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DATA NOTES 135 TABLE 14.10 Type of tax (tax base) Corporate income tax (taxable income) Employer-paid social security contributions (taxable wages) Computing the total tax rate for Kiribati Statutory rate r (%) most cases very small, and measuring these amounts is often complicated because they depend on fuel consumption. Fuel taxes continue to be counted in the number of payments. The total tax rate is designed to provide a comprehensive measure of the cost of all the taxes a business bears. It differs from the statutory tax rate, which merely provides the factor to be applied to the tax base. In computing the total tax rate, the actual tax payable is divided by commercial profit. Data for Kiribati are provided as an example (table 14.10). Commercial profit is essentially net profit before all taxes borne. It differs from the conventional profit before tax, reported in financial statements. In computing profit before tax, many of the taxes borne by a firm are deductible. In computing commercial profit, these taxes are not deductible. Commercial profit therefore presents a clear picture of the actual profit of a business before any of the taxes it bears in the course of the fiscal year. Commercial profit is computed as sales minus cost of goods sold, minus gross salaries, minus administrative expenses, minus other expenses, minus provisions, plus capital gains (from the property sale) minus interest expense, plus interest income and minus commercial depreciation. To compute the Statutory tax base b ($A) Actual tax payable a = r × b ($A) Commercial profit* c ($A) commercial depreciation, a straightline depreciation method is applied, with the following rates: 0% for the land, 5% for the building, 10% for the machinery, 33% for the computers, 20% for the office equipment, 20% for the truck and 10% for business development expenses. Commercial profit amounts to 59.4 times income per capita. The methodology for calculating the total tax rate is broadly consistent with the Total Tax Contribution framework developed by PwC and the calculation within this framework for taxes borne. But while the work undertaken by PwC is usually based on data received from the largest companies in the economy, Doing Business focuses on a case study for a standardized medium-size company. The data details on paying taxes can be found for each economy at http://www .doingbusiness.org. This methodology was developed by Djankov and others (2010). TRADING ACROSS BORDERS Total tax rate t = a/c (%) 20.0–35.0 109,381 33,283 137,156 24.3 7.5 154,711 11,603 137,156 8.5 Total 44,886 32.7 * Profit before all taxes borne. Note: Commercial profit is assumed to be 59.4 times income per capita. $A is Australian dollar. Source: Doing Business database. Doing Business measures the time and cost (excluding tariffs) associated with exporting and importing a standardized cargo of goods by sea transport. The time and cost necessary to complete 4 predefined stages (document preparation; customs clearance and inspections; inland transport and handling; and port and terminal handling) for exporting and importing the goods are recorded; however, the time and cost for sea transport are not included. All documents needed by the trader to export or import the goods across the border are also recorded. The process of exporting goods ranges from packing the goods into the container at the warehouse to their departure from the port of exit. The process of importing goods ranges from the vessel’s arrival at the port of entry to the cargo’s delivery at the warehouse. For landlocked economies, since the seaport is located in the transit economy, the time, cost and documents associated with the processes at the inland border are also included. It is assumed that the payment is made by letter of credit, and the time, cost and documents required for the issuance or advising of a letter of credit are taken into account (figure 14.15). The ranking of economies on the ease of trading across borders is determined by sorting their distance to frontier scores for trading across borders. These scores are the simple average of the distance to frontier scores for each of the component indicators (figure 14.16). Local freight forwarders, shipping lines, customs brokers, port officials and banks provide information on required documents, cost and time to export and import. To make the data comparable across economies, several assumptions about the business and the traded goods are used. Assumptions about the traded goods The traded product travels in a drycargo, 20-foot, full container load. 16 It weighs 10 tons and is valued at $20,000. The product: • Is not hazardous nor does it include military items. • Does not require refrigeration or any other special environment.
136 Doing Business 2015 Figure 14.15 How much time, how many documents and what cost to export and import by sea transport? To export Export Time Cost Documents Port and terminal handling Full, 20-foot container Customs and border agencies Time Cost Documents Import Inland transport To import required by customs authorities purely for purposes of preferential treatment but are not required for any other purpose by any of the authorities in the process of trading are not included. For example, if a certificate of origin is only presented to qualify for a preferential tariff rate under trade agreements, the document is not counted. It is assumed that the exporter will always obtain a certificate of origin for its trade partner, and the time and cost associated with obtaining this certificate are therefore included in the time and cost of document preparation to export. Figure 14.16 Trading across borders: exporting and importing by sea transport Rankings are based on distance to frontier scores for 3 indicators All documents required by customs and other agencies 33.3% Documents to export and import Document preparation, customs clearance and inspections, port and terminal handling, inland transport and handling 33.3% Time to export and import 33.3% Cost to export and import US$ per 20-foot container, no bribes or tariffs included • Does not require any special phytosanitary or environmental safety standards other than accepted international standards. • Is one of the economy’s leading export or import products. Assumptions about the business The business: • Is located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city (see table 14A.1). • Is a private, limited liability company. • Does not operate in an export processing zone or an industrial estate with special export or import privileges. • Conducts export and import activities but does not have any special accreditation, such as an authorized economic operator status. • Is 100% domestically owned. Documents It is assumed that a new contract is drafted per shipment and that the contract has already been agreed upon and executed by both parties. All documents required by law or common practice by relevant agencies—including government ministries, customs authorities, port authorities and other control agencies—per export and import shipment are taken into account (table 14.11). For landlocked economies, documents required by authorities in the transit economy are also included. Since payment is by letter of credit, all documents required by banks for the issuance or securing of a letter of credit are also taken into account. Documents that are requested at the time of clearance but that are valid for a year or longer or do not require renewal per shipment (for example, an annual tax clearance certificate) are not included. Documents that are Time The time for exporting and importing is recorded in calendar days. The time calculation for each of the 4 predefined stages starts from the moment the stage is initiated and runs until it is completed. Fast-track procedures applying only to firms located in an export processing zone, or only to certain accredited firms under authorized economic operator programs, are not taken into account because they are not available to all trading companies. Sea transport time is not included. It is assumed that neither the exporter nor the importer wastes time and that each commits to completing the process without delay. It is assumed that document preparation, inland transport and handling, customs clearance and inspections, and port and terminal handling require a minimum time of 1 day each and cannot take place simultaneously. The waiting time that occurs in practice—for example, in queues to obtain a service or during the moving of the cargo at the seaport—is included in the measure. Cost Cost measures the fees levied on a 20-foot container in U.S. dollars. All fees charged by government agencies and the private sector to a trader in the process of exporting and importing the goods are taken into account. These include but are not limited to costs
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12th edition Doing Business 2015 Go
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12TH EDITION Doing Business 2015 Go
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Doing Business 2015 Going Beyond Ef
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vi DOING BUSINESS 2015 wish and tha
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viii DOING BUSINESS 2015 of such an
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x DOING BUSINESS 2015 creation of t
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4 DOING BUSINESS 2015 TABLE 1.1 Eas
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6 DOING BUSINESS 2015 TABLE 1.2 The
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8 DOING BUSINESS 2015 Emirates refo
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12 DOING BUSINESS 2015 • Cumberso
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14 DOING BUSINESS 2015 This process
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18 DOING BUSINESS 2015 containerize
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20 DOING BUSINESS 2015 in defining
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30 DOING BUSINESS 2015 Enforcing co
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32 DOING BUSINESS 2015 FIGURE 3.8 C
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34 DOING BUSINESS 2015 affecting th
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36 DOING BUSINESS 2015 FIGURE 4.1 C
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38 DOING BUSINESS 2015 system now a
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40 DOING BUSINESS 2015 FIGURE 4.6 K
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42 DOING BUSINESS 2015 Tobago creat
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44 DOING BUSINESS 2015 TABLE 4A.1 W
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STARTING A BUSINESS 49 To implement
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STARTING A BUSINESS 51 FIGURE 5.4 C
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ZONING AND URBAN PLANNING 55 barrie
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ZONING AND URBAN PLANNING 57 one pr
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ZONING AND URBAN PLANNING 59 mixed
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REGISTERING PROPERTY 61 HOW TO PROV
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REGISTERING PROPERTY 63 FIGURE 7.5
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REGISTERING PROPERTY 65 for losses
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GETTING CREDIT 69 FIGURE 8.2—How
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GETTING CREDIT 71 nonincorporated c
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GETTING CREDIT 73 improvement in cr
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GETTING CREDIT 75 FIGURE 8.8—Econ
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PROTECTING MINORITY INVESTORS 77 Sp
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PROTECTING MINORITY INVESTORS 79 as
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PROTECTING MINORITY INVESTORS 81 FI
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Page 96 and 97: PAYING TAXES 85 decline. Its averag
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Page 102 and 103: ENFORCING CONTRACTS 91 FIGURE 11.1
Page 104 and 105: ENFORCING CONTRACTS 93 been reached
Page 106 and 107: ENFORCING CONTRACTS 95 FIGURE 11.3
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Page 110 and 111: RESOLVING INSOLVENCY 99 FIGURE 12.1
Page 112 and 113: RESOLVING INSOLVENCY 101 FIGURE 12.
Page 114 and 115: HIGHLIGHTS FROM THE DOING BUSINESS
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Page 122 and 123: REFERENCES 111 Aggregate, and How t
Page 124 and 125: REFERENCES 113 Rathinam, Francis Xa
Page 126 and 127: DATA NOTES 115 METHODOLOGY The Doin
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Page 132 and 133: DATA NOTES 121 TABLE 14.4 What do t
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Page 158 and 159: DISTANCE TO FRONTIER AND EASE OF DO
Page 164 and 165: SUMMARIES OF DOING BUSINESS REFORMS
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COUNTRY TABLES 185 Reform making i
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COUNTRY TABLES 187 Reform making
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COUNTRY TABLES 191 Reform makin
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LABOR MARKET REGULATION DATA 233 LA
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ACKNOWLEDGMENTS 253 of Aart C. Kraa
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ACKNOWLEDGMENTS 255 ALGERIA DELOITT
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ACKNOWLEDGMENTS 257 Gerald Mittereg
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ACKNOWLEDGMENTS 259 Siarhei Khvasto
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ACKNOWLEDGMENTS 261 Muhidin Karši
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ACKNOWLEDGMENTS 263 Sydney Simonagg
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ACKNOWLEDGMENTS 265 Laurence Idelet
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ACKNOWLEDGMENTS 267 Aurora Barroso
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ACKNOWLEDGMENTS 269 Marius Doh CIE
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ACKNOWLEDGMENTS 271 Lars Lindencron
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ACKNOWLEDGMENTS 273 Astrud María M
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ACKNOWLEDGMENTS 275 Josette Cadie O
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ACKNOWLEDGMENTS 277 Ioannis Sarakin
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ACKNOWLEDGMENTS 279 Patrick Wong MA
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ACKNOWLEDGMENTS 281 Mirza Karim KAR
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ACKNOWLEDGMENTS 283 Enrica Maria Gh
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ACKNOWLEDGMENTS 285 Milly Jalega IS
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ACKNOWLEDGMENTS 287 Guna Paidere RE
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ACKNOWLEDGMENTS 289 Dragica Tasevsk
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ACKNOWLEDGMENTS 291 Cheikh Sall ETU
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ACKNOWLEDGMENTS 293 Vitalie Zama AS
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ACKNOWLEDGMENTS 295 Marcel Kettenis
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ACKNOWLEDGMENTS 297 Adeola Sunmola
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ACKNOWLEDGMENTS 299 Ernesto Velázq
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ACKNOWLEDGMENTS 301 Nuno Gundar da
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ACKNOWLEDGMENTS 303 Vadim Kolomniko
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ACKNOWLEDGMENTS 305 Ivana Ajdanic P
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ACKNOWLEDGMENTS 307 Paul Lategan SH
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ACKNOWLEDGMENTS 309 Tariq Mahmoud E
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ACKNOWLEDGMENTS 311 Kanok Jullamon
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ACKNOWLEDGMENTS 313 Begum Durukan O
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ACKNOWLEDGMENTS 315 Sreekumar Sivas
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ACKNOWLEDGMENTS 317 Bruno Paredes L
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Smarter Regulations for Small and M
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