The World Bank's 2007 Doing Business report, released on Sept. 6, ranked economies based on the quality of the business regulatory environment, which was calculated by measuring the difficulty of practices such as starting a business, obtaining required licenses, employing workers, trading across borders, and enforcing contracts.
For the second year, the United States ranked first for ease of employing workers. It also placed in the world's top 10 for ease of starting a business (No. 3), getting credit (No. 7), protecting investors (No. 5), enforcing contracts (No. 6), and registering property (No. 10).
However, the United States dropped seven places in the rankings of tax burden — from No. 55 in 2005 to No. 62 in 2006. The report estimates that American companies pay close to 46 percent of gross profit in taxes and spend 325 hours each year preparing, filing, and paying (or withholding) the corporate income tax, the value added tax, and Social Security contributions.
The Maldives, Ireland, and the United Arab Emirates were deemed the best economies for business with regard to paying taxes. The report indicates that businesses in the Maldives spend zero hours and 9.35 percent of gross profits on taxes, Irish businesses spend 76 hours and 25.8 percent, and businesses in the United Arab Emirates spend 12 hours and 15 percent.
The United States' rank for ease of dealing with licenses dropped from No. 18 in 2005 to No. 22 in 2006. The report estimates that it takes 18 procedures and 69 days to comply with licensing and permit requirements for ongoing operations in the United States; the process costs 16 percent of income per capita.
St. Vincent and the Grenadines earned top ranking for ease of dealing with licenses. In that country, the report estimates it takes only 11 procedures and 74 days to comply with regulations. The process costs 10.6 percent of income per capita. Japan and Thailand ranked No. 2 and No. 3 for ease of dealing with licensing requirements.
According to Paul Wolfowitz, president of the World Bank Group, the report's purpose is not just to showcase economies that support a healthy business environment, but also to highlight, for developing countries, those areas in need of reform.
"The report points out that in many economies the costs of doing business are so prohibitive that most entrepreneurs are forced to operate outside the formal economy,” he said in a statement.
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