report (http://www.pwc.com/ca/payingtaxes) are also available from the media contacts.

Follow PwC on Twitter at @PwC_Canada_LLP and on Facebook at www.facebook.com/pwccanada.

About PwC Canada

PwC Canada helps organizations and individuals create the value they’re looking for. More than 5,700 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 close to 169,000 people in 158 countries. Find out more by visiting us at www.pwc.com/ca.

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