World Bank Publishes Doing Business Index

By Global Tax Weekly

Global competitive rankings, like the latest Doing Business Index from the World Bank, often throw up some surprising results. New Zealand usually performs well in such surveys, but who’d have thought that it is literally the best place in the world to set up and run a company from a regulatory, administrative, and tax point of view – better even than low-tax Singapore, according to Doing Business 2017?

Or, perhaps even more startling, that Denmark – yes, high-tax, high-spend Denmark – the object of derision from the right and praise from the left, during the US presidential election campaign, is the fourth best place to operate a firm, exceeding laissez-faire Hong Kong as a business location? Similarly, Sweden’s brand of social democracy is often criticized as overbearing and fiscally unsustainable. Yet, Sweden is just behind the United States in ninth place.

If these results seem scarcely credible, it is probably because we are looking at them through a tax-focussed lens. And Doing Business shows there are a whole host of other considerations that go into the mix when investors decide where to set up a business. New Zealand’s top score is attributable to several non-tax factors, including simple company formation and property registration procedures, hassle-free construction permit processes, strong minority investor protections, and the ease with which credit can be obtained. Sweden also scores quite highly in most of these categories, excelling particularly in the “getting electricity” segment of the index. It doesn’t fair as well when it comes to getting credit or paying taxes though.

The opposite also holds true; there are countries you’d think would be occupying the top spots in the league table but are only fair-to-middling, like Switzerland. Doing Business tells us that Switzerland’s taxes are not overly difficult to comply with, but it’s not a great place to start a business in a hurry, or to get credit. Dealing with construction permits is also difficult, and protecting minority shareholders virtually impossible.

On the other hand, some of the findings are not so surprising for those who follow international tax developments. For instance, it doesn’t come as a huge shock to find France down in 29th place. But, given the index includes 190 jurisdictions, this still isn’t a disastrous score. And I’m sure the fact that France finished ahead of Switzerland in the table – two countries with something of tense relationship around tax and banking secrecy rules, as illustrated by the French tax authority’s recent request for an unusually large amount of data from UBS – wasn’t entirely lost on the French Government.

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