UK business taxes are so bad, we're now two places behind Macedonia

Jessica Morris
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It looks like entrepreneurs' complaints about the standard of the UK's business tax system are justified - a new report has found that the cost of compliance is so bad, we've now fallen behind Macedonia.

The Paying Taxes report, an annual league table of 189 business tax systems compiled by PwC and the World Bank, showed Britain has fallen two places to 16th place, thanks to tax costs and compliance burdens.

This comes despite chancellor George Osborne's reforms, under which corporation tax will fall from 21 per cent to 20 per cent from April 2015.

Admittedly, one of the main reasons for the UK's downfall was other countries making improvements to their tax systems. We were leapfrogged by Macedonia, which rose 19 places to seventh, after it introduced a number of new tax reforms.

The report also found UK businesses still struggled with heavy compliance burdens. It takes about nine days (110 hours) for a medium-sized company to prepare, file and pay all of its taxes.

This contrasts with the UAE and Qatar, where the same process takes just 12 hours and 41 hours respectively.

Stuart Wallace, head of tax at PwC in the Midlands, said:

The UK has a competitive tax system, but other countries are upping the ante on reform. We can’t sit still if the government is to make the UK the most competitive tax system in the G20.
Corporation tax will fall to 20 per cent in April but tax rates are only half the issue. For medium sized businesses, the time spent having to deal with taxes can have a bigger impact. Reducing the compliance burden is critical.

We’ve seen the pace of tax reform globally slow down since the financial crisis, but it’s set to remain a priority, particularly as governments take on board the proposals from the OECD to update the system for global business.

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