Three ways to pay tax around the world

Tax text
By Eleanor O'Neill, Student Blog

5 June 2017

Should you ever find yourself filing a return overseas, have a look at some of the different models employed around the world.

1. Pay as you earn (PAYE)

The UK is one of 36 countries to utilise a return-free filing system for individual income tax. PAYE is a cumulative system that has required employers to report salary earnings in real time since 2013; this means that HMRC can accumulate your information throughout the year and calculate the tax you owe automatically.

Individuals can then either agree and confirm that amount or contest any overpaid costs.

2. Pay someone else to do it

Conversely, standard practice in the US is for taxpayers to submit a prepared return to the Inland Revenue Service (IRS) for approval. This usually calls for the involvement of personal accounting software or the services of an accountant to ensure compliance and accuracy.

The US tax code is notoriously more complicated than the majority of its European counterparts. A '2010 Annual Report to Congress' by the National Taxpayer Advocate Service suggested that Americans spend around 7.6 billion hours a year keeping their returns in line with federal regulation. 

3. Ask your phone to do it

Similar to the UK, tax returns in Nordic countries like Sweden are filled out automatically by the taxation authority. However, what makes this model unique is the method of confirmation; some taxpayers are able to simply send a text to the Swedish Tax Agency (Skatteverket).

In 2016, approximately 5.6 million Swedes submitted their income tax return online, by text, through an app or over the phone. The ease of this process is partially due to the high level of trust that exists around the Tax Agency. It was rated fifth out of 29 major public bodies for reputation.


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