Corruption is a problem that many nations around the world grapple with. Not only can corruption discourage citizens from working hard to contribute to their national economy, it can also cause people to lose faith in their government or even spark protests and revolutions in extreme cases.
The good news is that not all countries are plagued by this problem. There are quite a handful of countries whose governments have done well to tackle the problems of government finance, which is tax income at its core. Below are some of top countries in the world that took the top ten spots in Transparency International’s 2013 Corruption Perception Index.
Details from PWC’s 2013 Tax Transparency and Country-by-Country Reporting provide insights as to tax transparency laws that helped these countries rank well in the survey.
Canada has an advanced legal system and a parliamentary democracy and is actually tied with Australia in the ninth spot. Canada has been given a Bribery Perception Index score of 8.5 out of 10, which is 10.4% higher than the average for all corruption by country reported by Findthedata.org. Only 4% of the respondents surveyed said that they paid a bribe in the last 12 months.
PWC reported that in terms of tax transparency, the Canadian Resource Revenue Transparency Working Group has already issued a draft framework for tax reporting obligations for Canadian companies that operate in the extractive sector.
As one of the closest allies of the US, Australia also has the biggest democratic policies in the world. It also has wide freedom of speech laws. With an 8.5 out of 10 Bribery Perception Index score, the reported bribery in the past 12 months from the survey participants only accounted for 2%.
New legislation to improve tax transparency was given Royal Assent in June 2013. The new rule enhances information sharing between government agencies.
Netherlands is one of the oldest parliamentary democracies in the world. In the Transparency International’s survey, 57.1% of the citizens in Netherlands believe that the Dutch government is battling corruption effectively.
Last year, the Dutch government announced measures against shell companies and tax avoidance. The country will revise tax treaties and improve tax transparency according to Action Aid.
A country known for its private banking system, Switzerland has a corruption perception index score of 8.6 out of 10, a score that is 14.3% higher than the average for all corruption by country. Ironically, 36.7% of the participants surveyed believed that their government is effective in battling corruption.
Switzerland may have ranked well in Transparency International corruption perception index but the country has failed to meet international standards on tax transparency according to the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes.
With a very strict legal code, Singapore has been known for its relentless battle against corruption in the past years. The city-state has a corruption perception index score of 8.7 out of 10, which is higher by 7.8% than the average for all corruption by country. Nine percent of the participants who were surveyed said that they have paid a bribe in the past 12 months.
Singapore’s information practice is in line with international standards for transparency but the OECD recommends that the country update its effectiveness of information exchange network to further improve tax transparency.
Scandinavian country Norway is on Corruption Perceptions Index’s 5th ranking for the least corrupt country in the world. With only 1% of the surveyed residents reporting that they have paid a bribe in the past 12 months, 38.6% also believed that their government has effectively battled corruption.
Tax lists are freely available in Norway which makes the country very transparent in terms of taxes according to PWC.
Climbing up to the number 4th spot as the least corrupt country and also one of the world’s top tax transparent nations is Sweden, a politically stable country with highly skilled work force. It has an 8.8 out of 10 corruption perception index score.
Tax related documents are easily accessible in Sweden thanks to the strong principle of access to public records that is followed in Sweden.
Another Scandinavian country which ranks high on the list is Finland, at number 3. With a corruption perception index score of 9 out of 10, only 2% of the surveyed citizens reported paying bribes in the past 12 months.
Corporate income tax information for the previous year is made public every November which makes the country very tax transparent.
9. New Zealand
Second on the list of the least corrupt countries in the world is New Zealand. New Zealand scored 9 out of 10, equivalent to being 143.2% better than the average for all corruption by country. The survey also found that 54% of the participants believe that the government was effective in fighting corruption, and only 4% of respondents admitted they have paid bribes in the last 12 months.
The country is considering new rules on publishing the tax affairs of large multinationals to improve tax transparency.
Topping the list for Corruption Perception Index’s list of least corrupt countries in the world is Denmark, which is seen by most as one of the happiest destinations around the globe. Placing importance on income equality, Denmark’s corruption perception index score is 9 out of 10. Among the surveyed participants, 55.6% believed that their government has effectively combatted corruption, and no one has reported paying bribes to anyone in the last 12 months.
Danish tax authorities disclose a lot of tax information on companies which makes it a very tax transparent country.
Now that we know the top 10 countries that are perceived to be the least corrupt in the world, we can better gauge the performance of our own countries and compare the anti-corruption methods used in our own countries against the ones used by these top-ranking countries. Helping weed out corruption are tax laws that not just improve tax transparency but also help facilitate easier collection of taxes such as by letting citizens pay taxes through credit cards.
Ryan Del Villar is a content writer for Money Hero, Hong Kong’s leading online comparison portal. Ryan is also a freelance writer at Helm Word, an Online Reputation Management company.