The regional picture
Infographic: The regional picture
This year the number of economies covered by the study has increased to 189, and while this number is impressive, the value that the study brings lies in the ability to compare and contrast economies within relevant peer groups. The analyses in this publication offer the ability to do this for a particular set of geographical areas drawing out relevant themes and issues. Take a look at the regional findings below and also try out our comparative modeller to create the groupings that are of most use and interest to you.
Explore the map to the right to see the full regional picture.
- At 52.9% Africa has the highest average Total Tax Rate of any region.
- ‘Other’ taxes are the largest element of the Total Tax Rate for Africa while labour taxes are the smallest part, which is the reverse of the global picture. The elimination of cascading sales taxes is beginning to change this profile.
- Africa has the second highest average for the time to comply of 320 hours.
- Consumption taxes (VAT) take the most time in Africa – 127 hours on average.
- At 36.1 Africa has the highest average number of payments of any region.
- While Africa has a higher than average number of taxes, it is the lack of electronic filing in the region which contributes most to the difficulty of paying taxes. In only three of the 53 economies do the majority of companies use electronic filing for all major taxes.
- While the average Total Tax Rate for the region has fallen significantly since 2004 (by 16 percentage points largely as a result of the replacement of cascading sales taxes), the reduction in the average time to comply has been more moderate (28 hours) and the fall in the average number of payments has been small (2.3 payments).
- The most significant falls in the time to comply have been in labour taxes, though this has increased slightly in recent years.
- The regional averages for Total Tax Rate (36.4%), time to comply (232 hours) and number of payments (25.4) are all below the global average.
- Only the Middle East (23.7%) has a lower average Total Tax Rate.
- Profit taxes rather than labour taxes account for the largest element of the Total Tax Rate, but the trend for increasing labour taxes and reducing profit taxes and ‘other’ taxes is consistent with the global trend.
- The average time to comply (232 hours) in the region is moderately low. Only 11 out of the 37 economies in the region take more time than the global average.
- The relative lack of electronic filing and payments in the region keeps the average number of payments (25.4) close to the world average (26.7). There are only 12 of the 37 economies in this region where the majority of companies use electronic filing for all major taxes.
- The trend data over the last nine years shows a steady but moderate decrease across all the three sub-indicators; on average the Total Tax Rate has reduced by 3.4 percentage points, the number of payments by 1.9, and the time to comply by 48 hours.
- The time to comply and number of payments have both risen slightly since their lowest point in 2010.
Central America & the Caribbean
- The average Total Tax Rate for 2012 of 42.8% is slightly lower than the global average of 43.1%. The rate has moved little since last year with only one economy in the region showing a significant movement (an increase) in its Total Tax Rate.
- The regional average of 33.7 payments remains the second highest after the African region and above the global average of 26.7 payments.
- While the average time to comply is below the global average, it has fallen by only 20 hours over the nine years of the study and by only one hour in 2012.
- Corporate income tax is the most significant element of the Total Tax Rate, consistently accounting for around 55% of the Total Tax Rate since 2004.
- Most time is spent complying with labour taxes and mandatory contributions, but these taxes have also shown the greatest improvement since 2004 in the time to comply and in the number of payments.
Central Asia & Eastern Europe
- Central Asia & Eastern Europe has been the biggest reformer over the nine years of the study. Economies in this region have shown the largest fall in both the time to comply (220 hours) and number of payments (25 payments), and apart from Africa has the largest fall in the Total Tax Rate (15.7%).
- The average Total Tax Rate for the region is 39.5% which is a little below the world average of 43.1%. The Total Tax Rate has shown a slight upward trend since 2010.
- All three types of tax have shown a slight increase in Total Tax Rate in 2012.
- Almost all of the economies in the region have a significant element of the Total Tax Rate accounted for by labour taxes and mandatory contributions.
- The average time to comply across this region is 256 hours, 12 hours below the world average of 268. It is fairly evenly split between the major taxes.
- At 29.5, the region’s average number of payments is a little above the world average of 26.7.
- The region has shown a steady improvement in the number of payments and in the time to comply over the last nine years.
- The introduction of electronic filing and reducing tax rates has been the key to the reform process in this region. In 12 of the 19 economies the majority of companies use electronic filing and payment for all major taxes.
EU & EFTA
- On average, in the EU & EFTA region, the case study company has a Total Tax Rate of 41.1%, made 13.1 tax payments and took 179 hours to comply with its tax obligations in 2012.
- Labour taxes and mandatory contributions are and have consistently been the largest part of the Total Tax Rate, accounting for 65% of the overall rate in 2012. These taxes required 48% of the time to comply in 2012, but accounted for only 24% of the number of payments.
- The region has the lowest time to comply apart from the Middle East and the lowest number of payments after North America.
- Across the nine years of the study, on average, the region’s average Total Tax Rate has reduced by 4.1 percentage points, the time to comply has fallen by 59 hours, and the number of payments has fallen by 9.3.
- In recent years the Total Tax Rate for this region has started to increase, while the two compliance sub-indicators, time to comply and the number of payments continue to drop away steadily.
- On average, in the Middle East region the Paying Taxes case study company has a Total Tax Rate of 23.7%, makes 17.6 tax payments and takes 159 hours to comply with its tax obligations.
- Labour taxes and mandatory contributions are significant, accounting for 59% of the Total Tax Rate, 56% of the time to comply and 59% of tax payments.
- The region has the lowest Total Tax Rate and time to comply. It also has the lowest number of payments after North America and the EU & EFTA.
- Over the nine years of the study there has been very little movement in any of the three sub-indicators.
- In 2012, on average in North America our case study company had an average Total Tax Rate of 41.4% which is below the world average 43.1%. However for 2012 there is an increase of 0.2 percentage points driven by Mexico’s change to its social security rate.
- All three sub-indicators for the region are below the world average, but this disguises some significant differences between the three economies which make up this region.
- All economies in this region have implemented online filing and payment systems resulting in a reduction of 122 hours in the average time to comply over the nine years of the study.
- The average number of payments for the region is 8.3, well below the world average of 26.7 and the lowest of any region.
- High levels of corporate income tax drive the Total Tax Rate in the United States, labour taxes and mandatory contributions are significant in Mexico, while generally lower tax rates apply in Canada.
- The average Total Tax Rate for 2012 is 52.7% which is higher than the world average of 43.1% and is the second highest of any region apart from Africa.
- In 2012, the average time to comply across the South America region is 618 hours, which is significantly higher than the world average of 268, largely driven by Brazil with 2,600 hours and Bolivia with 1,025 hours.
- Since 2004, a number of fairly small reforms have reduced the average of Total Tax Rate by 4.1 percentage points.
- The average time to comply has declined by just 41 hours since 2004, which maintains the region as having the highest average time to comply with almost 350 hours above the world average in 2012.
- South America remains the region with the highest time to comply, despite the introduction of electronic filing and payment capabilities in several economies.
- Consumption taxes have always required the most time to comply in this region.
- In 2012, despite the high time to comply, the average of number of payments for this region of 24.2 is slightly below the world average of 26.7. ‘Other’ taxes account for 50% of tax payments in 2012.