Canada ranks 1st among G7 countries for ease of paying taxes and low total tax burden for small to medium-sized companies

According to the 12th edition of the Paying Taxes report released by PwC and the World Bank Group, Canada ranks 1st amongst the G7 nations and  16th out of all 190 economies measured. Despite consistently being in the top 20 over the past five years, Canada’s ranking could potentially drop should the federal government implement the proposed legislative changes for private corporations.

On average, small to medium-sized Canadian companies make eight tax payments (vs. an average of 24 payments globally) per year and take 131 hours (vs. an average of 240 hours globally) to comply with the tax requirements. Under this proposed legislation targeting private corporations, the total tax burden would increase and tax compliance would become more complex, which could result in Canada’s ranking decline in the coming years.

“Canada’s tax system is one of the most efficient and favourable systems in the world for small to medium-sized businesses. Canada’s tax system for large businesses is significantly less favourable. However, proposed changes to the current tax landscape put forward by the Government of Canada in July 2017 could negatively impact Canada’s future ranking”, said Peter van Dijk, PwC National Tax Policy Leader. “The Canadian tax system is a critical component of our Canadian investment climate. The recent proposals for private corporations by the government will increase the amount of taxes small and medium-sized businesses will have to pay, diverting money away from future investments and job creation.”

The Paying Taxes 2018 report measures the overall ease of paying taxes for small to medium-sized domestic companies based on the following criteria: number of tax payments per year, time required to compile returns and submit tax payments, total tax liability as a percentage of pre-tax profits, and post-filing index which measures the time to obtain a VAT refund, correct a corporate income tax return, and deal with the corresponding audits.

 

Overall Paying Taxes Ranking 2018 for the G7

Country

Overall Ease of Paying Taxes Ranking

Total Tax Payment (#)

Time to Comply (hours)

Total Tax & Contribution  Rate (%)

Post-filing index

Canada

16

8

131

20.9

73.23

France

54

9

139

62.2

92.40

Germany

41

9

218

48.9

97.67

Italy

112

14

238

48.0

52.39

Japan

68

14

151

47.4

71.69

UK

23

8

110

30.7

71.0

US

36

11

175

43.8

94.04

The following table illustrates Canada’s position over the years compared to other G7 nations.

Overall Paying Taxes Ranking Year over Year

Country

2018

2017

2016

2015

2014

Canada

16

17

9

9

8

France

54

63

87

95

52

Germany

41

48

72

68

89

Italy

112

126

137

141

138

Japan

68

70

121

122

140

UK

23

10

15

16

14

US

36

36

53

47

64

To access the full Paying Taxes Report, click here.

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