PWC and World Bank did it again

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Paying_taxes_2008_2 The World Bank – IFC and the global accountancy firm PriceWaterhouseCoopers jointly published Paying Taxes 2008, their second report. The study, which compares tax systems of 178 countries, uses the total tax rate indicator (TTR) as a measure of the amount of all taxes and mandatory contributions borne by the business in the second year of operation, and expressed as a percentage of firms' profits.

Overall, while 31 countries have improved their business tax systems, 7 of the bottom 10 countries still force their businesses to pay taxes at least once a week and to spend at least 65 days per year in the process. Burundi and Gambia require businesses to pay respectively 278 and 286 percent of their profits, according to the report.

Though high tax rates can force companies into the informal sector – as is the case with a half of the Democratic Republic of Congo's manufacturing activity - lowering rates can help persuade more businesses to comply. Greece saw its corporate tax revenue grow from 4 to 5 percent of GDP after reducing the corporate tax rate in 2005. In Egypt, this year's top-reformer, the number of complying taxpayers increased by a million after the country reduced the corporate and personal income tax rates in 2005.

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