Paying Taxes 2014 - pwc.pt · Paying Taxes 2014 – The global picture November 2013 Slide 21...

Portugal Neville Howlett 3 December 2013 Lisbon, Portugal

www.pwc.com/payingtaxes

Paying Taxes 2014 The global picture

PwC

During 2013 there has been an increasing focus on the perception that the world’s tax systems are no longer fit for purpose. Tax systems around the world need to be updated to meet modern needs. Paying Taxes provides information to help inform the discussion around tax reform. A PwC commentary

November 2013 Paying Taxes 2014 – The global picture

Slide 2

PwC

Paying Taxes is important

The impact that tax systems have on business is important. They:

support government economic and social policy

can help foster business investment and return to economic growth

help reduce public finance deficits and increase tax revenues in developing countries

The Paying Taxes study is important. It:

provides data to inform discussions on tax policy and tax administration

encourages tax reform

generates great interest and is used around the world

facilitates comparison on a like for like basis

Slide 3


PwC PwC

-6

-4

-2

0

2

4

6

8

10

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Asia-Pacific* EU US Latin America Africa

Uneven growth across the world economy % per annum change in GDP

Source: IMF World Economic Outlook, October 2013

* Major 6 economies

Slide 4


PwC

Implications for the tax system

• The global downturn has had significant impact.

• A prolonged period of fiscal adjustment continues in many economies.

• The policies that governments are choosing to adopt are more diverse

- Some are choosing reduced rates to attract investment and encourage growth

- Some are looking for additional revenue streams to reduce deficits

- The taxes that are levied are also changing

- There is a need to simplify administration to promote compliance

Slide 5


PwC

Key themes and findings from Paying Taxes 2014 The overall position in 2012 and the nine year trend

Slide 6


PwC

The global average results – 2004 to 2012

Slide 7

53.4 52.6 51.8 51.2 49.9 48.6 45.7 45.4 44.3

34.0 33.3 33.0 31.7 31.2 30.6

29.3 27.6 27.0

330 332 326

307 295 290

284 276 275

0

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350

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2004 2005 2006 2007 2008 2009 2010 2011 2012

TTR Payments Time


PwC

Key themes and findings from Paying Taxes 2014 The trend for the compliance indicators

Slide 8


PwC

The global average results – Time to comply (2004 to 2012)

PwC

The global average results – Number of payments (2004 to 2012)

PwC

Key themes and findings from Paying Taxes 2014 The trend for the total tax rate

Slide 11


PwC

The global average results – Total tax rate (2004 to 2012)

PwC

The total tax rate calculation for Portugal


Slide 13

The Total Tax Rate Calculation for Portugal

€‘000 €‘000

Profit before tax (PBT) 552

Addback above the line taxes borne:

Property tax 3

Social security contributions 205

Municipal business tax 7

Vehicle tax 1

216

Profit before all taxes borne/commercial profit 768

Corporate income tax on PBT after necessary adjustments (109)

Above the line taxes borne (216)

Total tax borne (325)

Profit after tax 443

Total Tax Rate = Total taxes borne / commercial profit 42.3%

Total Tax Rate 2011 42.6%

PwC

Total tax rate – Portugal and EU & EFTA


Slide 14

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Cro

atia

Luxe

mb

ou

rg

Cypru

s

Irela

nd

Denm

ark

Bulg

aria

Sw

itze

rla

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Icela

nd

Slo

ven

ia

United

Kin

gd

om

Latv

ia

Neth

erla

nds

Fin

land

Norw

ay

Ma

lta

Pola

nd

San

Marino

Port

ug

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Rom

ania

Lithu

ania

Gre

ece

Slo

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epu

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Czech R

ep

ub

lic

Germ

any

Esto

nia

Hung

ary

Sw

ede

n

Austr

ia

Belg

ium

Spa

in

Fra

nce

Italy

Profit taxes (%) Labour taxes (%) Other taxes (%) EU & EFTA Average

Portugal 42.3% EU & EFTA average

41.1%

PwC

Total tax rate – Portugal compared to EU & EFTA and the world average


Slide 15

12.8 16.1 15.1

26.6 16.4

26.7

1.7

10.6

0.5

EU & EFTA World Portugal

Profit taxes Labour taxes Other taxes

41.1 43.1 42.3

PwC

Total tax rate – Paying Taxes indicator trends The regional results


Slide 16

PwC

Time to comply – Prepare, File and Pay Portugal


Slide 17

Corporate

income tax

Labour

taxes

Consumption

taxes

Total

Prepare 51 86 72 209

File 6 22 12 40

Pay 6 8 12 26

Total (2012) 63 116 96 275

Total (2011) 275

PwC

Time to comply – Portugal and EU & EFTA


Slide 18

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San

Marino

Luxe

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Esto

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Norw

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Fin

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United

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Sw

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Neth

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Denm

ark

Fra

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Ma

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Icela

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Cypru

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Belg

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Austr

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Spa

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Lithu

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Gre

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Cro

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Rom

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Slo

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blic

Germ

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Slo

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Latv

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Italy

Port

ug

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Hung

ary

Pola

nd

Czech R

ep

ub

lic

Bulg

aria

Corporate income tax Labour taxes Consumption taxes EU & EFTA Average

Portugal– 275 hours

EU & EFTA average – 179 hours

PwC

Time to comply – Portugal compared to EU & EFTA and the world average


Slide 19

71

38 63

96

86

116

101

55

96

World average EU & EFTA Portugal

Profit taxes Labour taxes Consumption taxes

268

179

275

PwC

Time to comply – Paying taxes indicator trends The regional results


Slide 20

PwC

The number of payments calculation for Portugal


Slide 21

Portugal: Number of payments

World Bank Actual

Tax type indicator payments Notes

Corporate income tax 1 5 online filing

Property tax 1 1

Social security contributions 1 12 online filing

Value added tax (VAT) 1 12 online filing

Municipal business tax 0 1 paid jointly with CIT

Vehicle tax 1 1

Tax on check transations/Stamp Duty 1 12 online filing

Fuel tax 1 1 embedded in payments to third parties

Interest withholding tax 1 12 online filing

Total 8 57

Total 2012 8

PwC

Number of payments – Portugal and EU & EFTA


Slide 22

0

5

10

15

20

25

30

35

40

45

Norw

ay

Sw

ede

n

Esto

nia

Fra

nce

Latv

ia

Ma

lta

Czech R

ep

ub

lic

Fin

land

Gre

ece

Port

ug

al

Spa

in

United

Kin

gd

om

Germ

any

Irela

nd

Neth

erla

nds

Denm

ark

Belg

ium

Lithu

ania

Slo

ven

ia

Austr

ia

Hung

ary

Bulg

aria

Italy

Pola

nd

Cro

atia

San

Marino

Sw

itze

rla

nd

Slo

vak R

epu

blic

Luxe

mb

ou

rg

Icela

nd

Cypru

s

Ro

mania

Profit Taxes Labour taxes Other taxes EU & EFTA Average

Portugal– 8 payments

EU & EFTA average – 13 payments

PwC

Number of payments – Paying taxes indicator trends The regional results


Slide 23

PwC

What the paying taxes results Globally • While the global average Total Tax Rate fell in 2012, the picture is more

mixed. The Total Tax Rate significantly increased for 14 economies and significantly reduced for 14 others

• If the exceptional rate reductions which arise from replacing cascading sales tax with VAT are excluded, the global average Total Tax Rate has started to rise in 2012

• Over the nine years of the study the Total Tax Rate attributable to profit taxes has fallen faster than that for labour taxes so that labour taxes are now the largest element of the Total Tax Rate

• The fall in the compliance indicators has also slowed with time and the number of payments having fallen fastest for labour taxes

• Consumption taxes are still the most time consuming


Slide 24

PwC

What the paying taxes results show (continued) EU & EFTA

• On average, in the EU & EFTA region, the case study company has a Total Tax Rate of 41.1%, made 13.1 tax payments and took 179 hours to comply with its tax obligations in 2012.

• Across the nine years of the study, on average, the region’s Total Tax Rate has reduced by 4.1 percentage points the time to comply has fallen by 59 hours, and the number of payments has fallen by 9.3.

• In recent years, the Total Tax Rate for this region has started to increase. The two compliance sub-indicators, time to comply and the number of payments, continued to drop away steadily but the decline has now slowed.

• Labour taxes and social contributions are and have consistently been the largest part of the Total Tax Rate, accounting for 65% of the overall rate and require 48% of the time to comply.

• The region has the lowest time to comply apart from the Middle East and lowest number of payments after North America.


Slide 25

Thank you for listening

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Paying Taxes 2014 - pwc.pt · Paying Taxes 2014 – The global picture November 2013 Slide 21...

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