The Netherlands is making compliance straightforward. Many regulatory processes have been digitised, improving efficiency and security of data exchange between tax payers and tax revenue services.
The Dutch government is responsive and often willing to provide guidance to help businesses gain a clear understanding of new legislation. It conducts consultations with business groups before new measures are introduced, aiming to ensure their application is practical and user-friendly. It can be hard to secure employees in the Netherlands. In a strong economy, employers need to offer competitive benefits if they want to attract the most skilled workers to facilitate growth.
The banking challenge — As in much of Europe, opening a bank account in the Netherlands involves enhanced KYC (Know Your Customer) requirements. A high level of due diligence is required and companies will need to provide detailed information about their operations in other jurisdictions.
The financial services industry is the lifeblood of the British Virgin Islands (BVI). Within days of Hurricane Irma in 2017, the company registry was back up and running - testament to the government's prioritisation of the sector.
The BVI is one of the world's largest centres for the incorporation of companies, especially those which facilitate cross-border trade, investment and business. The incorporation process is extremely efficient and can take only a matter of hours. Further, the BVI's government offers lower fees than the governments of similar economies, including the Cayman Islands.
Talent pool — As with many other island jurisdictions, the BVI promotes the hiring of its own citizens over foreigners, leading to a complexity score of 9 out of 10 for seconding workers from overseas. Strict immigration controls mean that only highly-skilled workers can move there.
In Denmark, establishing and operating a business is relatively easy because nearly all document submission takes place online, making compliance straightforward and fast.
Setting up a business authority company ID or tax ID can usually be done within 24 hours. Furthermore, all statutory filing documents are submitted electronically. Once a company signatory has been granted digital access rights they are allowed to sign documents electronically, removing the need for hard copies.
Standardised employee benefits — Benefits are agreed by representatives for workers, employers and the government and are reviewed triennially. Payroll processing systems are established to manage those benefits.
Switzerland offers a very stable legislative environment combined with currency and price regularity and a highly professional international banking system.
With a business-friendly attitude, the country's tax authorities provide companies with guidance and support to ensure they can comply with laws and legislation. Contacting them is easy and most problems can be resolved with a phone call.
Direct democracy meets liberalism — Switzerland has a distinctive political system and any legislation that is passed must be 'put to the people'. These consultations take time, which gives companies ample warning of putative changes. New legislation is usually considered very carefully before it is put to the vote.
Swiss employers and employees negotiate contract terms with a high degree of freedom and terms can even be agreed orally. While severance pay is legally required in 87% of jurisdictions, it is not in Switzerland. There are basic national stipulations, such as a minimum of four weeks paid annual leave. However, the finer details of each contract are agreed individually. This system allows both parties to achieve the terms they want.
Israel scores well for simplicity because its government has worked hard over the last 20 years to create an attractive environment for overseas businesses - its Ministry of Economy even has a dedicated foreign investment arm.
Rules and regulations around hiring, firing and paying employees are usually straightforward. In addition, multinationals do not need a local resident shareholder or director and, as long as a local fiscal representative is appointed, firms can be entirely foreign-owned. This makes it relatively uncomplicated to establish a presence in the country.
Although Israel's official language is Hebrew, foreign companies can apply for special dispensation that allows them to keep their documents and tax records in English, removing an otherwise painful barrier to entry.
Straightforward reporting requirements — Tax invoices can be issued either electronically or manually, but most ongoing reporting is done online. The outcome is that, despite some unique local regulations, Israel is a relatively easy country in which to do business.
Paraguay is relatively light on legislation, compared with its South American neighbours.
It has minimal reporting requirements, domestically and internationally. For example, it is not compulsory to maintain Transfer Pricing Files (domestic) or comply with Base Erosion and Profit Sharing regulations (international - OECD). Most jurisdictions implement these standards and Paraguay is highly unusual in abstaining from them.
Despite undemanding regulations, penalties for tax offences can be severe. However, companies can arrange to pay them in monthly instalments to help avoid cashflow crises.
Stable microeconomic conditions — Paraguay suffers from a reputation for corruption and a lack of transparency. However, most of these problems are confined to government and publicly owned companies and do not affect the day-to-day running of private businesses.
Corruption is diminishing, thanks to a government crackdown. In April 2019, a high-profile raid took place at the home of the Director of the Customs Department of Specialised Surveillance, who had been accepting bribes from drug traffickers. The government is promoting transparency. In 2014, it passed a law granting citizens free access to certain information sources including the 'Portal Paraguay' website, which lists the salaries of public officials including politicians and judges.
While Thailand's tax and accounting system is quite complex, it scored highly for simplicity because its regulatory landscape and employment rules are business-friendly.
Despite frequent changes in government, the country's leadership is consistently pro-business and keen to attract foreign investment. The National Competitive Enhancement Act waives the need for work permits for highly skilled overseas workers and investors. Incorporation is relatively simple. Once all documentation has been prepared, establishing a company can take less than a day. A local company secretary or director is not required, so incorporation can be carried out from anywhere in the world.
Staffing is straightforward — Hiring and maintaining a local workforce is a relatively straightforward process in Thailand. Employee rights are enshrined in law but few benefits are mandatory and they are easy to administer. The Labour Department sets the health and safety requirements for companies in each industry but the requirements are not complex or overly onerous.
As a financial services specialist, Jersey has streamlined its legislation - as evidenced by the Companies (Jersey) Law 1991 - to allow for easy incorporation and operation in this sector. Companies setting up on the island can expect political stability and a simple tax system which is straightforward and not liable to sudden change.
The island's legislation is highly aligned with international standards and is very likely to remain constant over the next five years (true of only 17% of jurisdictions). In fact, as a leader in its field, Jersey plays a role in setting international standards, particularly in trust law.
Fast incorporation — Incorporation is simple, especially for financial operations which can be set up in a matter of hours. Labour and raw material-intensive industries will face more challenges, such as strict housing laws and restricted transportation options.
The politically-stable, pro-business jurisdiction of Curaçao in the Caribbean is part of the Kingdom of the Netherlands. It is the second least complex jurisdiction and is oriented towards attracting foreign investment.
Its population speaks English, Dutch, Spanish and Papiamento (a Creole language) and has close ties to Latin America and the United States, making it a welcoming environment for multinationals. Foreign nationals can easily invest in real estate in Curaçao, unlike many other parts of Latin America where the process can be complicated.
Accounting is relatively easy because foreign companies are permitted to use their own accounting practices and do not need to ‘translate’ their books to local standards. Audits are only mandatory for larger companies with annual sales exceeding approximately 5.6 million US dollars.
Flexible labour market — The island’s labour market favours the employer. Zero-hour contracts – with no minimum hours guaranteed by the employer and no obligation on the part of the employee to accept work – are permitted in certain sectors to support entrepreneurs. Companies can give workers temporary contracts up to three times in a row and fire short-term employees without notice. Laying off longer-serving employees will involve significant costs.
Authorities have worked hard to ensure the Cayman Islands is a transparent and pro-business jurisdiction. This has helped it to achieve the lowest complexity score on our index. With its healthy economy, this is an easy place for foreign companies to operate.
The government has implemented an online platform, significantly speeding up the process of tax reporting.
Lines of communication — Financial businesses are supported by professional bodies which consult the Government, the Chamber of Commerce and regulators and communicate their findings to members. The Government is very engaged with the private sector and consults local businesses on draft laws before they are finalised.