In the whole East African region, paying taxes is easiest in Rwanda, according to a World Bank report

The ‘Paying Taxes 2010’ report released recently Rwanda ranks as the 59th globally, followed by Uganda and Burundi, which are positioned 66th and 116th respectively while Kenya is ranked 164th.

Tanzania also staggered in this global ranking this year after tumbling 11 places to 120th position out of 183 countries listed in a survey to gauge the ease of paying taxes.

Despite the economic downturn, government focus around the world has remained on tax reform, concludes the report which was prepared in partnership with Pricewaterhouse Coopers LLP.

The report, measures the ease of paying taxes across 183 economies. It finds that 45 economies made it easier to pay taxes, almost 25 percent more than in the previous year.

It measures tax systems from the point of view of a domestic company complying with different tax laws and regulations.

This year’s top reformer, Timor-Leste, introduced a new tax law, streamlined the business tax regime, and simplified tax administration. For the third year in a row, Eastern Europe and Central Asia had the largest number of reforms, with 10 economies reforming.

Timor-Leste reduced compliance time by over 50 percent by rationalizing tax regulations, simplifying computation rules, and reducing payments.

Rwanda Revenue Authority (RRA), the national body charged with tax and non-tax revenue collection, managed to surpass its target for the first quarter under the EAC fiscal year, collecting Rwf 86.2bn between July and September 2009.

However the body announced recently that it had recorded an estimated shortfall of Rwf 1 billion in customs collections following the implementation of the EAC Customs Union.

Undertaken jointly by PwC and the World Bank, the paying taxes indicator PwC Tanzania said in a statement that despite the economic downturn, government focus around the world has remained on tax reform with 45 economies making it easy to pay taxes in the current survey.

"The global recession has meant falling tax revenues and difficult tax policy choices,” said Africa Tax Leader David Tarimo of PwC.

"The challenge is ensuring sufficient public revenues for the future while incentivizing investment and economic growth,” he added.

Overall, East Africa has performed poorly in the global paying taxes indicator, which was part of the World Bank’s Doing Business 2010 project.

While Tanzania lost position three to Burundi, which was ranked 114th in the world last year, Rwanda and Kenya fell from positions 56 and 158 respectively with Uganda improving the performance from the 70th position.

Ends