UK slips two places down league table of effective tax systems

Published at 09:18 AM on 21 November 2014

The UK cannot afford to stand still on tax competitiveness, the latest PwC, World Bank and IFC Paying Taxes study shows.   After two years of ascent, the UK has dropped two places to 16th in the annual benchmark of business tax systems, which measures the tax costs and compliance burden for a case-study manufacturer.

The UK’s fall was caused mainly by Macedonia introducing a number of tax reforms, leaping 19 places to 7th.  Norway is now also ahead in the ranking of 189 economies.

Kevin Nicholson, head of tax at PwC, said:

    “The UK has a competitive tax system, but other countries are upping the ante on reform.  We     can’t sit still if the Government is to make the UK the most competitive tax system in the G20.

    “Corporation tax will fall to 20% in April but tax rates are only half the issue. For medium sized     businesses, the time spent having to deal with taxes can have a bigger impact.   Reducing the     compliance burden is critical.

    “We’ve seen the pace of tax reform globally slow down since the financial crisis, but it’s set to     remain a priority, particularly as governments take on board the proposals from the OECD to     update the system for global business.”

While the corporation tax rate for UK businesses has been falling, profit related taxes globally have risen for the second year in a row, countering suggestions of a ‘race to the bottom’.  The sharpest drop was from 2008-10, when around 47 economies cut their rates during the financial crisis.  Governments are now focusing on funding public spending.

Since last year’s study, there’s been no let-up in the compliance burden for UK businesses.  It still takes about 9 days (110 hours) for a medium sized company to prepare, file and pay its corporation tax, labour taxes and value added tax - there remain 8 different taxes in all.  The Total Tax Rate has fallen by just 0.3 percentage points to 33.7 percent, largely because of the fall in the rate of corporation tax. Other countries managed to shave off time, bringing the average compliance time globally down four hours to 11 days.  The average number of payments globally was cut by one to 25.9.

South America has the most time consuming and costly tax system.  The compliance time is more than 7 weeks, and the total tax rate is 55.4%, compared with 40.9% globally.  Bolivia comes last in the ranking, largely due to the 1025 hours it takes to comply.  Conversely the Middle East is the easiest place to pay taxes.  Tax compliance takes only 12 hours for equivalent businesses in the UAE and 41 hours in Qatar, for example, and low total tax rates help these economies to the number 1 position in the ranking.

Andrew Packman, tax partner at PwC, commented:

    “UK businesses are unlikely to think their tax compliance burden is light, but when you look     around the world it’s clear things could be a lot worse.  One of the attractions of the UK is the ease     of paying taxes and there is still plenty of scope for further streamlining. 

    Earlier this year the Office of Tax Simplification was challenged with improving the     competitiveness of UK tax administration, looking in particular at the Paying Taxes study. We     welcome the OTS's review - the UK has to work harder at retaining and attracting business than     countries with specific resources, and it is much more than having a competitive tax rate.  Making     paying taxes simpler is equally important.”

Top 20 ranked economies

1. Qatar (up 1), joint with United Arab Emirates

3. Saudi Arabia

4. Hong Kong

5. Singapore

6. Ireland

7. Macedonia (up 19)

8. Bahrain (down 1)

9. Canada  (down 1)

10. Oman (down 1)

11. Kuwait

12. Denmark

13. Mauritius

14. Kiribati (down 4)

15. Norway (up 2)

16. UK (down 2)

17. Kazakhstan (down 1)

18. Switzerland (down 2)

19. South Africa (up 5)

20. Luxembourg (down 5)


Paying Taxes ranking of G20 economies

Argentina 170

Australia 39

Brazil 177

Canada 9

China 120

France 95

Germany 68

India 156

Indonesia 160

Italy 141

Japan 122

Republic of Korea 25

Mexico 105

Russia 49

Saudi Arabia 3

South Africa 19

Turkey 56

UK 16

United States 47


Contact: Laetitia Lynn, senior PR manager, PwC: 020 7212 3761 or 07850 515835


Paying Taxes 2015

measures all mandatory taxes and contributions that a medium-sized firm 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.

For more information about the Paying Taxes study, visit:

The Paying Taxes annual report builds on the World Bank Group’s Doing Business reports’ chapter on Paying Taxes. For more information on the Doing Business report series,


About the World Bank Group

The World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries. It comprises five closely associated institutions: 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). Each institution plays a distinct role in the mission to fight poverty and improve living standards for people in the developing world. For more information, please visit,, and

About PwC:

PwC firms help organisations and individuals create the value they’re looking for. We’re a network of firms in 157 countries with more than 195,000 people who are committed to delivering quality in assurance, tax and advisory services. Find out more and tell us what matters to you by visiting us at

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©2014 PricewaterhouseCoopers. All rights reserved


About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see for further details. © 2016 PwC. All rights reserved

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