According to GDP Study by UHY: Western European Economies Saddled with Tax Burden 40 Percent Higher than the Global Average

Heavier tax burdens in Western Europe could inhibit growth; low tax centers Dubai and Singapore hope to lure high-value industries from 'Old Europe'

Sterling Heights, Michigan (PRWEB) April 21, 2015

Western European countries are inhibiting their economies with tax burdens at least 40 percent heavier than both the global average and the average for neighboring countries in Central and Eastern Europe, according to research by UHY, the international accounting and consultancy network.

In the ‘Old European' economies of Western Europe the total amount of tax taken by governments is an average of 38.9 percent of GDP, 40 percent higher than the 27.6 percent global average and higher still than the 25.9 percent average tax burden across Eastern Europe and the Balkans.

In the BRIC economies the proportion of the economy claimed by the government in tax is even lower, at an average of 21 percent while the U.S. government's ‘take' from the economy is below the global average at 25.4 percent.

UHY examined 53 economies around the world, calculating what percentage of that country's GDP is taken by the government in tax.

Oil-rich Nigeria has one of lowest tax burdens of any major economy at 1.6 percent of GDP, even lower than in the UAE, where government levies on foreign oil producers, banks and some hotel and leisure businesses account for 2.7 percent of the Emirates' combined GDP.

The highest tax burden in the study was in Denmark, where the total amount of tax revenue taken equates to nearly half of the country's GDP at 48.6 percent.

UHY says that Western Europe's higher taxes on businesses, individuals, investors and consumer spending could all inhibit growth. Higher taxes reduce incentives for investment and wealth creation, and prompt larger businesses to maximize returns for their investors by seeking out lower tax bases for their operations.

In particular, Western Europe's economies could be vulnerable to international rivals that are increasingly able to offer a combination of stable legal systems and highly skilled workforces.

For example, the UAE and Singapore with tax burdens of 2.7 percent and 15 percent respectively are enjoying significant success in attracting corporate headquarters and professional and financial services companies, all creators of high skill, highly paid jobs.

The Dubai International Financial Services has grown in the last 10 years to 1,100 companies, 70 percent of which originate from outside the Middle East, while Singapore is now home to over 200 banks and has growing expertise in other high value sectors including pharmaceuticals and medical technology.

Eastern European and Balkan countries are focusing on developing their industrial and manufacturing industries, offering lower taxes and lower costs than traditional Western European centers. For example, Romania enjoyed 2.9 percent GDP growth last year, largely driven by expansion in its industrial and communications sectors. It is becoming a growing center for the auto manufacturing industry, with Daimler, Ford and Draexlmaier all choosing Romania over Germany for new plants in recent years.

Comments Ladislav Hornan, Chairman of UHY: "Unless they address their tax burdens, many Western European countries could find themselves pinched between lower cost, lower tax Eastern European countries that are able to offer equally strong manufacturing skills bases, and global cities like Singapore, Dubai and Qatar, that are consciously targeting the industries that create the most wealth."

UHY points out that within Western Europe, Ireland, has the lowest tax burden at 28.3 percent of GDP. Its lower taxes are a key part of its strategy of attracting high value industries such as financial services and technology companies. Dublin's International Financial Services Center is estimated to contribute over 7 percent of GDP with 35,000 employees, while Ireland is a major European base for 9 of the top 10 global software companies.

Comments Alan Farrelly of UHY Farrelly Dawe White Limited in Ireland: "While still relatively high by global standards, Ireland's tax burden is significantly lower than in most of Western Europe. This is a strategy that appears to be paying off: the Irish economy grew by 4.8 percent in 2014, the fastest rate in the EU, and Ireland is attracting significant levels of foreign investment – it is the number one destination for US foreign direct investment."

UHY adds that the BRIC economies impose bigger tax burdens than other, smaller emerging economies, which could see emerging markets investors looking beyond the BRICs for growth. Tax amounts to an average of 21.7 percent of the BRIC economies, compared to 14.6 percent across the lower income emerging economies** in the study.

Adds Ladislav Hornan: "Analysts have been keen to coin all sorts of rival acronyms to the BRICs, and one reason may be that the tax burden in the BRICs, especially Brazil, is relatively high."

"For China, as economic growth starts to slow and the country gradually loses its cost advantage, especially compared with other Asian countries, the conundrum of whether and how to lower the tax burden will start to loom larger."

** See attached chart for tax revenues as percentage of GDP by country**

###
About UHY LLP
UHY LLP, a licensed CPA firm, provides audit and other attest services to publicly traded, privately owned and nonprofit organizations in a number of industry sectors. UHY Advisors provides tax and advisory services to entrepreneurial and other organizations, principally those enterprises in the dynamic middle market.

UHY LLP, operating in an alternative practice structure with UHY Advisors, forms one of the largest professional services firms in the US. While that scale might provide confidence for some clients, others tell us our greatest value is the way we bring these resources to bear to help address today's evolving business challenges. It's a philosophy we call "The Next Level of Service". To learn more visit http://www.uhy-us.com.

All of the above entities are members of UHY International ("UHYI"), a worldwide network of independent professional services firms that provide audit, tax and advisory services around the globe. UHYI is ranked among the top international accountancy networks and a proud member in good standing of the Forum of Firms. Collectively, our US operating entities (UHY LLP and UHY Advisors) are the largest independent members of UHYI with significant participation, bringing the power of our international network to serve the individualized needs of our clients.

UHY LLP is a licensed independent CPA firm that performs attest services in an alternative practice structure with UHY Advisors, Inc. and its subsidiary entities. UHY Advisors, Inc. provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of "UHY Advisors." UHY Advisors, Inc. and its subsidiary entities are not licensed CPA firms. UHY LLP and UHY Advisors, Inc. are U.S. members of Urbach Hacker Young International Limited, a UK company, and form part of the international UHY network of legally independent accounting and consulting firms. "UHY" is the brand name for the UHY international network. Any services described herein are provided by UHY LLP and/or UHY Advisors (as the case may be) and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members.

About UHY, the network
Established in 1986 and based in London, UK, UHY is a network of independent audit, accounting, tax and consulting firms with offices in over 275 major business centres in 87 countries.
Our staff members, over 7,626 strong, are proud to be part of the 25th largest international accounting and consultancy network/association. Each member of UHY is a legally separate and independent firm. For further information on UHY please go to http://www.uhy.com.
UHY is a full member of the Forum of Firms, an association of international networks of accounting firms. For additional information on the Forum of Firms, visit http://www.forumoffirms.org

For the original version on PRWeb visit: http://www.prweb.com/releases/2015/04/prweb12667484.htm