Doing Business - Singapore vs Austria
Choosing the right jurisdiction is crucial to the success of one’s business. This tenet applies to every business entity but more so for start-ups and SMEs. A careful analysis of strengths, weaknesses, opportunities and risks associated with setting up a business in a given market is vital. However, for many entrepreneurs, it is a project by itself to consolidate information and make a sound assessment based on the plethora of business studies, reports and surveys issued by various institutions every year. Hence, country guides on business environments are useful tools that help entrepreneurs compare business locations and make an informed decision.
Business Environment
- The World Bank has consistently ranked Singapore as the world’s easiest place to do business. Singapore has maintained its number one position for the fifth year in a row in its latest ‘Doing Business Report’. Its ability to stay at the top of the list proves that it has the necessary elements that make it a great place to start and run a business. Austria, on the other hand was ranked #21. Singapore’s strengths lie in the areas of trading across borders (ranked #1), protecting investors (ranked #3), starting a business (ranked #6) and paying taxes (ranked #5). Austria did not perform as well when compared to Singapore in the same areas. It ranked #19 for trading across borders, #32 for protecting investors, #101 for starting a business and #72 for paying taxes. When it comes to setting up a business, it takes eight procedures and 28 days to do so in Austria. To incorporate company in Singapore, it takes only 24 hours and two procedures.
- According to Forbes ‘2014 Best Countries for Business Index‘, Singapore is the eighth-best country in the world for business. Austria is on the list as well but comes in at #25. Austria has a much lower ranking is due to factors such as investor protection (Singapore ranked #3 vs Austria’s #32 rank), red tape (Singapore ranked #6 vs Austria’s #83 rank) and tax burden (Singapore ranked #5 vs Austria’s #60 rank).
Taxes
- The PWC, IFC, World Bank’s ‘2011 Paying Taxes Report‘ ranked Singapore #4 for ease of paying taxes while Austria came in #104.
- The World Bank ‘2011 Doing Business Report‘ also ranked Singapore #4 for paying taxes while Austria came in at #104. Singapore has moved up a notch since 2010 but Austria has come down three positions from #101 since 2010.
- When it comes to tax burdens, Forbes’ ‘2014 Best Countries for Business Index’ ranked Singapore #5 while Austria ranked #60. Prior to that, in Forbes’ ‘2009 Tax Misery & Reform Index‘, Singapore was ranked #11, indicating that tax burden on its residents were lower than in Austria (ranked #60). While personal income tax rates in Austria range from 0% to 50%, personal income taxation starts at 0% and ends at 20% for residents and remains at a flat rate of 15% for non-residents in Singapore. Austria’s corporate tax rate is 25% while Singapore’s corporate income tax rate is 8.5% for profits up to S$300,000 and a flat 17% for profits above that amount. Additionally, Austria imposes a 25% capital gains and 25% dividends taxation on companies. In Singapore, there are no capital gains or dividends tax. Goods and services tax is also much higher in Austria than in Singapore (20% vs. 7%). With 22 tax payments, Austria imposes more than four times the number of annual tax payments than in Singapore.
IP Protection
- Countries that have a strong intellectual property protection system in place have been proven to flourish the most. According to the World Economic Forum’s ‘2014 – 2015 Global Competitiveness Report‘, Singapore has the second-best IP protection regime in the world while Austria has the 16th best.
Global Competitiveness
- In the World Economic Forum’s ‘2014 – 2015 Global Competitiveness Report’, Singapore is the second-most competitive economy among 144 economies while Austria’s competitiveness rank is #21. Austria’s lower ranking is due its problematic factors including restrictive labour regulations, inefficient government bureaucracy, high tax rates and cumbersome tax regulations, lower access to financing, shortage of educated workforce and political instability. Singapore’s strong suit is precisely in these areas. Singapore has low corporate and income taxation, liberal labour laws, an abundant pool of funding, efficient and stable government and a talented workforce.
- In the Heritage Foundation’s ‘2011 Index of Economic Freedom’ Singapore emerged as the second freest economy among 183 countries while Austria came in as the 21st freest. Singapore scored high points on areas such business freedom, trade freedom, government spending, property rights, labour freedom and freedom from corruption. It has also improved in terms of fiscal, financial and monetary freedom since 2010. Singapore superceded Austria in terms of fiscal freedom (Singapore’s 91.1 vs. Austria’s 50.3 points), labour freedom (Singapore’s 98 vs. Austria’s 78.2 points) and government spending (Singapore’s 91.3 vs. Austria’s 28 points).
- In the IMD ‘2015 World Competitiveness Yearbook’ Singapore clinched the #3 spot while Austria was ranked in the 18th position.
Openness to Trade
- Data from the World Economic Forum’s ‘2014 Global Enabling Trade Report’ shows that when it comes to openness to trade, Singapore remains at the number one spot since 2009 while Austria drops to the 18th place from #14 in 2010. The report, which is conducted on 138 countries, saw that Singapore emerging tops due to its open trade policy, stable regulatory environment, low trade barriers, low tariff structure, efficient border administration, sophisticated transport and port infrastructure, logistics efficiency, and affordability of shipments. Austria did not perform as well as Singapore due to its cumbersome framework for hiring foreign labour, number and complexity of tariffs it imposes, its higher export and import costs, less efficient financial market and lower quality of port infrastructure.
- While Austria ranked #94 for domestic and foreign market access and #21 for efficiency of import-export procedures, Singapore ranked #1 on both counts. In terms of business environment Austria ranks #13 while Singapore ranks #2.
Bureaucracy
- According to the ‘2010 Corruptions Perceptions Index‘ released by Transparency International, a global coalition against corruption, Singapore was perceived as a “very clean” and non-corrupt country and was ranked #1. Austria was considered clean as well but was ranked #15 together with Germany.
- The WEF’s ‘2014 – 2015 Global Competitiveness Report’ also reveals that Singapore has the highest public trust of politicians and second with regards to the least burden of government regulation. In comparison, Austria ranks #36 and #83 respectively.
- In 2010, the Political and Economic Risk Consultancy (PERC) accorded Singapore the status of having the most efficient bureaucracy in Asia.
Labour Force
- Singapore’s top position in BERI’s ‘2010 – 2011 Labour Force Evaluation Measure‘ for more than 30 years is testament to its ability to attract and retain the world’s best labour force. On the other hand, Austria came in at #57.
- Aon Consulting’s ‘2010 People Risk Index‘ reveals that Singapore is the third-lowest risk city in the world for employing people while Vienna (Austria) is the 35th riskiest.
- The WEF ‘2014 – 2015 Global Competitiveness Report’ ranks Singapore #2 in terms of labour/employee relations. Austria is high on the list as well but ranks #12.
- In 2010, INSEAD ranked Singapore’s workforce as the sixth-best in the world.
Living Environment
- The ‘2010 IMD, World Competitiveness Yearbook’ shows that Singapore is the second best country to work in while Austria comes in at #16.
- According to Gallup’s ‘2010 Potential Net Migration Index‘, Singapore is the most desirable immigration destination while Austria is the 20th most desirable.
Country Rankings: SINGAPORE VS. AUSTRIA
Year | Category | Singapore’s Rank | Austria’s Rank | Source |
---|---|---|---|---|
2015 | Ease of Doing Business | 1 | 21 | World Bank, Ease of Doing Business Report |
2015 | World’s Most Competitive Economy | 3 | 26 | IMD, World Competitiveness Yearbook |
2014 – 2015 | World’s Most Competitive Economy | 2 | 21 | World Economic Forum, Global Competitiveness Report |
2014 – 2015 | World’s Best IP Protection | 2 | 16 | World Economic Forum, Global Competitiveness Report |
2014 – 2015 | World’s Freest Economy | 2 | 21 | Heritage Foundation’s Index of Economic Freedom |
2010 | Country Most Open to Trade | 1 | 18 | World Economic Forum, Global Enabling Trade Report |
2014 | Country with Least Corruption Perception | 7 | 23 | Transparency International’s Corruption Perceptions Index |
2014 | World’s Best Country for Business | 8 | 25 | Forbes’ Best Countries for Business Index |
2010 | Ease of Paying Taxes | 4 | 104 | PWC, IFC, World Bank’s 2011 Paying Taxes Survey |
2010 | Most Desirable Immigration Destination | 1 | 20 | Gallup, Potential Net Migration Index |
2010 | World’s Best Labour Force | 1 | 57 | BERI’s Labour Force Evaluation Measure |
2010 | Most Efficient Bureaucracy in Asia | 1 | – | Political and Economic Risk Consultancy Survey 2010 |
2010 | Best Country to Work In | 2 | 16 | IMD, World Competitiveness Yearbook |
2010 | World’s Lowest Risk City for Employers | 3 |
35 (Vienna) |
Aon Consulting’s People Risk Index |