World Bank issues report on the ease of doing business in 175 countries
Regnum, Russia
Sept 7 2006
The World Bank and the International Finance Corporation have released
a report Doing Business 2007, reports REGNUM correspondent. The report
ranks 175 countries as to the ease of doing business there.
In terms of attractiveness for business, Kyrgyzstan has gone up from
104th to 90th place from 2005 and is now more attractive than Turkey,
China and Russia, but less attractive than Mongolia and Kazakhstan.
Georgia has jump up from 112th to 37th, Kazakhstan from 82nd to
62nd place. Now the leaders of the region are: Armenia (34), Georgia
(37) and Kazakhstan (62). Tajikistan and Uzbekistan have the worst
positions among the CIS countries – 133rd and 147th, respectively.
Russia is 96th – lower than China, but higher than Brazil and India.
Ukraine and Belarus are 128th and 129th, respectively.
The top reformers are Georgia, Romania, Mexico and China. In the CIS
Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia
and Ukraine have carried out, at least, one reform. Tajikistan have
carried out no reforms, while Uzbekistan has made business an even
harder job for its companies.
The report gives a review of the reforms carried out in the past
year. For example, Georgia reduced the size of the minimum capital
required for starting a business from 2,000 to 200 lari ($85).
Business registration rose by 20% between 2005 and 2006. Reforms in
customs and the border police simplified border procedures. It took 54
days to meet all the administrative requirements to export in 2004 –
it now takes 13.
Armenia brought together the procedures of new business registration
in tax authorities and social security funds thereby reducing the
time of new business starting by one day. The country softened the
requirements for construction business licensing and simplified the
property rights transfer procedure. Armenia enhanced the rights of
creditors by allowing them to claim guarantees outside courts.
Kyrgyzstan introduced a fixed noratial tariff for land transfer
contract certification. The tariff has replaced an interest
honorarium. This reform has reduced the cost of property right
transfer from 5.25% to 1.99% of the cost of the property. The country
also allowed non-court guarantee and pledge claims, which has made it
easier for creditors to get back their debts. The period of compulsory
employee dismissal notification was reduced from two to one month.
Azerbaijan simplified the documentation requirements and reduced the
time of new business registration – from 115 to 53 days. The country
revised the Civil Code and enlarged the rights of creditors to claim
their unpaid debts. From now on, seized property will be sold through
a public auction. This makes the sale maximally profitable.
Russia reduced the single social tax and the size of pension
allocations and abolished 3 taxes: tax on securities, tax on the use of
"Russia" and "Russian Federation" and tax on forest. Besides, in Moscow
they will no longer demand that new businesses register their seals.
Ukraine formed a single body for new business registration: now
the procedures of registration in the pension, social security and
employment funds, in the fund of insurance against industrial accidents
and in the tax authorities (except for the registration for VAT) will
be carried out by one body. As a result, the number of steps for new
business registration has been reduced from 15 to 10 and the time –
from 34 days to 33 days.
Moldova reduced the number of licenses for business or commercial
activity from 400 to 128 and lowered the corporation income tax from
20% in 2004 to 18% in 2005 and 15% in 2006.
The first credit bureau of Kazakhstan has begun issuing crediting
reports on potential borrowers. Today, the bureau has information
(both negative – non-payment of loans, and positive – timely payment)
on 5.5% of Kazakhstan’s population. It gets the information from 29
commercial banks.
Belarus lowered the turnover tax from 3.9% to 3% and the transport tax
from 4% to 3%, but has much to do yet in tax reforms: if a company
in Belarus pays all the required taxes, it will have to pay 186%
of its profit. Belarus also sped up the process of new business
registration by obliging the committee registering new companies to
meet every week rather than once in two weeks. At the same time, the
country took a step back by prohibiting creditors to register their
pledge claims at notary’s office. Now they have to appeal to court.
Uzbekistan has made things worse for its business. The country imposed
a new tax on business – compulsory allocation to the school education
development fund. As a result, the tax burden on local companies has
grown from 106.3% to 122.3% of their profit. The local creditors have
become less protected in bankruptcy cases.
The report says that the key problems in the region are red-tape
in trade and complicated tax system. For example, in Kazakhstan
the export of a product takes 93 days and requires 14 documents. In
Belarus tax payments make up 186% of local companies’ profits, while
the procedures of their registration take 1,188 working hours.
The key indicators of the report are how much time and money is needed
for a new company to prepare all necessary documents, its activities,
trade operations, taxes and closing procedures.