No. 20: Tax complexity in Canada: A comparative perspective

Abstract

Motivated by concerns about Canada’s tax system being overly complex, this study examines the Canadian corporate income tax system complexity faced by multinational corporations and compares it to the average complexity from other OECD countries, using the survey data of the Tax Complexity Index. I find that, with regard to the Canadian tax code, the most complex regulations are those on corporate reorganization, transfer pricing and controlled foreign corporations; while in relation to the Canadian tax framework the most complex areas are tax audits, tax law enactment and tax guidance. Relative to the other OECD countries, Canada has a medium level of total complexity. However, the tax code is slightly more complex than the average of the other OECD countries, driven by a higher overall complexity level of certain tax regulations in Canada, such as those on corporate reorganization. In contrast, the tax framework is similarly complex as the average of the other OECD countries. There are no substantial differences in the overall complexity level of the tax framework areas between Canada and the other OECD countries.

Participating Institutions

TRR 266‘s main locations are Paderborn University (Coordinating University), HU Berlin, and University of Mannheim. All three locations have been centers for accounting and tax research for many years. They are joined by researchers from LMU Munich, Frankfurt School of Finance and Management, WHU – Otto Beisheim School of Management, ESMT Berlin, Goethe University Frankfurt and Carl von Ossietzky University Oldenburg who share the same research agenda.