The Tax Complexity Index: An innovative measure to analyze tax complexity across countries

Posted by CAREN SURETH-SLOANE - Aug 12, 2021

Recently, the relevance of tax complexity has increased significantly. This is a potential threat for the economy and society since the negative consequences of complex tax systems can jeopardize economic prosperity and encourage undesired tax planning as well as tax avoidance. However, research on the impact of tax complexity on the economy and society is limited. It is unclear how to measure complexity: a comprehensive assessment of tax complexity across different countries is needed.


Without any doubts, tax complexity is a global phenomenon. But how can tax complexity be reliably measured? The TRR 266 Accounting for Transparency research team is led by Deborah Schanz and Caren Sureth-Sloane. Together with TRR 266 alumni Thomas Hoppe and Susann Sturm, they developed a new and innovative survey-based measure of corporate income tax complexity across countries – the Tax Complexity Index – which allows them to analyze tax complexity faced by multinational corporations (MNCs).


The Tax Complexity Index

The Tax Complexity Index (TCI) is based on a uniform and transparent approach to measure tax complexity. Furthermore, it covers a variety of different facets which have been identified in preceding investigations. This approach goes beyond so far existing measures as it provides a unique and highly differentiated measure targeted for MNCs and cross-country analyses. The TCI is based on data (both facts and perceptions) from a worldwide survey, answered by highly experienced tax consultants of the largest international tax services firms and networks from more than 100 countries. The index consists of two components, tax code complexity (covering tax regulations) and tax framework complexity (covering tax processes and features). Thus, it makes it possible to focus on different aspects of tax complexity.


Survey results

Drivers of tax complexity

The survey results show considerable variation in the overall tax complexity levels across those countries – and identify the main drivers of tax complexity. Worldwide tax code complexity is strongly affected by transfer pricing regulations, whereas tax framework complexity is strongly influenced by the complexity of tax audits. The main drivers of the complexity of transfer pricing regulations are documentation requirements and the ambiguity of these regulations. In contrast, tax audit complexity is strongly driven by inconsistent tax officers' decisions.

Country characteristics

The survey results also provide evidence for specific associations: countries with a very complex tax code tend to have a larger population, a higher GDP, and higher tax rates. Countries with a very complex tax framework tend to have a lower GDP, a more deficient infrastructure, a lower development level, and a lower quality of governance in place.



The collected data provides new opportunities for research on the impact of tax system characteristics. For example, it allows researchers to investigate how tax complexity affects corporate decisions such as investment, location, or profit shifting or analyze tax reforms regarding tax complexity. This can help both firms and tax authorities to learn about the impact of these decisions and reforms as well as how to react to it. The TCI can also help policymakers and governments benchmark their country's tax complexity against other countries and identify aspects that require further review. It can be useful in designing tax policy measures or advancing the digitalization of tax administrations. Tax practitioners can use the index as support in corporate decision-making and when shaping tax risk management systems.


Interactive Website & Data

Our results are publicly available at doi:10.1080/09638180.2021.1951316. In the future, our survey will be repeated biennially. For current and future waves of the TCI, the data is accessible via the interactive website This website enables users to compare countries and create a customized Tax Complexity Index as well as allows for a comparison of countries' complexity over time.


The link to the article, forthcomign at EAR, is:





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