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The Best Low-Tax Countries for Business in 2017

The world has been hearing plenty about how newly-elected U.S. President, Donald Trump will return America to its original glory. One of the ways President Trump plans to ‘Make America Great Again, is by lowering U.S. corporate tax rates. President Trump, in a joint address to Congress, said that American companies are “taxed at one of the highest rates anywhere in the world.” He said his economic team was working on reforms that would “reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone.”

“It will be a big, big cut,” he said.

This cut, if it’s anything like what he announced during the campaign, could mean he’s set to slash U.S. corporate tax rates by 20 percent, from 35 percent to 15 percent.

With the U.S. being taxed at one of the highest rates anywhere in the world, it doesn’t come as a surprise that the United States of America has landed itself on the 23rd spot on the Forbes list “Best Countries for Business”. Indicating a significant slip from its famed Number 1 ranking back in 2006. What are the reasons behind this drop? Economists suggest that unfavorable trade policies and lack of monetary freedom, combined with the increasing levels of bureaucracy and red tape might be responsible for the decline faces by the largest economy in the world.

What are the reasons behind this drop? Economists suggest that unfavorable trade policies and lack of monetary freedom, combined with the increasing levels of bureaucracy and red tape might be responsible for the decline faces by the largest economy in the world.

Denmark Continues to Attract Capital Investment

In 2016, Denmark was ranked the 6th best country out of a total of 130 nations of the world in the “Best Countries for Business” list of Forbes. The list indicated world economies are highly lucrative as far as capital investment is concerned.

Denmark continues to provide one of the most innovative and profitable business environments to companies from all across the globe. Greater Copenhagen is known to offer low business costs and extremely competitive taxes along with a flexible and highly skilled labor market.

The Forbes list of “Best Countries for Business” is created on the following key factors:

  • Innovation
  • Technology
  • Taxes
  • Property rights
  • Freedom (monetary, trade and personal)
  • Stock market performance
  • Investor protection
  • Corruption
  • Red tape

Low-tax nations on the 2017 Forbes list

In the second half of 2016, the World Economic Forum released the ‘Global Competitiveness Report’ which analyzed the state of various world economies. Besides factors such as inflation, corruption, policy stability, etc., an important aspect included in the analysis process is ‘tax burden.’ Lower ‘tax burden’ indicates higher competitiveness, noting that a country offers a profitable business environment.

For measuring tax, the total tax rate of the World Bank is utilized. This includes all taxes levied on the business itself, rather than those levied on employees.

The United Arab Emirates and Qatar ended up tying for the number one spot for low tax burden in the latest Forbes list. New Zealand topped the list in the area of investor protection. Analysts report that incorporating a business in New Zealand is a pretty quick process and takes just about a day. Registration of property takes two days. New Zealand is home to an educated and skilled workforce and also has the advantage of low labor costs.

But what about taxes? As far as business taxes are concerned, New Zealand has no capital gains, social security, or payroll taxes. These ‘no taxes’ makes New Zealand one of the best countries for business investment in 2017.

Even though New Zealand is a small nation, it has managed to build multiple business structures. You can choose to an independent trader in New Zealand and a business of your own. Alternatively, you may also consider a professional partnership and benefit from the shared operational expenses.

Some of the other nations ranked low on tax burden in the 2017 list include Hong-Kong, Ireland, and the UK.

It is both easy and affordable to incorporate a business in the United Kingdom. For this reason, the United Kingdom is among the most lucrative countries in the world to start a business. According to David Mytton, Founder of Server Density, a start-up company based in the UK, there are several reasons why the UK is an excellent place to launch a new business. Besides quick incorporation, the tax authorities in the UK understand that most new business ventures aren’t usually profitable in the initial years of their operation. The UK government provides multiple tax benefits to founders, employees, and investors. 

Which areas are the most business-friendly places in the UK? Well, consider Derby, Belfast, Durham, Stirling or Stoke.

The Rise of Sweden in the Forbes List of Best Countries for Business

There is one country that has taken the world by surprise by grabbing the No. 1 spot in the 2017 list of the best countries for business investment. And it is none other than Sweden (GDP: $493 billion, tax burden position: 27). Over the last 20 years, Sweden has experienced a massive transformation in the areas of budget self-restraint and deregulation.

The government of Sweden decided to shrink disability and jobless benefits to boost employment. The reduced benefits enabled tax cuts. In 2005, the government did away with the inheritance tax in Sweden. At the same time, it put a stop the wealth tax for two years.

Although Sweden may still have relatively higher taxes when compared to other developed economies of the world, the taxes paid up as profit percentage have fallen by eight percentage points in the last ten years. The nation’s ranking in the famous “World Bank’s Ease of Doing Business” list has gone up 11 positions during this time.

The Forbes annual list is created on the basis of data collected from Property Rights Alliance, Heritage Foundation, Freedom House, World Economic Forum, World Bank Group and Transparency International.

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