Measuring tax uncertainty across countries

Anecdotal evidence suggests that uncertainty about taxes on profit is important in determining the investment and location behaviour of business. However, there is very little solid empirical evidence. This research project undertook a survey of senior tax professionals in large businesses and in professional firms on the uncertainty of corporation tax in major countries. There were 88 respondents from 25 countries, and from businesses in 10 different countries. BRIC countries take up 4 of the top 5 places in respondents’ assessments of the extent of corporation tax uncertainty. In the last 5 years, corporation tax uncertainty has increased in 20 out of 21 countries analysed (with more than 10 responses). 72% of respondents ranked tax uncertainty as either 4 or 5 on a scale of 1 to 5 indicating “extremely important”. BRIC countries also take up the top 4 places in frequency with which corporation tax uncertainty has had a serious impact on business decisions. The single most important factor in determining uncertainty is“unpredictable or inconsistent treatment by tax authority”, although the importance of different factors varies across countries.

Michael P. Devereux. CBT Working Paper 16/13