Malta ranks 26th on tax burden for PWC global report

Global results of all 189 economies surveyed in 2013.

Matthew Vella
18 December 2014, 8:23am
On average it takes a case study company 264 hours to comply with its taxes, it makes 25.9 payments and has an average Total Tax Rate of 40.9%, PricewaterhouseCoopers' global tax report has found.

'Paying Taxes' records the taxes and mandatory contributions that a medium-size company must pay in a given year as well as measuring the administrative burden of paying taxes and contributions.

Malta was ranked 26 out of 189 surveyed countries for ease of payments, with a total tax rate of 41.6%, 139 hours to comply and a total seven payments to make.

On average, Malta had a 10.7% labour tax compared to the EU’s 26.3% and 23.3% for the OECD, but higher tax on profits at 30.3% when compared to the EU’s 13.1% and OECD’s 16.5%.

Taxes and contributions measured include corporate income and other profit taxes, social contributions and labour 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 any other small taxes or fees.

The average Total Tax Rate fell by 1.3 percentage points. Excluding the replacement of cascading sales taxes in Africa with VAT, the Total Tax Rate still falls by 0.2 percentage points. This is made up of an increase in profit taxes of 0.1 percentage points and a fall in 'other' taxes of 0.3 percentage points.

43% of economies now have electronic filing and payment systems which are used by the majority of companies. The pace of reform accelerated during the financial crisis, slowed in more recent years, but improvement continues. 379 reforms making it easier and less costly to pay taxes have been recorded since 2004, 105 of these relate to electronic filing and payment.

The average global results, taking into account all 189 economies for the year ending 31 December 2013, show that while, on average, profit taxes account for a similar proportion of the Total Tax Rate to labour taxes (almost 40%) they take 25% less time and almost 30% less time than consumption taxes.

Other taxes now account for a fifth of the Total Tax Rate, but almost a half of the number of payments.

All three of the sub-indicators continue to demonstrate a wide range between the highest and the lowest results.
 For payments and the time to comply, the minimum and maximum figures remain the same as for last year while the range of Total Tax Rates has narrowed with the maximum dropping to 216.5% from 283.2%.

From last year, all but two of 32 EU and EFTA economies in the region have exhibited some change since last year, but these are all small and any decreases are cancelled out on average by the increases. There were however a number of reforms in 2013 that are expected to affect the Paying Taxes sub-indicators next year.

The largest movement from last year is a 5.9 percentage point increase in Greece following an increase in the statutory rate of corporate income tax from 20% to 26% and a change in tax depreciation rates.

The 3-hour drop in time to comply 
from the 2012 published data is largely explained by Latvia’s 71-hour reduction coupled with a 41-hour reduction for Romania. For Latvia, much of the reduction can be attributed to changes in the VAT system so that the VAT return is now a single document.

Romania accounts for the vast majority of the drop in the number of payments thanks to the majority of companies now paying their taxes online. This has resulted in a drop of 25 payments from 39 to 14. Romania now has no tax that counts for more than 2 payments a year, but as there are ten taxes for which payments are included, the average number of payments remains relatively high for the region.

Matthew Vella is executive editor at MaltaToday.