Digitization lowers tax burden

Thanks to the digitalization of tax returns and electronic payment transactions, small and medium-sized companies worldwide now only need an average of 261 working hours per year for tax; that is 61 hours less than in 2004.

In the EU and EFTA area, the figure is as low as 173 hours, according to the long-term study "Paying Taxes" by the World Bank and PwC, which covers 189 countries.

"It is encouraging to see that the fiscal environment is improving substantially in more and more economies. This reduces the burden on companies, while at the same time governments can rely on sustainable revenues"

says World Bank Director Augusto Lopez-Claros.

Marius Möller, Tax Director at PwC in Germany, nevertheless points out that the results of the study vary greatly from region to region:

"There is still a considerable need for improvement in many countries when it comes to the efficiency of the tax system. Especially in developing regions, there is often a lack of the necessary IT infrastructure to digitize tax collection in the first place. The countries concerned are missing out on significant revenue as a result."

Compared to many other European countries, the overall tax rate in Germany is relatively high at 48.8% of profits.

In the UK, for example, the figure is only 32.0%, in the Netherlands 41.0%. Even more striking is the amount of time that German companies have to spend in order to meet all of the tax authorities' requirements.

For example, the average German SME spends 218 working hours on tax every year, while Swiss companies, for example, manage with 63 hours and companies in Norway with 83 hours.

In most countries, the actual corporate taxes only make up a small part of the overall fiscal burden - on average only around 40% globally. The rest is accounted for by income taxes or social security contributions, for example.