What Makes Singapore Score Better Than Denmark as an Investment Destination?

The last few years have seen a major transition in how entrepreneurs perceive the location which is best suitable for their businesses. Earlier they used to think on terms of migrating to a city within the same country that would offer the best potential for their kind of business. But now hassle free company incorporation in Singapore has made doing business easy and fruitful.

However with globalization of economies and the geographical barrier been narrowed down over the years, entrepreneurs have now begun to consider incorporating their company in the most suitable jurisdiction across the world. Many agencies which prepare statistical data on various parameters that define different aspects of economy now play a vital role in helping entrepreneurs decide whether the economic condition of a particular jurisdictions meet the requirements to cater to their business needs specifically or not.

The surveys use parameters like bureaucracy levels, taxation, social and political stability, availability of infrastructure, legal barriers, openness to trade, etc. to calculate which countries fare better and is a good investment destination.

In this article we shall compare the economies of Singapore and Denmark based on such parameters and observe which of them serves as an easier place to do business in is. People looking for company incorporation in Singapore or Denmark should read this piece carefully.

Key Indicators

Singapore has been ranked #1 for ‘Ease of Doing Business’ as per World Bank, Doing Business Report. Denmark follows four positions behind at #5 rank. This in itself is an important indicator which goes a long way in establishing that Singapore is second to none and is easiest place to conduct business from. This point can be ascertained by the fact that company incorporation in Singapore is as easy as a cake walk.

On the economic front, Singapore is the 2nd most competitive economy in the world as per World Economic Forum, Global Competitiveness Index and also the 2nd freest economy worldwide as per Heritage Foundation, Index of Economic Freedom. Denmark is ranked at #8 and #11 positions respectively.

Singapore also stands at first position in terms of being a ‘Country Most Open to Trade’ and having ‘World’s Best labor Force’ as surveyed by World Economic Forum, Global Enabling Trade Report and BERI, Labor Force Evaluation Measure respectively. Denmark is ranked at #3 and #12 positions respectively as per these surveys.

Singapore is also ‘World’s Best Place for Asian Expats’ as per ECA International, Quality of Living Rankings while Denmark is 4 notches behind at #5 position. Similarly, Singapore has got world’s second best IP Protection while Denmark has the 6th best IP protection as per World Economic Forum, Global Competitiveness Index.

Tax Rates

Singapore is known for its awesome tax regime. It possibly offers one of the lowest corporate tax rate in the world. While established companies are taxed at 17% for incomes above $3,00,000 and 8.5% for incomes up to $3,00,000, the new start-ups are exempted from Corporate tax on income up to $1,00,00 for first three years of operation; a special incentive to encourage increase of offshore investments and provide the much needed cushion to new ventures.

Besides, it also levies low rates of personal tax and no tax on dividends and capital gains. What more? Income generated by a company worldwide but not repatriated to Singapore is totally exempted from corporate tax.

On the contrary, Denmark imposes one of the highest taxes in the world. Income tax rates are progressive in nature and peak at 51.5% while the Danish corporate tax rates are levied at 25% and so is the VAT. Similarly dividend income and capital gains are also highly taxed and varies from 28-42% depending upon income levels.

Due to its low tax rates and ease of paying taxes, most of the population in Singapore diligently pay taxes and do not avoid it. Singapore is ranked #4 for ease of paying taxes as per PWC, IFC, World Bank’s ‘2011 Paying Taxes Report’ and #11 as per Forbes’ ‘Tax Misery and Reform Index’. Denmark is positioned at #15 and #40 as per both indices respectively.

Competitiveness on Global Front

Many factors such as high quality of education, availability of skilled taskforce, efficient governance, lack of corruption and strong infrastructure make Singapore the second most competitive economy in the world and therefore an excellent choice for entrepreneurs.

However factors such as high level of corruption, burdensome taxation and government regulations, restrictive labor laws, etc. make Denmark less competitive on the World chart and a not so favorable place to do business in.

Global Trade Opportunity Excellent border administration, low taxation, friendly custom policies, low tariffs and high quality transport infrastructure are few factors that make Singapore more open to global trading lending it a superior edge.

Tariff structure, heavy taxation and lack of foreign market access shut many doors in Denmark for global trading opportunities.

As per World Bank’s ‘2012 Doing Business Report’, Singapore is the world’s best country in terms of trading across border while Denmark scored 7th rank. Businessmen who undergo company incorporation in Singapore accentuate the fact that Singapore is better than many other destinations like Denmark.

Task Force

Singapore ranks much above Denmark in terms of safety for employees, and labor market efficiency. BERI’s ‘2011 Labor Force Evaluation Measure has ranked Singapore as #1 in the world while Denmark was ranked #12.

Quality of Life

The quality of life for residents and expats in Singapore is par excellence. It is the World’s most favorite immigration destination as per Gallup’s 2010 Potential Net Migration Index; it is also #1 place for Asian expats as per ECA International’s ‘2010 Location Ratings System while Danish city of Copenhagen trailed behind to secure 5th position as per the Index.

The above factors are clear indicators of Singapore being a better and easier place to do business in as compared to Denmark. Thus companies or entrepreneurs looking forward to company incorporation in Singapore should not consider Denmark as a choice.