Special Report

Best (and Worst) Countries for Business

5. United Kingdom
>Distance-to-frontier score:
> Cost of starting a business: 0.1%
> Total tax rate: 32.0%
> Income per capita: $42,690

Bureaucratic and regulatory conditions in the United Kingdom are among the most business friendly in the world. The country scores within the 75th percentile in eight out of 10 measures of ease of doing business. Entrepreneurs have a significant advantage in the U.K. With no capital, an entrepreneur can start a business in the U.K. in under five days.

In particular, the U.K. has improved its tax system in the past year. Over the 12 months through June 2015, the country has reduced the corporate income tax rate and decreased the contributions to social security that employers are required to pay. Other changes in the country were not as beneficial. Court fees associated with enforcing contracts went up in the U.K over that time.

4. South Korea
>Distance-to-frontier score:
> Cost of starting a business: 14.5%
> Total tax rate: 33.2%
> Income per capita: $27,090

No country in the world has better access to reliable electricity than South Korea. It takes just 18 days for a typical enterprise to establish a new electricity connection, tied for the fastest time in the world. For businesses, loss of electricity often leads to a significant loss of revenue. Not only do businesses in Seoul — South Korea’s capital — lose power very rarely, but also they receive compensation for outages that last longer than five minutes.

South Korean businesses are also protected by one of the most efficient judicial systems in the world. Court cases in South Korea are filed and conducted entirely online, one of only a few nations where this is the case. The typical commercial dispute in South Korea is resolved in just 230 days — a relatively short turnaround. Despite being generally conducive to business, South Korea has a comparatively high cost of entrepreneurship. The average cost of starting a business in South Korea is 14.5% of the country’s GNI per capita, one of the higher such rates among the better countries.

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3. Denmark
>Distance-to-frontier score:
> Cost of starting a business: 0.2%
> Total tax rate: 24.5%
> Income per capita: $61,310

Since June 2014, Denmark has implemented an online platform to facilitate simultaneous business and tax registration for entrepreneurs. Under the improved conditions, it takes three days to start a business in Denmark. Denmark is one of 122 nations to implement business friendly reforms between June 2014 and June 2015. Though the Scandinavian country ranks 29th in the world for ease of starting a business, its handling of international trade is the most business friendly in the world. With no fees for documentation or border compliance for imports and exports, along with a documentation time that can be measured in minutes, no nation makes it easier, or cheaper, for businesses to trade with other nations.

With conditions so conducive to doing business, Denmark’s people are relatively prosperous and the national economy is growing modestly. GNI per capita is slightly more than $61,000 and the economy grew by 1.1% and 1.6% in the last two years, respectively.

2. New Zealand
>Distance-to-frontier score:
> Cost of starting a business: 0.3%
> Total tax rate: 34.3%
> Income per capita: $43,837

New Zealand is home to roughly 4.5 million people, and its economy depends largely on agriculture, manufacturing, and tourism. The country has one of the best environments in the world for business. New Zealand ranks highest in the world in ease of starting a business, obtaining credit, registering property, and protecting minority investors. An entrepreneur in New Zealand can start a business in half a day, with no minimum capital required. By contrast, it takes five times as long to start a business in Australia, New Zealand’s closest neighbor.

With the exception of Singapore, no other country has more ideal conditions for doing business. And conditions continue to improve. Since last year, regulators in New Zealand have improved payment monitoring and confirmation processes, ultimately reducing the time it takes to establish an electricity connection.

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1. Singapore
>Distance-to-frontier score:
> Cost of starting a business: 0.6%
> Total tax rate: 18.4%
> Income per capita: $51,150

Despite making no significant reforms, Singapore is once again the best country for business. Singapore is notable for its swift and transparent judicial system. The average commercial dispute takes just 150 days to resolve, the shortest turnaround worldwide. Moreover, since early last year, litigants and lawyers have been able to file cases, exchange documents, schedule hearings, and hold conferences entirely online.

A streamlined construction process contributes to the city state’s favorable business. It takes only 26 days to get a construction permit in Singapore, the quickest proceedings of any country. Additional hurdles to owning property are fairly low. Business owners are charged on average just 0.3% of their property’s value in construction-related fees, one of the lowest such compliance costs in the world. Business owners also pay an effective tax rate of just 18.4%, one of the lowest rates worldwide.

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