The 2020 Global MNC Tax Complexity Project
The 2020 Global Multinational Corporation Tax Complexity Project, which ranks the complexity of the corporate income tax system faced by multinational corporations in 69 countries, has now been published.

Introduction

The 2020 Global Multinational Corporation Tax Complexity Project (the Project) has now been made available at https://www.taxcomplexity.org/ The Project is the result of joint research between Deborah Schanz of LMU Munich and Caren Sureth-Sloan of Paderborn University.

The Project was completed with the help of Taxand, the world's largest independent tax organisation with more than 550 tax partners and over 2,500 tax advisors in 50 countries, of which William Fry is the sole Irish member firm. The Project produces a "Tax Complexity Index" for 69 participating countries, which "measures the complexity of a country’s corporate income tax system as faced by multinational corporations". The index includes measurements of complexity in the tax code, described as "complexity inherent in different tax regulations" as well as the complexity of the tax framework, described as "complexity that arises from the features and processes of a tax system".

The index ranges from zero, meaning not complex, to one, that is extremely complex. Visitors to the website can hover over countries on the map to check the index and ranking of each participating country. Timelines for each country, giving results from the 2016, 2018 and 2020 Projects can be accessed. Specific countries can be selected and compared across the sub-headings. Additionally, visitors can create their own Tax Complexity Indexes by varying the effect each individual sub-heading has on the overall result. Finally, the underlying data behind the Project can be downloaded.

Ireland

Ireland sits at 14 in the rankings on complexity, with an overall score of 0.32, a tax code score of 0.41 and a tax framework score of 0.23. For reference, the highest ranked country is Mauritius with an overall score of 0.18. The lowest ranked country is Croatia, with an overall score of 0.49.

Of note is the movement in the level of complexity shown across the last three Projects. Whilst Ireland's tax framework has stayed at a relatively low level with little movement, the tax code complexity shows a greater variance over the years. This is likely due to the introduction of some substantial EU Directives such as the Directives on Administrative Cooperation (DACs) and the Anti-Tax Avoidance Directives (ATADs).

Ireland's results are reproduced below, with headings for results from the previous years of the Project.

 Ireland 2016  2018   2020
 Overall Tax Complexity  0.30  0.37  0.32
 Tax Code Complexity  0.41  0.52  0.41
 - Additional Taxes  0.26  0.39   0.16 
 - (Alternative) Minimum Tax  0.006  0.00   0.16 
 - Capital Gains  0.42   0.49  0.39 
  - CFC-Rules  0.17  0.59  0.31
 - Corporate Reorganization  0.49  0.58  0.50
 - Depreciation  0.37  0.43  0.41
 - Dividends  0.39  0.42  0.36
 - General Anti-Avoidance  0.61  0.62  0.51
 - Group Treatment  0.49  0.61  0.48
 - Interest  0.42   0.54  0.39
 - Investment Incentives   0.46  0.57   0.50
 - Loss Offset  0.44  0.50  0.41
 - Royalties  0.46  0.50  0.42
 - Statutory Tax Rate  0.31  0.52  0.36
 - Transfer Pricing  0.44  0.65  0.51
 Tax Framework Complexity  0.19  0.21  0.23
 - Guidance  0.28   0.25  0.29
 - Enactment  0.22  0.28  0.17
 - Payment & Filing  0.09   0.07  0.10
 - Audits   0.24  0.24  0.38 
 - Appeals   0.15  0.23  0.23 

Selection of Countries

Below we have produced a table of the top 10 countries, EEA and applicant countries, the United States and the United Kingdom, showing their overall Tax Complexity Index and rankings.

 
Country  

Overall Tax
Complexity
Index

Rank/69 
 Mauritius   0.18  1
 Singapore  0.23
 2
 Switzerland  0.24  3
 Finland  0.25  4
 Cyprus  0.27  5
 Lithuania  0.27  6
 Hong Kong  0.27  7
 Belarus  0.28  8
 Sweden  0.29  9
 Norway  0.30  10
 Luxembourg  0.32  13 
 Ireland  0.32  14 
 Turkey  0.33  17
 Austria  0.33  18
 Slovakia  0.34  20
 Latvia  0.34  22
 Malta  0.35  25
 Denmark  0.35  26
 Canada  0.35  27
 United Kingdom  0.35  28
 Greece  0.36  32
 Netherlands  0.36  35
 Spain  0.37  37
 Germany  0.37  38
 Bulgaria  0.37  40
 France  0.39  42
 Portugal  0.39  47
 United States  0.41  50
 Slovenia  0.41  51
 Czech Republic  0.41  52
 Hungary  0.41  53
 Poland  0.43  57
 Romania  0.43  59
 Belgium  0.46  66
 Italy  0.47  68
 Croatia  0.49  69

 

How Can We Help You?

For more information on tax-related matters, please contact Brian Duffy or your usual William Fry contact.

We thank Caren Sureth-Sloane, Deborah Schanz and their team for sharing data from their Global MNC Tax Complexity Project with us, www.taxcomplexity.org  For further information on the survey and index construction see Hoppe, Schanz, Sturm, Sureth-Sloane (2021): The Tax Complexity Index – A Survey-Based Country Measure on Tax Code and Framework Complexity, European Accounting Research, forthcoming. Available at SSRN

 

Contributed by Jack Feehan

 

 

Key Contacts

Brian Duffy Partner