Doing Business - Singapore vs Switzerland
Business expansion beyond one’s national boundaries has become an increasingly common and obvious consideration for businesses in the present day economic environment. However, setting up a business in the wrong jurisdiction can prove to be a fatal and costly mistake. Most entrepreneurs and investors tend to consider only certain isolated factors while deciding on a foreign jurisdiction and often lose sight of the vast difficulties of pioneering a new territory. It is easy to overestimate the attractiveness of a foreign business location. Hence, a careful consideration of opportunities, strengths, weaknesses and risks associated with setting up a business in a given market is imperative. In this regard, country guides on business environment are a useful tool that help to compare and contrast two or more business locations.
- The World Bank has consistently ranked Singapore as the world’s easiest place to do business. The country held its number one position since 2010 in the latest edition of the ‘Doing Business Report’. Singapore’s high ranking on the index implies that its regulatory environment is most conducive to starting and operating a business. Switzerland on the other hand was ranked #26. Singapore’s strengths are most visible in the areas of enforcing contracts (ranked #1), paying taxes (ranked #5), protecting investors (ranked #1) and starting a business (ranked #10). Switzerland demonstrated a huge differential gap when compared to Singapore on the same parameters. The country ranked #46 for enforcing contracts, #19 for paying taxes, #105 for protecting investors, and #69 for starting a business. While it takes 6 procedures and 20 days to open a company in Switzerland, it takes only 24 hours and two procedures to incorporate company in Singapore.
- Singapore is the eighth-best country in the world for business according to Forbes ‘2015 Best Countries for Business’ Index while Switzerland is the twelfth best. The reasons for Switzerland’s lower ranking is due to factors such as red tape (Singapore ranked #10 vs Switzerland’s rank #58), investor protection (Singapore ranked #1 vs Switzerland’s rank #92), and tax burden (Singapore ranked #5 vs Switzerland’s rank #18).
- The PWC, IFC, World Bank’s ‘2015 Paying Taxes Report‘ ranks Singapore #5 for ease of paying taxes while Switzerland ranks #19.
- Singapore’s 11th position in Forbes’ ‘2009 Tax Misery & Reform Index‘ indicates that it imposes a low tax burden on its residents while Switzerland’s 41st position suggests that its residents are subject to higher tax burdens. Combined highest personal income tax rates vary across Switzerland from approximately 20% to over 45%. Singapore follows a progressive personal income tax rate starting at 0% and ending at 20% for income above S$320,000. Singapore’s corporate income tax rate is 17% while Switzerland imposes a corporate tax rate of 8.5% at the federal level and a cantonal rate of up to 20%.
- Other surveys that point out to the startling difference in taxation between Switzerland and Singapore are the World Bank’s ‘2016 Doing Business Report‘ that ranks Singapore #4 for paying taxes while relegating Switzerland to the 16th position and the 2015 ‘Best Countries for Business Index’ by Forbes where Singapore ranks #5 for tax burden while Switzerland ranks #18.
- Countries that enforce a strong intellectual property regime have often proven to be the most innovative and prosperous. In this regard, Singapore offers the second-best IP protection regime in the world as per the World Economic Forum’s ‘2014-2015 Global Competitiveness Report‘. IP protection in Switzerland is considered the fourth-best according to the report.
- Although Switzerland beats Singapore (ranked #2) as the world’s most competitive economy in the World Economic Forum’s ‘2014-2015 Global Competitiveness Report‘, Singapore’s institutions, infrastructure, goods market efficiency, higher education & training and financial market development were better ranked than Switzerland’s.
- The Heritage Foundation’s ‘2015 Index of Economic Freedom‘ ranks Singapore as the second-freest economy in the world while Switzerland’s is the fifth freest. Singapore’s business freedom score of 96.9 demonstrates its prowess over Switzerland, which scored only 78.1 points in comparison. Fiscal freedom is a second area where Singapore outperforms Switzerland with score of 91.2 versus 70.3. This can be attributed to Switzerland’s tax system that is more burdensome at the cantonal levels than it is at the federal level.
- Singapore is the third most competitive economy in the world according to IMD’s “2015 World Competitiveness Yearbook‘ while Switzerland’s economy is the fourth-most competitive.
Openness to trade
- The World Economic Forum reaffirms that Singapore’s economy is the most open trade by ranking it #1 in its ‘2014 Global Enabling Trade Report‘. Switzerland trailed behind in the seventh spot. Singapore places first for border administration and infrastructure; second for market access and operating environment. The trade-weighted applied tariff rate amounts to almost zero (0.03%, the second lowest), as 99.9 % of imports enter duty-free. Importing and exporting goods requires little paper work (four documents on average), is swift (three to five days on average), and inexpensive.
- The ‘2014 Corruptions Perceptions Index‘ released by corruption watch-dog Transparency International unveils that corruption is perceived to be low in Singapore (ranked #7 on the index) while Switzerland is perceived to be less corrupt on a comparative basis (ranked #5).
- Singapore has the highest public trust of politicians and #2 in the least burden of government regulation according to the WEF’s ‘2014-2015 Global Competitiveness Report’. By contrast, Switzerland ranks #8 and #12 on the same parameters.
- In 2010, the Political and Economic Risk Consultancy (PERC) accorded Singapore the status of having the most efficient bureaucracy in Asia.
- Aon Consulting’s ‘2010 People Risk Index‘ establishes that Singapore is the third-lowest risk city in the world for employing people while Zurich (Switzerland) is the sixth-lowest in terms of risk associated with recruiting and employing staff.
- Singapore has maintained the top position in BERI’s ‘Labour Force Evaluation Measure‘ for more than 30 years asserting that it has the world’s best labor force. Switzerland ranks #4 on the index.
- In 2010, INSEAD ranked Singapore’s workforce as the sixth-best in the world.
- Gallup’s ‘2010 Potential Net Migration Index‘ finds Singapore to be the most desirable immigration destination while Switzerland is only the fifth-most desirable.
- In 2010, ECA International’s ‘Location Ratings System‘ ranked Singapore #1 as the best location in the world for Asians to live while Bern (Switzerland) ranked #13.
- Singapore ranks #2 for financial quality of life of its expats in the ‘2015 HSBC Expat Economics Report‘ while Switzerland ranks #15.
AT-A-GLANCE COUNTRY RANKINGS: SINGAPORE VS. Switzerland
|Year||Category||Singapore’s Rank||Switzerland’s Rank||Source|
|2016||Ease of Doing Business||1||26||World Bank, 2016 Ease of Doing Business Report|
|2014-2015||World’s Most Competitive Economy||2||1||World Economic Forum, Global Competitiveness Report|
|2014||Country Most Open to Trade||1||7||World Economic Forum, Global Enabling Trade Report|
|2014||Country with Least Corruption Perception||7||5||Transparency International’s Corruption Perceptions Index|
|2015||World’s Best Country for Business||8||12||Forbes’ Best Countries for Business Index|
|2015||World’s Freest Economy||2||5||Heritage Foundation’s Index of Economic Freedom|
|2015||World’s Most Competitive Economy||3||4||IMD, World Competitiveness Yearbook|
|2015||Ease of Paying Taxes||5||19||PWC, IFC, World Bank’s 2015 Paying Taxes Survey|
|2010||Most Desirable Immigration Destination||1||5||Gallup Potential Net Migration Index|
|2010||Best Place for Asians to Live||1||13
|ECA International’s Location Ratings System|
|2010||World’s Lowest Risk City for Employers||3||6||Aon Consulting’s People Risk Index|
|2015||World’s Best Financial Quality of Life for Expats||2||15||HSBC’s Expat Economics Report|
|2010||World’s Best Labor Force||1||4||BERI’s Labor Force Evaluation Measure|
|2009||Country with Lowest Tax Misery||11||41||Forbes Tax Misery and Reform Index|