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Nicolas de Chamfort
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Study: more should be done to make tax procedures easier

Photo: pixabay.com
The four main indexes for business tax commitments have not changed much globally: commitment compliance time (237 hours); number of payments (23.8); total tax and duties rate (40.4%) and post-declaration index (59.6 out of 100), as concluded in the Paying Taxes 2019 study by PwC and World Bank Group.

It is also stated in the study that countries’ tax administrations could do more to use opportunities provided by technologies to reduce the tax commitment burden for businesses.

Compared to other Baltic States, Latvia had the lowest tax and duties volume in 2017 – 36% (42.6% in Lithuania and 48.7% in Estonia). Latvia also has the longest commitment compliance time, which has not changed much over the course of time – 169 hours (99 hours in Lithuania and 50 hours in Estonia).

Paying Taxes 2019 outlook compares business taxes in 190 countries, using medium-sized local companies for research purposes.

«This year’s Paying Taxes outlook shows how new technologies, if used strategically, can help improve tax administration and work productivity for businesses. But it should be said that technologies are not the only influencing factor over the tax system. A simple, logical and well-organized and correctly administered tax system could motivate people working in the grey economy to come to the light, expanding the range of applicable taxation and increasing state budget revenue without adopting new taxes. To achieve this goal, state policy makers and tax specialists have to guarantee options to gain new knowledge and understanding based on technological progress,» says PwC Tax Department’s senior manager in Latvia Agate Zīverte.

Several especially progressive countries continue improving their systems to make life easier for taxpayers and their own tax administrations, shorten the time needed to prepare and submit tax declarations and pay taxes, as mentioned in the outlook.

The fact that the average index has changed very little in the world, in spite of the fact that 113 countries adopted tax reforms, shows that reforms have limited effect. The outlook also shows that adoption of new technologies could also increase the administrative burden for a short while. Because of that, adoption of technologies requires careful planning.

Although many countries have significantly improved their tax systems in recent years, the outlook also shows that some countries have a hard time adopting online tax declaration and payment due to a lack of IT infrastructure, cultural barrier and complex legislation.

Generally, these conclusions confirm trends that have been observed since the publication of the first outlook in 2004:

Thanks to technologies, the average period of time for payment of taxes has reduced 84 hours since 2004, and the average number of payments has reduced by 10.3.

VAT repayment takes about 19.2 weeks in high income countries and 44 weeks in low income countries.

For the tax system to function properly, it is important to raise tax inspectors’ qualifications. 97% of countries provide tax inspectors with training, but only in 35% of countries provide regular training.


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