The degree of difficulty or ease in paying taxes is not solely dependent on the tax rates and number of taxes that needs to be settled. There are countries that only have a few taxes but are very hard to comply with. For example, Brazil only has a few taxes and yet, its complicated system requires the taxpayers to devote 2,600 hours (for tax compliance) per year. Here’s what an expert from the global consulting firm PriceWaterhouseCoopers have to say,

“The Brazilian VAT, ICMS (tax on the movement of goods, transport services and communication services), can be charged by the 27 states of the Brazilian Federation. The municipal tax on services (ISS) is charged by more than 5,000 Brazilian municipalities. Each one of these governmental bodies has the power to legislate on the tax computation and collection, guided by one major law that provides general rules – the National Tax Code (CTN).”

As a result, companies in that country are required to maintain additional personnel who are fully dedicated to ensuring their organizations tax compliance.

This is in sharp contrast to the United Arab Emirates which only has three taxes that only takes the tax payer a total of three (3) hours every year to comply.

Source: PricewaterhouseCoopers Report, Paying Taxes in 2008

Some firms using tactic to avoid taxes –Treasury

It seems that even US companies are going offshore. It’s just that some are taking it a bit further. The technique used is called, Inversion..

“At issue is the practice of using an “inversion” transaction to replace a U.S.-based parent company with a foreign parent in a low-tax or no-tax country, in order to become foreign-controlled, and then stripping earnings of a U.S. subsidiary by adding excessive debt or other costs to reduce local profits and avoid tax liabilities.”

FLAT TAX FRED

Bjorn Tarras- Whalberg will probably support this presidential candidate. Fred Thompson wants to follow the model used by 20 countries that implemented a flat tax (13% and 20%) system..

It’s definitely not because of lower taxes, since Switzerland imposes stiffer rates compared to Russia.

Russia’s daily online “Kommersant” reported that the giant Russian company Gasprom’s Shtokman Development Company, which is to invest $43 ~ 44 billion (at current prices) in Gas Condensate will be incorporated in Switzerland on December 20, 2007.