Highest tax paying countries in the world

South African businesses pay the 40th highest taxes in the world, according to a new study by PwC and the World Bank, paying just under 29% in total taxes.

The PwC rankings measures the ease of paying taxes across 189 economies, determined by assessing the time required to file and pay taxes, the number of taxes that need to be paid and the total tax liability as a percentage of commercial profits.

In terms of the overall ease of paying taxes in South Africa, the country ranks highly – 19th in the world.

Globally, the average company will pay 40.9% in tax, making 25.9 payments, and taking 264 hours to comply. All indicators were down from 2013, PwC noted.

Businesses in South Africa have to make an average of seven payments (ranked 13th, overall), and comply within 200 hours (85th).

With a total tax rate of 29%, however, the country ranks further down the list at 40th, but is still far above the global and African average.

South Africa’s taxation on profits (22%) however, is above the global average (16%) and regional average (18%), according to PwC, which is a cause for some concern.

There is room for South Africa to make its tax system more conducive to economic growth, the group said.

Top 10 lowest tax paying nations

Rank Country Total Tax Rate (%)
1 Macedonia 7.4%
2 Vanuatu 8.5%
3 Timor-Leste 11.0%
4 Qatar 11.3%
5 Kuwait 12.8%
6 Bahrain 13.5%
7 Lesotho 13.6%
8 Saudi Arabia 14.5%
9 United Arab Emirates 14.8%
9 Zambia 14.8%

South Africa’s total tax rate for businesses is also the 6th lowest on the African continent, below Lesotho (13.6%), Zambia (14.8%), Namibia (20.7%), Mauritius (24.5%) and Botswana (25.3%).

The Comoros has an exceptionally high tax rate for businesses – at 216.5% – as a direct result of a “cascading sales tax” in the country, according to PwC. This is also the highest total tax rate in the world.

In 2013’s report, Gambia had the highest total tax rate in Africa and the world due to its sales tax (283.2% at the time) but has since recovered to the 63.3%.

Top 10 highest tax paying nations

Rank Country Total Tax Rate (%)
189 Comoros 216.5%
188 Argentina 137.3%
186 Bolivia 83.7%
186 Eritrea 83.7%
185 Tajikistan 80.9%
183 Colombia 75.4%
183 Palau 75.4%
182 Central African Republic 73.3%
181 Algeria 72.7%
180 Mauritania 71.3%

Total Tax Rate is only one of the factors at play, however. Taking into account compliance times and the number of tax payments required, Qatar and the UAE top PwC’s ranking in overall ease of business tax.

Despite it’s high tax rate, the Comoros is not the most cumbersome tax nation – the title belongs to Bolivia, which ranked 189th, overall, above Venezuela and Mauritania.

Top 10 countries for paying taxes

# Country Total Tax Rate (%) Time to comply (hours) Number of payment
1 Qatar 11.3 41 4
1 UAE 14.8 12 4
3 Saudi Arabia 14.5 64 3
4 Hong Kong 22.8 78 3
5 Singapore 18.4 82 5
6 Ireland 25.9 80 9
7 Macedonia 7.4 119 7
8 Bahrain 13.5 60 13
9 Canada 21.0 131 8
10 Oman 23.0 68 14

Personal income tax

According to data from KPMG, South Africa’s highest income tax bracket of 40% (for people earning over R670,000 per annum), is the 25th highest in the world.

Aruba has the highest maximum tax, according to the firm, at 59% for people earning the equivaent of R1.9 million or more, after tax-free income has been deducted.

Other high-tax nations include Sweden (57% for those earning over R890,000), Denmark (55% for those earning R850,900 and more) and the Netherlands and Spain (52% on income over R800,000 and R4.1 million, respectively).

Countries with the lowest tax rate include many nations such as Saudi Arabia, Kuwait, Anguilla which do not tax income.

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Highest tax paying countries in the world