Global PwC study ranks Bahrain as the easiest country to pay tax

02 December 2019 3 min. read

Bahrain has been deemed the easiest place on earth to pay taxes according to an assessment by the World Bank and PwC, with Qatar, Kuwait and Oman placing among the top ten.

Paying business taxes can be bad enough – but then being made to jump through hoops with endless reams of paperwork and red tape . . . Those companies seeking relief from excessive tax payment burdens could consider a move to Bahrain, assessed by the World Bank and global professional services firm PwC as the planet’s easiest country to pay up, with the Middle East ranked first for the least time to comply.

The Paying Taxes 2020 report – the 14th edition of the comprehensive annual study from PwC and the World Bank – examines and benchmarks 190 tax regimes around the world on a range of tax-related issues, in particular the Total Tax and Contribution Rate (TTCR), the time to comply, the number of payments, and the efficiency of post-filing processes – with each dimension contributing to the overall score.

Time taken for tax compliance by region

Bahrain ranked first ahead of every jurisdiction worldwide for ease of paying taxes, with Qatar following closely behind in third and Kuwait and Oman placing in respectively sixth and seventh. Further down the list was the UAE, considered the 30th easiest place to pay taxes overall, and Saudi Arabia, which landed in 57th. Despite an increase on last study, the Middle East also led other regions for compliance time.

One of the factors for its number one ranking, Bahrain was assessed as taking just 22.5 hours to comply, easily the least time of anywhere worldwide. Qatar, also ranking third for compliance time, takes 41 hours according to the study, while Oman, ranking on the sub-index at 13th, takes 68 hours. The UAE and Saudi Arabia meanwhile were among the countries cited has having the largest increases in compliance times.

“It takes 72 hours to comply with VAT in Saudi Arabia and 104 hours in the UAE,” commented PwC Middle East Tax head Mark Schofield. “This is in line with the global average of 90 hours and somewhat higher than the European Union average of 52 hours. Given that most European countries have long-established VAT systems, it is not surprising that newly-introduced systems may take longer to comply within the GCC.”

Average total tax costs per region

As well as the introduction of VAT – with Bahrain the third GCC state to introduce the goods tax at the beginning of the year – the regional tax regime is also undergoing evolution in other areas, such as through the implementation of taxes on products deemed harmful to health. The UAE is set to expand its so-called ‘sin tax’ excise from tobacco to sugary drinks and electronic products at the beginning of next year.

Still, in terms of Total Tax and Contribution Rate (TTCR) – the Middle East also ranks as the lowest in the world, an issue management consultancy Oliver Wyman recently contended would need to be addressed in the GCC in order to cover an emerging $2 trillion budgetary black-hole. For the PwC study, the Middle East was assessed at a 24.5% TTCR, well below the near 39% rates calculated for the EU and North America.

Taxes taken into account for the study included profit or corporate income tax, employer social contributions and labor taxes, property and transfer taxes, dividend and capital gains tax, financial transactions tax, and other municipal taxes such as road and waste. From a country view-point, all of the GCC states bar Oman featured among the top dozen lowest nations for TTCR, with Qatar, Kuwait and Bahrain all below 14%.