Croatia is known for its dark grey economy. How does it compare globally when it comes to paying taxes?
Introduction of electronic tax filings and payments was the tax reform which countries around the world have most often implemented over the past year, according to the Paying Taxes study published on Thursday. Among 189 countries, Croatia is ranked 38th according to the ease of paying taxes, reports Jutarnji List on November 20, 2015.
The Paying Taxes study has been conducted for the last ten years by PricewaterhouseCoopers, in collaboration with the World Bank, and takes into account all mandatory taxes and contributions that a medium-sized company must pay in a given year. The report compares business conditions in 189 countries in the world. According to the results, Croatia is ranked 38th, with the average tax rate of 20.0 percent, while payments require 206 hours in total.
The survey showed that on average a total tax rate was 40.8 percent of operating income, which was just 0.1 percentage points less than last year. On average, tax payments required a total of 261 hours, which is two hours less than last year. PricewaterhouseCoopers point out that, in the last ten years, the global average time for compliance with the tax obligations has decreased by 61 hours, while the number of payments has decreased by 8.2, largely due to the introduction and improvement of the electronic filing and payment systems.
“Online tax filing continues to have a significant impact on the simplification of the tax system administration. Globally, the most common feature of tax reforms in the past year was the introduction or improvement of electronic systems for filing tax returns and paying taxes”, reads the report. However, the economies with low incomes, which often have high taxes, have recorded the least reduction of time required for compliance with tax obligations. “This indicates that there are other challenges that need to be overcome in these economies, such as the availability of modern communications infrastructure, before significant reforms of the tax system can be implemented.”
It is notable that, although there was a small decrease in global average tax rate, there are big differences at the regional and national levels. “The total tax rate in Africa, Central Asia, Eastern Europe and the Middle East has increased due to increase in various taxes. Around the world, in 46 economies the total tax rate has been increased, while in 41 economies it has been reduced”, explains the report.
