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World Bank: Timor-Leste, Mexico Ranked Top Tax Reformers

(Nov. 27, 2009) According to PAYING TAXES 2010: THE GLOBAL PICTURE (the fifth year of the “paying taxes” series), jointly issued by the World Bank, the International Finance Corporation, and PricewaterhouseCoopers LLP on November 20, 2009, tax payment was simplified in 45 of 183 economies surveyed for the period June 2, 2008 – June 1, 2009. This represents an increase of almost 25% above the number that instituted reforms during the prior survey year. (World Bank, Paying Taxes 2010 – The Global Picture [overview], (last visited Nov. 23, 2009; Press Release, IFC, Tax Reform Remains on the Agenda of Governments Despite Economic Downturn (Nov. 20, 2009), available at

Timor-Leste was the top reformer, with its introduction of a new tax law, a simplified tax administration, and a streamlined business tax regime, which helped to reduce compliance time by 50%. Mexico ranked second, through its adoption of electronic filing systems for payroll and property taxes as well as social security, thereby reducing by 21 the number of types of annual payments. In terms of the largest number of reforms by region, Eastern Europe and Central Asia led the pack for the third year in a row: ten economies undertook reforms. (World Bank, supra.)

As for the ease of payment rankings, Maldives, Qatar, and Hong Kong, in that order, still rank highest, while Belarus, Venezuela, and Ukraine make paying taxes the most difficult among the 183 economies; in 2008-2009, the Republic of Congo, Ukraine, and Belarus, in that order, ranked last in ease of tax payment. (Id.)

The “paying taxes” indicator, which is part of the World Bank Group's “Doing Business” project (providing “quantitative measures of regulations in nine other areas”), takes as its basis the point of view of a domestic company complying with a given economy's tax laws and regulations in each economy, in order to measure the tax system. “The case study company is a small to medium-size manufacturer and retailer, deliberately chosen to ensure that its business can be identified with and compared worldwide.” (Id.) The indicator covers the cost of taxes borne by the company and the administrative burden of its tax compliance, which are measured by means of three sub-indicators: the total tax rate, the time needed to comply (with payment of major taxes, i.e., on profit, labor, and consumption), and the number of tax payments. All taxes and contributions mandated by government at any level are included in the measurement. (Id.)

The most popular reforms during the 2008-2009 period, according to the study, were the reduction of profit tax rates (20 out of the 45 economies), simplification of the tax payment process (18/45 introduced electronic filing and payment), revision of the tax code (12/45), reduction of labor tax rates or mandatory contribution rates (9/45), and elimination of taxes (8/45). (PAYING TAXES 2010 – THE GLOBAL PICTURE,
(last visited Nov. 23, 2009).)