The total tax burden on Indian companies is one of the highest in the world and in fact more than that of businesses in major economies like the US, UK, China and Japan, a new study by PricewaterhouseCoopers and World Bank reveals.
Companies in India have to shell out as much as 81 per cent of their commercial profits as taxes, which includes corporate income tax, labour tax and other taxes, the joint report released on Tuesday said.
The report also showed that it takes a company in India 264 hours a year to comply with tax legislation, which is, however, less than 325 hours in the US. However, India ranks below the UK where it takes 105 hours to comply.
China ranks much below India in terms of time to comply with tax legislation where it takes 872 hours a year, while in countries like United Arab Emirates (12 hours) Singapore (30 hours) and St Lucia (41 hours) it is less than 50 hours. In contrast, it takes more than 2,000 hours at places like Brazil, Taiwan and Ukraine.
The taxes being paid by India Inc are higher than a number of emerging markets and other Asian countries.
Among the BRIC countries, the tax rates are 71.7 per cent in Brazil, 54.2 per cent in Russia and 77.1 per cent in China. In Asia, Japanese companies pay 52.8 per cent of their commercial profits as taxes, Pakistan pays 43.4 per cent as taxes and Singapore pays just 28.8 per cent.
The rates in the US, UK, Germany and France are 46 per cent, 35.4 per cent, 57.1 per cent and 68.2 per cent, respectively. Taxes are higher than India only at 12 other places, which include Argentina (116.8 per cent), Burundi (286.7 per cent) and Belarus (186.1 per cent).