Statutory 1st Year 5-Year PIT top Number of

Corporate Effective Effective Tax VAT and marginal tax

Code Country Tax Rate Tax Rate Rate Labor Tax Other Taxes Sales Tax rate payments
ARG Argentina 35.00 23.54 23.80 19.51 14.51 24.00 35.00 34.00
ARM Armenia 20.00 11.48 12.46 16.00 0.53 20.00 20.00 50.00
AUS Australia 30.00 21.96 23.03 11.38 0.24 10.00 47.00 12.00
AUT Austria 34.00 20.86 21.04 25.11 0.19 20.00 50.00 20.00
BEL Belgium 33.99 16.71 19.57 24.27 0.54 21.00 50.00 10.00
BOL Bolivia 25.00 39.87 39.87 10.18 17.58 14.94 13.00 41.00
BRA Brazil 34.00 15.49 15.49 31.45 4.32 73.54 27.50 23.00
BGR Bulgaria 19.50 8.60 10.24 26.36 1.02 20.00 29.00 27.00
BFA Burkina Faso 35.00 22.28 22.54 13.99 4.07 18.00 35.00 45.00
CAN Canada 36.12 21.78 25.93 7.04 4.52 15.00 29.00 10.00
CHL Chile 17.00 15.09 15.09 2.04 2.17 19.00 40.00 10.00
CHN China 33.00 15.75 15.75 36.71 0.88 18.87 45.00 48.00
COL Colombia 38.50 24.28 24.28 23.64 4.40 16.97 35.00 68.00
HRV Croatia 20.06 6.04 11.90 14.16 0.00 22.07 45.00 39.00
CZE Czech Republic 28.00 9.29 13.00 29.68 0.02 19.00 32.00 14.00
DNK Denmark 30.00 21.94 24.53 0.61 1.14 25.00 59.00 18.00
DOM Dominican Republic 25.00 26.58 26.58 10.62 0.99 13.00 25.00 87.00
ECU Ecuador 25.00 18.90 19.08 10.30 0.77 12.00 25.00 8.00
EGY Egypt 34.00 17.07 20.43 21.74 0.51 10.00 32.00 42.00
FIN Finland 29.00 16.30 18.84 18.04 0.73 22.00 34.00 19.00
FRA France 35.43 14.06 14.42 37.65 3.32 21.10 48.09 33.00
GEO Georgia 20.00 11.06 11.06 26.29 1.36 20.50 20.00 48.00
DEU Germany 37.07 23.50 23.60 16.75 0.04 16.00 45.00 32.00
GHA Ghana 35.00 19.55 22.48 10.60 0.01 13.54 30.00 35.00
GRC Greece 35.00 19.78 19.91 23.80 0.21 18.00 40.00 33.00
HKG Hong Kong, China 17.50 0.00 12.25 3.95 0.00 0.00 17.00 4.00
HUN Hungary 18.00 9.48 9.62 31.01 5.26 27.20 38.00 24.00
IND India 36.59 20.28 24.29 14.21 3.28 25.65 30.00 59.00
IDN Indonesia 30.00 20.84 21.01 8.00 0.09 10.00 35.00 52.00
IRL Ireland 12.50 9.62 9.62 9.12 0.00 21.00 42.00 8.00
ISR Israel 35.00 25.72 25.98 5.04 1.19 17.17 49.00 33.00
ITA Italy 37.25 23.82 23.82 35.23 0.27 20.00 45.00 15.00
JAM Jamaica 33.33 19.67 23.42 9.75 0.95 15.00 25.00 72.00
JPN Japan 42.05 28.66 31.64 10.00 2.16 5.00 37.00 15.00
JOR Jordan 15.72 12.24 12.28 9.33 0.45 16.00 25.00 26.00
KAZ Kazakhstan 30.00 18.79 20.62 14.96 1.69 15.00 20.00 34.00
KEN Kenya 30.00 23.62 24.84 5.44 4.90 16.30 30.00 17.00
KOR Korea 26.73 14.94 18.38 5.87 0.65 10.00 36.00 27.00
KGZ Kyrgyz Republic 20.00 9.94 11.88 21.20 0.44 26.30 33.00 89.00
LVA Latvia 15.00 5.20 8.47 20.40 0.44 18.00 25.00 41.00
LBN Lebanon 15.00 10.20 10.24 18.23 0.00 10.00 20.00 21.00
LTU Lithuania 15.00 4.14 7.25 26.21 1.08 18.48 33.00 13.00
MDG Madagascar 30.00 16.43 19.99 14.21 1.24 20.00 35.00 27.00
MWI Malawi 30.00 17.32 25.07 0.85 0.00 17.50 40.00 29.00
MYS Malaysia 28.00 10.50 16.13 9.79 0.35 10.00 28.00 35.00
MLI Mali 35.00 20.97 21.23 17.73 3.33 18.00 15.00 60.00
MEX Mexico 33.00 22.21 22.48 18.46 0.70 15.00 33.00 49.00
MNG Mongolia 30.00 0.00 6.63 15.27 0.30 15.00 40.00 42.00
MAR Morocco 35.00 17.74 22.33 16.71 0.27 20.00 44.00 28.00
MOZ Mozambique 32.00 25.59 25.59 3.39 1.35 17.00 32.00 36.00
NLD Netherlands 34.50 25.62 25.62 12.90 0.50 19.00 52.00 22.00
NZL New Zealand 33.00 26.44 28.45 0.00 0.12 12.50 39.00 9.00
NGA Nigeria 32.00 20.69 21.99 6.54 0.40 5.00 25.00 35.00
NOR Norway 28.00 18.50 20.33 11.96 0.00 24.00 12.20 3.00
PAK Pakistan 41.00 31.28 32.42 9.77 0.53 15.00 35.00 47.00
PAN Panama 30.00 16.88 20.25 10.39 7.62 5.00 30.00 59.00
PER Peru 30.00 22.03 23.57 8.27 1.83 19.00 30.00 53.00
PHL Philippines 32.00 22.08 22.88 7.24 3.14 10.68 32.00 59.00
POL Poland 19.00 11.54 12.47 16.01 0.98 22.00 40.00 43.00
PRT Portugal 27.50 16.03 16.10 20.07 0.71 19.00 40.00 7.00
ROM Romania 25.00 15.17 15.35 27.35 0.53 19.00 40.00 89.00
RUS Russia 24.00 12.62 12.98 29.41 2.30 18.00 13.00 74.00
SEN Senegal 33.00 22.01 22.34 15.06 5.06 18.00 50.00 59.00
SGP Singapore 20.00 10.25 13.17 10.68 2.18 5.00 22.00 16.00
SVK Slovakia 19.00 5.40 8.63 29.03 0.22 19.00 19.00 31.00
SVN Slovenia 25.00 14.38 15.76 14.64 0.29 20.00 50.00 34.00
ZAF South Africa 30.00 18.10 22.69 1.99 2.01 14.14 40.00 23.00
ESP Spain 35.00 18.52 18.61 33.23 0.18 16.00 45.00 7.00
LKA Sri Lanka 32.50 23.00 23.09 12.72 1.66 16.00 30.00 60.00
SWE Sweden 28.00 10.47 14.93 27.16 0.33 25.00 25.00 5.00
CHE Switzerland 24.10 13.74 16.18 8.57 0.45 7.60 11.50 13.00
TAI Taiwan, China 25.00 17.83 18.01 7.73 1.87 5.00 40.00 15.00
TZA Tanzania 30.00 18.05 20.69 13.57 0.08 20.30 30.00 48.00
THA Thailand 30.00 22.04 22.26 4.18 3.79 7.00 37.00 46.00
TUN Tunisia 35.00 20.63 23.45 15.27 0.00 19.24 35.00 45.00
TUR Turkey 30.00 16.92 16.92 22.96 0.34 18.00 40.00 18.00
UGA Uganda 30.00 19.42 21.94 8.48 0.43 17.50 30.00 31.00
UKR Ukraine 25.00 10.68 13.16 31.51 0.09 20.00 13.00 98.00
GBR United Kingdom 30.00 18.61 21.44 8.19 1.10 17.50 40.00 7.00
USA United States 45.20 18.19 31.99 7.18 4.56 8.25 35.00 10.00
URY Uruguay 30.00 25.45 25.53 3.07 0.00 26.00 0.00 41.00
VEN Venezuela 34.00 19.21 19.72 13.32 2.80 16.48 34.00 68.00
VNM Vietnam 28.00 18.37 18.79 14.42 0.17 10.00 60.00 32.00
ZMB Zambia 35.00 17.68 25.32 4.24 0.00 17.50 30.00 37.00
ZWE Zimbabwe 30.90 14.66 20.23 3.52 4.87 15.00 45.00 59.00
Time to Business Average IEF
comply Investment 2003- FDI 2003- density per entry rate Property Procedure
with taxes 2005 as % of 2005 as % of 100 people (%) 2000- Tax GDP pc Rights s to start a Employment
(in hours) GDP GDP (2003/4) 2004 evasion 2003 Index business rigidity index
580.00 18.59 2.22 1.72 7.46 2.00 6,932.45 30.00 15.00 41.00
1,120.00 25.39 5.23 5.68 7.55 889.72 50.00 10.00 23.00
107.00 25.35 0.79 13.98 11.27 4.70 22,404.59 90.00 2.00 16.00
272.00 21.05 2.35 4.91 4.48 4.20 24,650.02 90.00 9.00 33.00
160.00 19.17 10.73 4.83 7.19 2.90 23,136.09 90.00 4.00 27.00
1,080.00 12.46 0.08 1.74 4.60 2.20 1,017.38 30.00 15.00 40.00
2,600.00 17.63 2.31 3.80 2.40 3,737.39 50.00 17.00 42.00
616.00 21.32 10.41 4.59 11.84 2.50 1,846.81 30.00 11.00 46.00
270.00 19.48 0.46 0.00 246.60 30.00 12.00 70.00
119.00 20.13 1.35 4.68 13.66 5.20 24,165.15 90.00 2.00 3.00
432.00 21.17 6.39 4.99 5.30 5,176.06 90.00 9.00 24.00
872.00 40.81 3.08 0.48 8.20 3.00 1,209.00 30.00 13.00 23.00
456.00 17.81 4.64 2.45 2.40 2,060.66 30.00 27.00
232.00 28.57 5.00 7.22 4,818.67 30.00 12.00 50.00
930.00 26.13 3.16 12.80 11.27 2.60 6,013.49 70.00 10.00 31.00
135.00 19.97 (0.34) 7.92 10.23 3.60 30,272.84 90.00 4.00 16.00
124.00 22.18 4.05 0.30 2.80 2,287.41 30.00 10.00 41.00
600.00 21.62 4.50 0.56 14.62 2.70 1,410.67 30.00 14.00 51.00
504.00 16.90 2.63 0.07 9.17 3.10 1,542.98 50.00 13.00 53.00
264.00 18.76 1.94 6.66 9.99 5.10 24,461.55 90.00 3.00 44.00
128.00 19.24 2.53 6.09 8.34 4.00 22,963.13 70.00 7.00 55.00
448.00 25.58 8.43 14.77 7.24 822.69 30.00 9.00 43.00
105.00 17.42 0.58 5.70 5.91 3.80 23,277.08 90.00 9.00 44.00
304.00 26.87 1.45 268.00 50.00 12.00 33.00
204.00 24.71 0.68 11.78 7.51 2.70 11,882.17 50.00 15.00 58.00
80.00 21.12 16.44 10.52 9.71 6.10 26,235.94 90.00 5.00 0.00
304.00 22.72 4.38 7.15 11.93 3.40 5,353.83 70.00 6.00 33.00
264.00 26.41 0.79 0.10 4.08 2.70 511.42 50.00 11.00 41.00
560.00 20.98 0.78 1.00 2.30 872.36 30.00 12.00 43.00
76.00 23.70 (2.14) 5.76 10.30 4.10 28,322.94 90.00 4.00 32.00
210.00 17.69 3.18 9.50 10.98 3.70 17,306.63 70.00 5.00 26.00
360.00 20.52 1.06 10.06 7.51 2.80 19,465.15 70.00 9.00 53.00
414.00 30.47 7.56 2.84 3.40 2.60 3,228.29 50.00 7.00 3.00
315.00 22.89 0.13 2.85 3.13 4.70 37,243.79 70.00 11.00 25.00
101.00 22.79 7.35 4.63 3.60 1,900.69 50.00 11.00 27.00
156.00 24.18 6.63 1.90 15.01 1,671.21 30.00 9.00 23.00
372.00 16.99 0.32 417.21 50.00 12.00 27.00
290.00 29.59 0.83 8.73 3.30 12,245.18 70.00 12.00 33.00
204.00 14.37 4.01 2.09 3.84 306.40 30.00 8.00 37.00
320.00 27.24 3.99 6.44 7.56 3.30 4,153.93 50.00 5.00 62.00
208.00 20.45 11.65 7.95 4,822.42 30.00 6.00 28.00
162.00 21.75 2.81 3.02 11.97 3.00 4,157.98 50.00 8.00 47.00
400.00 21.51 0.39 4.65 4.54 223.62 50.00 13.00 42.00
878.00 12.99 0.11 1.21 8.37 146.50 50.00 10.00 20.00
190.00 20.80 3.11 15.26 5.76 4.60 4,081.16 50.00 9.00 10.00
270.00 22.63 2.70 238.60 50.00 13.00 51.00
536.00 19.29 2.53 6.76 7.14 2.00 5,872.29 50.00 9.00 37.00
204.00 32.70 8.59 2.50 10.48 424.96 50.00 8.00 33.00
468.00 24.61 3.29 1.06 4.85 1,306.97 30.00 6.00 60.00
230.00 23.46 4.26 0.15 6.28 261.76 30.00 14.00 54.00
250.00 19.29 3.54 4.61 8.06 4.80 24,147.78 90.00 7.00 42.00
70.00 23.08 2.98 12.32 16.38 5.50 14,802.31 90.00 2.00 7.00
1,120.00 22.36 2.69 1.49 7.87 2.00 395.76 30.00 10.00 24.00
87.00 18.10 1.23 5.48 8.52 3.40 38,403.78 90.00 4.00 48.00
 560.00 15.39 1.26 0.06 3.27 545.21 30.00 11.00 38.00
560.00 17.19 6.68 2.08 10.90 3.00 3,991.57 30.00 7.00 55.00
424.00 18.17 2.65 2.32 2.81 2.60 2,148.17 30.00 10.00 61.00
94.00 15.96 0.84 1.49 1.86 1.90 1,056.05 30.00 11.00 38.00
175.00 18.18 3.46 3.04 5.74 3.00 4,775.69 50.00 10.00 37.00
328.00 22.13 2.86 8.67 5.87 2.80 10,966.41 70.00 11.00 51.00
188.00 22.05 6.12 5.98 7.51 3.30 1,991.65 30.00 5.00 65.00
256.00 18.28 2.15 4.07 2.10 2,120.65 30.00 9.00 44.00
696.00 21.67 0.83 0.04 441.62 50.00 10.00 60.00
30.00 23.22 14.07 10.45 12.81 6.30 23,221.94 90.00 7.00 0.00
344.00 25.51 2.96 12.50 14.24 2.60 4,239.81 50.00 9.00 38.00
272.00 24.07 1.73 6.67 6.94 3.90 10,549.12 50.00 9.00 57.00
350.00 16.41 1.14 6.17 7.54 3.00 3,179.88 50.00 9.00 45.00
602.00 28.11 2.44 4.47 7.78 4.70 15,138.38 70.00 10.00 62.00
256.00 24.38 1.19 1.00 3.00 2.40 920.55 50.00 8.00 26.00
122.00 16.35 1.30 15.78 10.95 3.70 28,327.07 90.00 3.00 42.00
63.00 20.82 3.42 6.03 3.95 5.50 33,886.15 90.00 6.00 23.00
1,104.00 19.67 9.30 4.00 15,015.87 70.00 8.00 55.00
248.00 18.50 4.39 299.06 30.00 13.00 66.00
104.00 26.31 1.66 2.99 7.95 3.10 2,240.59 50.00 8.00 17.00
268.00 22.87 2.26 6.77 2,224.77 50.00 10.00 45.00
254.00 17.61 1.46 4.60 2.00 2,976.88 50.00 8.00 48.00
237.00 21.04 3.15 0.11 257.76 50.00 17.00 6.00
2,185.00 19.92 4.97 2.99 7.97 2.00 821.71 30.00 15.00 54.00
105.00 16.30 4.14 4.55 10.23 5.40 25,885.48 90.00 6.00 13.00
325.00 18.35 0.87 3.72 8.10 5.40 35,312.75 90.00 5.00 0.00
300.00 11.20 3.49 5.90 3.60 5,495.34 70.00 11.00 31.00
864.00 17.38 2.23 2.97 2.30 3,966.50 30.00 16.00 79.00
1,050.00 33.28 3.65 1.20 3.40 473.41 10.00 11.00 47.00
132.00 24.71 3.98 0.40 10.47 326.62 50.00 6.00 23.00
216.00 15.78 1.09 4.93 2.40 479.42 10.00 10.00 33.00
 EFW Median Equity
Freedom to manufacturi Median Size of Market
Average Trade ng sector service informal Debt to Cap in %
inflation Internationally firm sector firm sector Equity of GDP Legal
(1995-2004) Seignorage Index investment investment 2005-07 Ratio 2003 Income group origin
4.93 7.57 6.20 1.27 0.31 34.58 190.25 34.62 Upper middle income French
22.51 5.17 6.90 31.25 Lower middle income French
2.22 3.77 7.30 15.83 140.70 101.57 High income English
1.19 5.97 8.30 15.42 248.05 20.55 High income German
1.50 5.95 8.50 23.75 123.05 55.11 High income French
6.24 5.55 7.10 0.81 0.14 43.75 Lower middle income French
17.85 2.68 6.40 1.60 35.83 104.02 19.85 Lower middle income French
118.43 11.92 7.40 31.25 Lower middle income German
3.37 6.48 0.77 0.66 35.83 Low income French
1.91 3.05 7.80 19.58 99.86 90.36 High income English
4.80 2.79 8.40 2.00 0.93 15.00 101.28 116.09 Upper middle income French
3.38 13.30 7.40 0.75 0.68 27.92 89.08 23.71 Lower middle income German
11.99 5.35 5.90 0.61 0.16 28.33 58.16 9.39 Lower middle income French
4.87 5.10 6.70 30.42 Upper middle income German
6.43 8.41 8.30 19.17 31.80 17.87 Upper middle income German
1.96 2.98 7.90 17.08 73.13 62.44 High income Nordic
13.84 3.48 6.30 34.17 Lower middle income French
3.79 0.18 6.60 1.32 0.63 31.67 Lower middle income French
6.07 12.25 6.40 30.42 96.12 9.68 Lower middle income French
1.82 5.67 7.90 12.08 25.01 95.89 High income Nordic
1.41 5.89 7.80 15.00 237.04 69.80 High income French
25.67 6.18 7.10 32.50 Lower middle income German
0.74 6.39 8.20 17.50 252.94 40.85 High income German
26.13 7.20 35.83 Low income English
4.90 6.89 7.20 27.92 161.68 52.78 High income French
(0.68) 10.88 9.50 16.25 41.35 301.94 High income English
12.68 6.48 8.30 27.50 62.09 19.63 Upper middle income German
5.44 10.85 6.40 0.00 5.87 29.17 67.41 44.32 Low income English
17.52 4.75 7.20 0.00 35.42 80.48 22.85 Lower middle income French
3.97 4.32 8.60 16.25 50.78 High income English
5.75 3.21 7.90 18.75 101.78 57.58 High income English
3.10 6.24 7.50 31.25 261.30 37.93 High income French
11.88 4.76 7.00 3.09 3.00 37.50 Lower middle income English
(0.89) 14.62 6.70 16.25 200.27 72.51 High income German
1.73 17.48 7.40 0.00 0.03 20.00 Lower middle income French
29.61 6.46 33.33 Lower middle income French
9.79 4.88 6.40 1.24 34.17 Low income English
3.54 2.67 7.20 27.50 115.35 51.07 High income German
18.89 11.77 42.92 Low income French
7.84 8.68 7.40 24.17 Upper middle income German
3.31 Upper middle income French
8.91 8.18 7.60 16.67 Upper middle income French
13.52 7.25 6.50 0.00 39.17 Low income French
36.16 5.31 6.20 35.00 Low income English
4.08 6.02 7.50 2.01 19.17 98.22 141.78 Upper middle income English
4.37 9.52 6.10 0.20 37.92 Low income French
15.77 3.52 7.20 0.00 0.00 36.67 65.94 15.95 Upper middle income French
16.72 7.26 7.10 6.96 33.75 Low income German
2.56 15.78 5.50 0.43 35.00 37.23 24.63 Lower middle income French
18.19 4.06 6.10 36.67 Low income French
2.57 5.38 8.40 13.75 213.82 117.39 High income French
2.10 1.46 8.00 13.33 106.39 34.49 High income English
21.33 5.36 6.40 35.42 Low income English
3.97 7.10 13.33 116.48 43.33 High income Nordic
 9.65 11.62 5.80 0.00 0.00 32.08 84.02 16.76 Low income English
2.32 0.00 6.90 0.65 0.00 27.50 Upper middle income French
5.57 3.38 7.20 1.18 0.14 40.00 15.43 10.65 Lower middle income French
6.70 5.33 7.50 0.00 32.50 124.29 26.68 Lower middle income French
10.70 5.49 7.00 25.83 71.50 16.91 Upper middle income German
3.33 8.19 7.70 21.67 291.11 39.50 High income French
47.49 3.03 6.90 25.42 Upper middle income French
39.96 9.00 6.70 37.50 21.93 34.53 Upper middle income French
2.57 7.50 6.10 0.00 Low income French
0.23 7.42 9.30 10.00 78.07 169.97 High income English
6.08 7.38 8.40 20.83 57.27 2.79 Upper middle income German
9.08 3.15 7.30 17.08 55.60 13.11 High income German
7.86 2.80 6.90 0.42 0.00 29.58 57.68 99.13 Upper middle income English
3.60 6.27 8.00 21.25 306.55 54.65 High income French
8.91 4.77 6.50 33.33 109.85 7.38 Lower middle income English
1.51 3.74 8.00 20.83 88.01 82.67 High income Nordic
0.58 9.34 7.70 12.08 53.60 214.82 High income German
8.00 21.25 82.08 136.67 High income German
12.91 5.37 5.70 0.80 0.00 34.17 Low income English
2.75 8.78 7.50 0.00 23.75 100.30 81.08 Lower middle income English
3.27 8.43 6.20 22.50 Lower middle income French
54.24 2.20 7.00 36.25 104.30 21.89 Upper middle income French
4.82 4.18 6.40 0.00 0.00 35.83 Low income English
60.10 12.27 7.10 37.08 Lower middle income French
2.62 2.63 7.90 15.42 203.39 129.76 High income English
1.95 5.80 7.60 16.25 145.29 120.00 High income English
15.41 2.85 6.90 0.61 0.00 28.75 Upper middle income French
39.01 3.06 5.80 7.08 5.56 37.50 22.67 4.22 Upper middle income French
7.11 15.25 6.70 26.25 Low income French
24.41 2.80 6.90 0.65 3.54 45.00 Low income English
116.84 6.96 3.10 39.17 22.77 9,401.97 Low income English

Variable name
Tax Variables
Statutory Corporate Tax Rate (%)
1st Year Effective Tax Rate (%)
5-year Effective Tax Rate (%)
Labor Tax (%)
Other taxes (%)
VAT and Sales tax
PIT top marginal rate
Number of tax payments
Time to comply with taxes (in hours) World Bank (Doing Business data)
Outcome variables
Investment 2003-2005 as % of GDP World Bank (World Development
Indicators)
FDI 2003-2005 as % of GDP
FDI 2002-2004 as % of GDP
Business density per 100 people
(2003/2004)
Table 2. Variable Definitions
Source
Authors' calculations
Authors' calculations
Authors' calculations
Authors' calculations
Authors' calculations
Authors' calculations
World Bank (World Development
Indicators), PricewaterhouseCoopers,
and IBFD
World Bank (Doing Business data)
World Bank (World Development
Indicators)
OECD (International Direct Investment
Statistics)
Authors' data, collected from business
registries
Definition
The tax rate for the highest bracket of all taxes on corporate income. We
take into account the deductibility of any of these taxes from the tax based
used for calculating pre-tax corporate income.
The tax rate obtained by dividing the total corporate tax TaxpayerCo pays by
its pretax earnings.
The tax rate obtained by dividing the present-discounted value of the total
corporate tax TaxpayerCo pays over five years by the present-discounted
value of the pretax earnings in these five years.
The sum of all labor-related taxes payable by TaxpayerCo, including payroll
taxes, mandatory social security contributions, mandatory health insurance,
mandatory unemployment insurance, worker's compensation insurance
contributions, and any local contributions that are proportional to payroll or
number of employees. It is expressed as a percentage of pretax earnings.
The sum of all taxes payable TaxpayerCo other than corporate income taxes
and labor taxes where the statutory incidence is on the firm. It is the sum of
all property tax, business license tax, financial transactions tax, turnover tax,
and asett and capital tax payable by TaxpayerCo. It is expressed as a
percentage of pretax earnings.
The sum of all consumption tax rates payable or collected by TaxpayerCo,
including value added tax rate, sales tax rate, and turnover tax rate, and and
related surtaxes.
The tax rate for the highest bracket of tax on personal income. Only taxes at
the national level are included.
The tax payments indicator reflects the total number of taxes paid, the
method of payment, the frequency of payment, and the number of agencies
involved for this standardized case during the second year of operation. It
includes payments made by the company on consumption taxes, such as
sales tax or value added tax.
Time is recorded in hours per year. The indicator measures the time to
prepare, file and pay (or withhold) three major types of taxes: the corporate
income tax, value added or sales tax, and labor taxes, including payroll
taxes and social security contributions.
Gross fixed capital formation (formerly gross domestic fixed investment)
Foreign direct investment is the net inflows of investment to acquire a lasting
management interest (10 percent or more of voting stock) in an enterprise
operating in an economy other than that of the investor.
The Foreign direct investment measured by the OECD is the sum of the
direct investment by all countries made in each OECD member country
receiving the investment (as published in the international direct investment
statitics). The authors then measured this sum as a percentage of the total
GDP in the receiving country. (Total GDP is published by the World Bank
(World Development Indicators).) For each country, these percentages were
averaged over the years 2002 to 2004.
The number of limited liability corporations (or their country-specific
equivalent) legally registered divided by the working-age population (total
population aged 15 to 64). Only businesses with at least one employee that
are not soleproprietorships are included. The variable is scaled to measure
the number of businesses per 100 people in the working-age population.

Average entry rate 2000-2004 (%)
Median manufacturing sector firm
investment
Median service sector firm
investment
Size of the informal sector 2005-
2007
Debt to equity ratio
Control variables
Tax evasion
GDP per capita 2003
IEF Property Rights Index
Procedures to start a business
Employment rigidity index
Average inflation 1995-2004
Seignorage
EFW Freedom to Trade Inter-
nationally Index
Other variables
Income group
Legal origin
Table 2. Variable Definitions
Authors' data, collected from business
registries
World Bank (Enterprise Surveys)
World Bank (Enterprise Surveys)
World Economic Forum (Global
Competitiveness Report 2005-2006 and
2006-2007)
IMF (International Financial Statistics
Database)
World Economic Forum (Global
Competitiveness Report 2001/2002)
World Bank (World Development
Indicators)
The Heritage Foundation (Index of
Economic Freedom)
World Bank (Doing Business data)
Updates of Djankov et al. (2002)
World Bank (Doing Business data)
Updates of Botero et al. (2004)
World Bank (World Development
Indicators)
IMF (International Financial Statistics
Database)
The Fraser Institute (Economic Freedom This index measures taxes on international trade, regulatory trade barriers,
of the World)
World Bank (World Development
Indicators)
La Porta et al. (2008)
The average number of limited liability corporations (or their country-specific
equivalent) that were registered per year between 2000 and 2004. Only
businesses with more than one employee that are not soleproprietorships
are included. The variable is scaled to measure the number of businesses
per 100 people in the working-age population.
The country median of the firm level investments in new machinery and
equipment as a percentage of total sales of the firm.
The country median of the firm level investments in new machinery and
equipment as a percentage of total sales of the firm.
Average of the size of the informal sector as a percentage of economic
activity in 2005-2006 and 2006-2007. Computed using the scale provided in
sections 6.17 (2005-2006) and 6.30 (2006-2007), which report measures on
informal sector activity.
Average of the country's companies' debt (book value) as a percentage of
companies' equity (book value) weighted by the companies' market caps.
This ratio is computed using the IMF's Corporate Vulnerability Utility which
uses firm level data from Datastream and Worldscope.
Executives' assessment of how important tax evasion is in their country (the
lower the measure the more rampant is tax evasion). Based on table 6.11.
GDP per cpaita is gross domestic product divided by midyear population.
Data are in constant U.S. dollars.
The property rights index is an assessment of the ability of individuals to
accumulate private property, secured by clear laws that are fully enforced by
the state.
This variable includes all procedures that are officially required for an
entrepreneur to start up and formally operate an industrial or commercial
business.
The average of three subindices: a difficulty of hiring index, a rigidity of hours
index, and a difficulty of firing index.
Inflation as measured by the annual growth rate of the GDP implicit deflator
shows the rate of price change in the economy as a whole, averaged over
the period 1995-2004. The GDP implicit deflator is the ratio of GDP in current
local currency to GDP in constant local currency. World Bank national
accounts data and OECD national accounts data files.
Currency in circulation outside banks as percentage of total GDP. The data
on currency comes from IFS line 14 A.
size of the trade sector relative to expected, black-market exchange rates,
and international capital market controls.
Economies are divided according to 2004 GNI per capita, calculated using
the World Bank Atlas method. The groups are: low income, $905 or less;
lower middle income, $906 - $3,595; upper middle income, $3,596 - $11,115;
and high income, $11,116 or more.
A dummy variable that identifies the legal origin of the Company law or
Commercial Code of each country. The four origins are English, French,
German, and Nordic.