Employers? tax obligations take three times as long in the UK as in Norway

24 November 2014

The latest survey by the World Bank and PwC says that business tax systems in the United Kingdom suffer from a triple burden of red tape, compliance costs and the slow pace of tax reform. Britain is now ranked lower than Macedonia and Kiribati for all business taxes.

The report covers corporation, employment and value added taxes

While the Government's decision to slash corporation tax to 20% in 2015 from 28% in 2010 meant hundreds of multinational companies were now flocking to the UK, increased efforts by other countries to step up reforms and Britain's relatively complex system pushed it down two places to 16th in the World Bank and PwC's annual benchmark of business tax systems.

The decline means the UK is behind Macedonia and pacific island Kiribati in terms of overall tax competitiveness and just one place above Kazakhstan.

Norway, where widespread use of electronic payments has made the system more efficient, also moved above the UK this year.

The report highlighted that medium-sized British businesses took an average of 110 hours - or almost 14 working days - to prepare, file and pay their corporation, labour and value added taxes in 2013, with eight different taxes payable in total.

48 of the 110 hours are shown as being the time required for labour taxes, i.e. taxes and contributions paid or managed by employers. While this looks pretty good compared to the Bulgarian employer’s 256 hours, the UK could perhaps see a challenge to simplify things more to come closer to European comparisons such as the 15 hours spent by Norwegian employers or the 34 hours for Estonian employers.