Worldwide labour tax burden

Profit tax and labour tax burden

The tax burden for business owners and workers. In what country do companies pay the largest share of the total tax burden? Which country has the highest tax burden on entrepreneurship? Which country takes out the most tax share from the companies? How is the tax burden between workers and entrepreneurs divided into different countries? Which country has the highest income tax on workers? What is the tax burden in your country compared with other countries?

Paying taxes 2019

In the new report “Paying Taxes 2019“, PWC investigates and compares tax regimes across 190 economies worldwide. You can learn more about how the tax burden is distributed for an entrepreneur in different countries, and how your country stands in competition with other countries. What is a bit unique with the report is that it is written from the perspective of businesses, not the state, the tax office or any separate interest organisation which always tilts the viewpoint of the text and images to suit the current political agenda. With this report companies have the ability to study tax pressures, bureaucratic time and payment management in an objective global comparative perspective.

Belgium tops the average tax wedge league, closely followed by Germany and Italy. Surprisingly Sweden is not at the top of this list as they often are when it comes to taxes on labour. Taxes on high incomes from work is, of course, the highest in the world in Sweden.

The company’s share of the tax burden is high in Sweden compared to Germany where wage earners are conceded to pull the big tax bill almost entirely with over 2/3 the labour tax. Finland has a better balance between tax types. Simplified you could say the entrepreneur in Sweden pays the employee’s fees, and in Germany, the worker pays a significantly higher share of their tax costs.

Average tax wedge

Here you can easily see the distribution of the tax rates for the different tax types as compared to the total tax burden of the companies. This is known as the Tax wedge.

Tax wedge around the world

Tax distribution in different countries

The distribution between profit taxes and taxes on workers

We see that the EU has a rather decent level of profit tax for businesses, while the tax on labour is a bit high, especially as a share of total tax burden.

Labour and profit taxes around the world

Total tax and contribution rate by regions around the world

Which region is worst for an entrepreneur?

As you read the report and summarise all aspects of corporate tax burdens, including time and different types of tax payments that have to be completed, we see that South America is quite cumbersome for an entrepreneur, from an administrative perspective. However, you have a low tax burden that compensates for the big time losses of handling the relatively low taxes. Brazil is considered to be the most complicated tax system in the world. In Africa, it takes the most time to make tax payments and, unbelievably, the most efficient bureaucracy from the perspective is how easy or difficult it is to pay taxes. The well developed financial infrastructure makes the payments themselves relatively smooth within the EU, even though it has increased an hour in time for companies since the last measurement. For other regions, payment efficiency has increased rapidly much due to the introduction of new modern technologies.

Further reading:
PWC: Paying Taxes 2019
Highest VAT in the world
Lowest VAT in the world
The lowest corporate tax rates in the world

© 2018 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see for further details. Extract from ‘Paying Taxes 2019’ publication, available on payingtaxes

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