Canada has boosted its global standing with one of the best business tax systems in the world, ranking 37th out of 183 countries studied.
A global report by the World Bank, the International Finance Corp. and PricewaterhouseCoopers compares the ease of paying taxes among different national tax regimes each year.
The ranking is based on the number of times companies have to make payments a year, the time it takes to compile returns and submit payments and a company’s total tax liability as a percentage of pre-tax profits.
Canada moved to 37th this year from 103rd in 2009, due in part to a dramatic reduction in corporate taxes to 29.2%, compared to 49.1% in 2006. Its ranking was also boosted by the fact that by 2012, Canada will have one of the lowest statutory combined federal and provincial corporate income tax rates in the G7.
Ongoing efforts to reduce compliance costs and make the tax system more efficient with initiatives such as the HST in Ontario and B.C., mandatory online tax returns starting in 2010 for certain companies with gross revenues over $1 million and a potential consolidation of federal and provincial corporate tax returns were cited as additional reasons for Canada’s strong showing in the report.
“Canada is moving in the right direction,” said Lincoln Schreiner, a PwC tax services partner. “Low corporate tax rates and easing of the administrative burden for Canadian taxpayers will continue to be important to remaining internationally competitive.”
The study noted nearly 60% of the world’s economies have made significant business regulatory changes to ease paying taxes.