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Canada leads the G7 for ease of paying taxes

Taxes aren’t fun, but it’s pretty easy for Canadian businesses to file (Giphy)

Few business owners will tell you they like taxes. But when it comes to ease of paying them, Canada leads the G7. That’s according to a new report from PwC and the World Bank group.

The report measured the relative ease of paying taxes by looking at the time the company requires to prepare, file and pay its taxes, the number of taxes it has to pay, the method of that payment, and the total tax liability as a percentage of its commercial profits. Overall, Canada ranks 19th out of 190 countries studied.

Ease of paying taxes (PwC)

Hong Kong took the top spot, followed by a tie between Qatar and United Arab Emirates.

Canadian small to medium-sized businesses make eight payments a year on average, compared to a global average of 24. It takes 131 hours in Canada, but 237 globally.

Finance Minister Bill Morneau has so far been unwilling to match President Trump’s tax cuts in the U.S. That means Canada has to find other ways to compete.

“The competitiveness of Canada’s tax regime was put front and centre when the U.S. announced its tax reform,” says Peter van Dijk, National Tax Policy Leader, PwC Canada. “Canada’s federal government’s response in the latest fall economic update was a solid step in the right direction to encourage investments by small, medium and large businesses, and most importantly, to protect Canadian jobs.”

Good for smaller businesses, not big corporations

The report found Canada’s tax regime favourable for small and medium-sized businesses, but significantly less attractive for large companies to do business. The authors call the Canadian tax system a critical component of the country’s investment climate.

“In previous years, Canada’s comparatively low corporate tax rate was attractive, but now the U.S. tax reform poses a serious risk to future investments,” says van Dijk.

The report calls on Canada to review its corporate taxation system, if it wants to remain competitive on the global stage and attract large, multinational firms.

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