New Zealand ranked 22nd in ease of paying tax

21 November 2014

New Zealand ranked 22nd in ease of paying tax

New Zealand is rated 22nd out of 189 economies in its ease of paying taxes, according to Paying Taxes 2015, now in its ninth edition. The unique study by PwC and the World Bank Group is the only piece of research which measures the ease of paying taxes by assessing time required for a case study company to: prepare, file and pay its taxes, the number of taxes that it has to pay, the method of that payment and the total tax liability as a percentage of its commercial profits.

PwC’s Tax and Private Business Leader Geof Nightingale says, “New Zealand’s 22nd placing out of 189 shows we have coherent tax policy settings, with no immediate or radical shifts in policy required for our country. However, there is little risk of New Zealand becoming complacent. Inland Revenue’s (IR) briefing to its returning Minister Hon. Todd McClay last week made it clear IR’s Business Transformation Project is a key priority.

“As we look to our major trading partners, the easier and less costly for a company to pay tax here, the more likely this will encourage and help to attract both domestic and international investment to our economy.

“We expect Paying Taxes 2015 to be a catalyst for some interesting debate with tax authorities, governments, and business around tax systems and how they can be reformed, providing illustrations of successful reforms and also where reform has been more of a challenge,” says Mr Nightingale.

New Zealand has risen one place from last year’s study (from 23rd place), and ranked behind Singapore who came in at 5th and the 16th ranked UK, yet ahead of most other major trading partners including Australia at 39th, the US at 47th and China and Japan, on 120th and 122nd respectively.

Want to know how New Zealand compares to others around the world? Try out our comparative modeller tool to create your own peer groups from all the economies and regions in the study. Please note the following link will be live from 2:30am NZDT, Friday 21 November 2014 with Paying Taxes 2015 information. Currently it is populated with last year’s Paying Taxes 2014 results - www.pwc.com/payingtaxesmodeller. For more information about the study please visit www.pwc.com/payingtaxes. Please note the data for Paying Taxes 2015 relates to the calendar year to 31 Dec 2013.

The economic backdrop continues to present a challenging environment for governments around the world as they consider their future fiscal policies. With globalisation, technological change, shifting demographic patterns and the persistent challenges that continue around climate change and the environment all have a significant impact on fiscal policy and the associated tax systems.

Alongside this, the Organisation for Economic Co-operation and Development (OECD) has put forward proposals for changing the international tax rules to modernise them for today’s globalised business and to address concerns over base erosion and profit shifting (BEPS).

The Paying Taxes data provides an objective basis for governments to initially benchmark their tax systems on a like- for-like basis and a platform for government and business to engage in constructive discussion around tax reform across a broad range of issues. This year we provide an additional focus on tax administrations and tax compliance using information and views that we collect beyond the three main sub-indicators of the Paying Taxes study.

New Zealand's total tax rate is 34.4% (decreased very slightly from Paying Taxes 2014 figure of 34.6%). Lower than the Global average of 40.9% and Asia Pacific average of 36.3%. New Zealand's profit tax total tax rate is 30.0%, labour tax total rate is 3.0% and other taxes total rate is 1.4%.

New Zealand's time to comply is 152 hours which is lower than Global of 264 hours and the Asia Pacific average of 229 hours (remained the same from the 2014 report). Corporate income tax time is 34%, labour tax time 59%, and consumption tax time 59%.

New Zealand is 5th out of the Asia Pacific countries to have the least total number of tax payments - at 8 compared to Global at 25.9 and the Asia Pacific average of 25.4. Profit tax payments were 1, labour tax payments were 2 and other tax payments were 5. In the 2014 report New Zealand also had 8.

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