The top and bottom Tax Regimes on the Planet
Titled Grant Thornton International enterprise report 2010, the paper sought the perceptions of owners and directors of Phbs (privately held businesses) on the issue of tax in their respective country.
The top and bottom Tax Regimes on the Planet
Phbs feel the effects of tax most because worldwide this group pays the most enterprise tax. Unlike Google and Apple, Phbs don't rapidly move funds globally to evade the taxman.
These Phb perceptions' are not unfounded. Agreeing to statistics in case,granted by Worldwide Tax (www.world-wide-tax.com), Singapore and Hong Kong share one of the lowest enterprise tax, personal revenue tax and value-added tax rates in the world.
Hong Kong in particular has a benign tax regime, with no Vat, sales tax, tax on venture revenue and no employment taxes paid by the employer. Corporate tax is only 16.5 percent.
Other countries in the low tax regime bracket include Bulgaria, Cyprus and Canada. Countries with a high rate of enterprise tax include Germany, France, Belgium, Brazil, Usa, India.
Countries with marginal revenue tax rates above 40% include Australia, New Zealand, Belgium and Germany.
In old decades countries like the Us and Japan cut sufficient tax rates to keep local enterprise globally competitive. However Governments are unlikely to cut tax in 2012. Governments instead will seek to sacrifice national debts accumulated from the recession by increasing taxes.
This will incentivise entrepreneurs from Europe, the Us and parts of Asia to join their start-up companies in Singapore and Hong Kong.
In March 1999, Bob Perlman, then Vice President of Taxes for Intel Corporation, told the Senate Finance Committee that if he had known at Intel's founding "what I know today about the international tax rules, I would have advised that the parent enterprise be established exterior the U.S. Our tax code competitively disadvantages multinationals naturally because the parent is a U.S. Corporation."
Put simply, if Government was an entrepreneur seeking funding with their current revenue model, no Vc would spend in them. Government are what money-men call 'uninvestible'.
Retaliate. Start-up in Asia.
Governments worldwide have something to learn from killing the goose that lay the golden egg. They are so desperate, so tax dependent, they will blindly chase a goose to every corner of the globe.
Many industries have in the last two decades undergone sizable revenue-model changes. Industries like energy, telecommunications and logistics have been disrupted by new, more intuitive ways of collecting revenue.
Sadly, Government has not adapted to the new ways consumers think and enterprise operates. Entrepreneurs can now protest with their feet by exciting operations offshore to low tax-bearing nations in Asia.
When making decisions to spend in Asia, entrepreneurs need to assess a country's tax risk. Despite the increase potential of many Asian countries, their taxation systems can sizable sacrifice a company's retained earnings.
China is a magnet for venture because of the nation's increase potential. However, China's tax law is one of the most complex in the world, incorporating every conceivable type of taxation that exists along with Vat, enterprise tax on services, corporate and personal taxes, and worldwide taxes.
India's enterprise community reports a high burden of indirect taxes along with Vat, Gst, commodity taxes, real and personal property taxes and excise duties. Complying to the tax codes of these two countries is challenging. Many businesses are too small to afford the pro outsource fees required to comply properly.
In stark contrast, the tax systems of Hong Kong and Singapore are very simple. The only major variation is Singapore has a goods and services tax. Both countries have low enterprise tax rates, many separate kinds of tax incentives and have a high degree of tax stability.
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