On the total tax rate, which measures the amount of taxes and mandatory contributions by a business, expressed as a share of commercial profit, Macedonia ranks in the very high 4th place in the world with a total rate of 9.7%, according to a new report by the World Bank, IFC, and PwC. Macedonia is a good practice example, according to Paying Taxes 2012 report since it has, alongside United Kingdom and China, one tax per tax base.
The Paying Taxes 2012 ranks Macedonia in the 20th place, ahead of all countries in Eastern Europe. Paying Taxes 2012 measures all mandatory taxes and contributions that a midsize firm must pay in a given year. Taxes and contributions measured include the profit or corporate income tax, social contributions and labor 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.
"Macedonia's high world ranking in Paying Taxes 2012 demonstrates that improving the tax system for businesses is high on the government's agenda,” said Lilia Burunciuc, Country Manager, World Bank Office in Macedonia.
"By creating a system that is easy to comply with, it is more likely that businesses will operate in the formal economy and provide a more sustainable source of revenue to the budget," she said.
The report says that governments continue to reform their tax systems. One hundred and twenty three out of 183 economies measured have made significant regulatory changes since 2006 to ease tax burdens for small and midsize firms, as governments seek to increase business registrations and relieve the impact of the global economic downturn.
Launched on Thursday, Paying Taxes 2012 finds that 33 economies made it easier and less costly to pay taxes from June 2010 through May 2011. The most common tax reform was the increased use of online systems to facilitate tax compliance, introduced in 23 economies. Electronic filing and payment reduces the amount of paperwork, allows a more targeted and risk based approach to audit and compliance, and can help eliminate corruption.
The report finds that the total tax rate for small and midsize companies in the world has fallen by 8.5 percentage points since 2006, more than one point per year.
Globally, the average Total Tax Rate for a small to midsize company is now 44.8 percent of its commercial profit.
"Governments have it in their control to develop tax systems that foster business investment and make the private sector an engine for a return to economic growth and prosperity," said Andrew Packman, a tax partner at PwC UK. "Reducing rates and making the compliance less burdensome helps companies focus on making their business grow.
