Australian businesses finding it more difficult to pay taxes

Australian businesses are finding it more difficult to pay their taxes, ranking 41st in the world for ease in companies paying their tax, a new report shows, highlighting the need for more efficient mechanisms to aid growth.

The joint PricewaterhouseCoopers (PwC) and World Bank Report, released on Friday local time (AEDT), comes at an opportune time for the local government as it undertakes reforms to make the tax system more efficient.

Governments are increasingly recognizing that tax is an important dimension to an economy's competitiveness, which encourages growth, the report says.

This view essentially highlights the delay in the Australian government's release of the tax green paper until next year, following the change in government leader and renewed focus on innovation and higher technology industries.

"We'll be putting a green paper out on these and other related issues next year, because remembering this is a package about how you grow the economy -- not just how you might seek to change the tax system," Australia's Treasurer Scott Morrison said mid-November.

The report says the most common feature of tax reform over the past year was the introduction, or the enhancement of electronic systems for filing and paying taxes, removing focus from reducing tax rates.

That's despite a recent PwC survey showing 70 percent of global CEOs are somewhat or extremely concerned about the increasing tax levies.

"The way in which the tax system collects and administers its taxes has an impact on businesses in terms of the time required and the costs associated with that time," the report says.

The report found on average, the model company spends 261 hours to make the 25.6 tax payments per year to meet its 40.8 percent tax burden on profits, highlighting the need for more efficient systems.

Comparatively, Australia ranks 41st in the world for ease in which companies pay their 47.6 percent Total Tax Rate, taking 105 hours to comply with 11 payments, a slip of two ranks from last year, behind Britain (15th) and New Zealand (22nd), but ahead of the United States (53rd) and Japan (121st).

However lower income economies, such as some economies in the Asia-Pacific region, which have significant tax compliance issues, have shown the least reduction on the reports indicators.

The Asia-Pacific region has one of the lowest average Total Tax Rate index with the three indicators below the global average since the 10-year study began, however the mix of large reductions in some economies offset significant increases in others.

"This year's report demonstrates in particular the acute challenge in developing countries of the availability of IT infrastructure including broadband, needed to design and run a modern tax system to raise the revenues to sustain growth," PwC partner and Tax Transparency lead, Andrew Packman, said. Endit