On 25 October 2016 the World Bank issued the 2017 issue of the annual report on ease of doing business entitled Doing Business 2017: Equal Opportunity for All.

According to the report 137 jurisdictions carried out important reforms in the past year to facilitate the task of starting up and operating small and medium sized businesses. Of a total number of 283 reforms 75% were adopted in developing countries. More than a quarter of all the reforms were carried out in countries of sub-Saharan Africa. In sub-Saharan Africa 37 economies implemented 80 business reforms in the past year, with Kenya included by the report as one of the top ten improvers in the period.

In the rankings of business efficiency the report considers the top ten countries to be Singapore, Denmark, Hong Kong SAR, Korea, Norway, UK, the US, Sweden and FYR Macedonia. The report quotes research showing that ease of doing business is associated with lower income inequality leading to lower poverty and shared prosperity. Simple rules yield direct economic benefits from more entrepreneurship, opportunities in business for women and greater adherence to the rule of law. Too much regulation and compliance work can distract entrepreneurs from business development and innovation.

Paying taxes

The report notes that 46 tax reforms have been implemented by countries in the past year.The section of the report on paying taxes assesses the number of payments, the time required for a firm to comply with tax regulations and the total tax rate. The 2017 report has added certain post-filing processes to these indicators. The relevant section of the report has therefore been expanded to include post-filing processes such as tax refunds, tax audits and administrative tax appeals.

VAT refunds

Refund processes can be a major weakness of VAT systems. The process can often require a long time, partly because fraud is common in the area of VAT refunds and countries want to make sure that the validity of a claim has been checked as thoroughly as possible. In some countries a VAT refund may give rise to a tax audit and resulting additional compliance costs. A refund claim triggers an audit in 65 of the countries covered by the publication.

The report notes that in the OECD high income economies the tax authorities process a VAT refund on average in 14.4 weeks. In the Middle East and North Africa (MENA) region the process takes 28.8 weeks on average, in sub-Saharan Africa 27.5 weeks and in Latin America and the Caribbean the process requires on average 35 weeks.

A full VAT refund is only made in 93 of the countries covered by the report. In 43 countries the VAT refund may only be given to specified taxpayers such as exporters, embassies or non-profit organizations.  In 21 countries a taxpayer is only allowed a VAT refund after rolling over the excess credit for a specified period of time, for example three or four months, after which the net balance is refunded. In some countries there is no refund and the excess must be carried forward and offset against future VAT liabilities.

Tax audits

The report notes that most countries use risk assessment in selecting cases for tax audit. Where a company realizes it has made an error in its tax computation in most countries with corporate income tax it can notify the tax authorities and submit an amended return. In 38 of the countries covered by the report this will lead to a comprehensive audit of the income tax return and therefore involve more compliance time. However in 25 of the OECD high income economies a mistake in the tax return does not trigger a tax audit and taxpayers only have to submit an amended return with documentation if necessary and pay the additional tax. In Latin America and the Caribbean there is a much lengthier process involving a tax audit and a waiting time until the final assessment is issued.

Administrative appeals

In 123 countries the first level administrative appeal authority is an independent department within the tax authority. In the 171 economies covered by the report that levy corporate income tax the appeal guidelines are available to the taxpayer either through a printed publication, online or by asking a person within the tax authority. In 102 of the economies covered the law imposes a timetable on the tax authorities and the taxpayer for every stage of the appeal process. It appears however that in only 47 of the countries are the time limits consistently applied in practice.