Canada is the easiest place to pay business taxes out of all the G20 nations, according to a study of 183 countries by PricewaterhouseCoopers, the World Bank and the International Finance Corporation.
Canada came in tenth place in the study, first among the G20, which measures the overall ease of paying taxes. It compares the number of tax payments per year, the time taken to compile returns and submit tax payments and companies' total tax liability as a percentage of pre-tax profits.
The country’s total tax rate ranking rose to 37 from 103 in 2009. Business tax rates in Canada have been reduced to a low of 29.2%, compared to 49.1% in 2006, the report said.
"Canada is moving in the right direction," said Lincoln Schreiner, Tax Services partner. "The initiatives introduced by the federal and provincial government are aimed at stimulating economic growth, and restoring confidence following the global economic recession."
The study found that countries around the world have focused on improving their corporate tax regimes to improve the rate of collection and to help improve their attractiveness as a place to do business after the recession.
In the past year, 40 economies have made it easier to pay taxes, with Tunisia improving the most. In all, 90 economies have reduced taxes on corporate profits since 2006.
Canada has improved its tax system through the introduction of the Harmonised Sales Tax in British Columbia and Ontario, mandatory online tax returns for some companies with annual revenue of more than $1 million and the potential consolidation of federal and provincial corporate tax returns, the study said.
Despite the changes, Canada’s small businesses say red tape is still costing too much.
A report by the Canadian Federation of Independent Business earlier this year estimated that companies spend more than $30.5 billion annually to comply with regulation, much of it on tax-related matters.
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