Most Improvements in Starting a Business, Paying Taxes
WASHINGTON, October 24, 2019 – Organisation for Economic Co-operation and Development high-income economies carried out 23 reforms over the past year to make it easier for domestic small and medium-size enterprises to do business and continued to set global standards for business-friendly regulatory environments, the World Bank Group’s Doing Business 2020 study says.
The reforms were implemented in 15 of the 34 OECD high-income economies[1] in the 12-month period to May. This group continues to lead the world in setting global best practices in regulatory efficiency for businesses. Overall, OECD high-income economies focused reform efforts on starting a business and paying taxes, implementing seven and five reforms in these areas respectively. With an average cost of 3% of income per capita, it is 10 times cheaper to start a business in OECD high-income economies than it is in Latin America and the Caribbean (where it costs 31.4% of per capita income).
Seven OECD high-income economies are among the top 10 performers globally on the ease of doing business rankings, and the OECD high-income group’s average rank is 30th. In 2018-19, New Zealand repeats as world’s easiest place to do business, followed by Denmark 4th; the Republic of Korea 5th; the United States 6th; the United Kingdom 8th; Norway 9th, and Sweden 10th.
“The continuous pace of reforms in the OECD high-income economies is particularly welcome as these economies lead the world in setting best practices for business regulation,” said Rita Ramalho, Senior Manager of the World Bank’s Global Indicators Group, which produces the study. “Further improvements to the business climate this year demonstrate a commitment to development.”
With a record four reforms in the past year, Israel has demonstrated a strong commitment to its reform agenda. The country stopped requiring exporters to obtain a certificate of origin, cutting the time and cost required to comply with export documentation mandates. Authorities improved access to credit information by requiring that both positive and negative data on individual borrowers now be reported to credit bureaus. Israel introduced an electronic system for filing and paying value added taxes and social security contributions, reducing the time companies must spend fulfilling fiscal obligations. The country also lowered its corporate income tax for the fiscal year 2018 (the year measured by Doing Business).
The United States introduced three reforms in the past year. The country introduced online filing of the statement of information for limited liability companies, making business registration faster. The United States improved its judicial system by introducing electronic filing and electronic payment of court fees. It also reduced corporate income taxes for the fiscal year 2018.
Belgium, Greece and Lithuania carried out two reforms each. Greece streamlined its business registration process, cutting the time it takes for an entrepreneur to set up a business to four days from 12.5 days. Belgium made starting a business easier by eliminating a paid-in minimum capital requirement to start a new limited liability company. Company founders are now only required to prove sufficient equity to carry out operations in their financial plans. Belgium also reduced corporate income tax rates (fiscal year 2018), increased the national interest deduction rate, and lowered rates for social security contributions paid by employers.
Other OECD high-income economies implementing reforms included Australia, Chile, Denmark, Finland, Germany, Hungary, the Republic of Korea, Poland, the Slovak Republic and Spain.
Chile, Finland, and the Slovak Republic all made starting a business easier, while Lithuania and Poland carried out reforms in the area of getting electricity. Poland made getting electricity faster by implementing a new customer service platform making it easier to track applications for new commercial connections. Lithuania launched an integrated digital application for getting power.
Hungary and Korea carried out one reform each in the area of paying taxes by improving their electronic platforms and online filing systems. Denmark eliminated fees for building permits. Germany made enforcing contracts easier by introducing electronic filing of initial complaints and allowing electronic process serving without the need for paper documents.
Three OECD high-income economies, however, made it more difficult to do business in certain areas. For example, registration time increased at the land registry in Poland and Latvia increased corporate income taxes for the fiscal year 2018.
The full study and its datasets are available at www.doingbusiness.org
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[1] The OECD high-income economies are: Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, United Kingdom, United States
