Singapore has kept its ranking as the fifth easiest place in the world for companies to file and pay their taxes, a new study has found.
The study was conducted jointly by professional services firm PricewaterhouseCoopers (PwC) and the World Bank Group.
The report, now in its 10th year, compares tax regimes across 189 economies.
It records the taxes and mandatory contributions that a case study medium-sized company in its second year of business must pay.
In Singapore's case, this includes Central Provident Fund (CPF) employer contributions, as well as corporate tax.
The report also examines the administrative burden of paying taxes and mandatory contributions.
Such a company in Singapore would need 82 hours per year to comply with its tax obligations.
That is very considerably shorter than the global average of 264 hours.
The Singapore company would make five tax payments per year, again much lower than the global average of 25.9.
The total tax rate for the company here - that is, the cost of all taxes borne by the company as a percentage of commercial profits - is estimated at about 18.4 per cent.
The global average is more than double that proportion at 40.9 per cent.
Singapore's "great result" in the ranking "should come as no surprise to small and medium-sized enterprises (SMEs) operating in Singapore, given the Government's focused and principled approach in designing an equitable but nonetheless competitive tax system", said Mr Lennon Lee, a corporate tax partner at PwC Singapore.
Qatar and the United Arab Emirates (UAE) tied for the top spot as countries where it is easiest for firms to file and pay taxes.
Companies in the UAE need a mere 12 hours per year to comply with their tax obligations, while those in Qatar need 41 hours. Firms in both countries make an estimated four tax payments per year.
The two are followed by Saudi Arabia and Hong Kong making up the top five.
While Singapore and the other top-ranking economies may bask in their strong showing, companies in other countries can take heart too.
Paying taxes has become easier for companies around the world, the study showed.
The time and the number of payments required to comply with tax obligations across all economies have fallen over the 10-year period recorded by the survey, as has the average total tax rate.
The fastest rate of decline for the total tax rate occurred during the financial crisis from 2008 to 2010.
The average time it takes a medium-sized company to deal with its tax submissions has fallen by nearly a week and a half over the 10 years of the study, reflecting the increased use of electronic filing and payment systems around the world.
Of the 379 tax reforms recorded in the reports since 2004, 105 relate to electronic filing.
"The latest results from (the) study show many economies are continuing to make progress in tax reform, but there is still a lot of scope to streamline and simplify tax systems," said Mr Andrew Packman, the leader for tax transparency and total tax contribution at PwC.
Policymakers need to find the right balance between raising revenue and ensuring that tax rates and the burden of compliance do not deter participation or discourage business activity, said Mr Augusto Lopez-Claros, the director of the global indicators group at the World Bank Group.
This article was first published on November 21, 2014.
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