Country Rankings - Denmark
Oct 25, 2017 Denmark: assistsUltimately, perhaps small businesses need more help. Tighter definitions might be start. Indeed, this references small companies, small firms, small businesses, SMEs, the self-employed, and individuals in businesses, being terms often used interchangeably, but in terms of tax outcomes, they can be miles apart in many jurisdictions, and governments are often guilty of blurring the lines too. Indeed, as Congress prepares to draft new tax laws to provide substantial tax cuts for many small businesses, agreeing what a small business is when developing policy could be a major stumbling block in the push towards tax reform. However, instead of waiting for small businesses – however we chose to define them – to fall down legal rabbit warrens, perhaps governments and tax authorities could be more proactive. Denmark, for instance, where almost 50 percent of SMEs make unintended errors in their tax filings, is launching a project to allow small businesses to have their tax returns vetted for mistakes before submission. This, in theory, is intended to provide a double dividend, reducing the chances that small firms will face long and costly tax audits, and freeing up tax authority resources to pursue actual tax evaders. No doubt, taxpayers in other parts of the world are hoping this is an idea that will catch on. Some governments, thirsty for revenue, might hope otherwise. Either way, Denmark can always be relied upon to spark a lively discussion about tax.
Sep 06, 2017 Denmark: hyggeDenmark is a benchmark country. It is the archetype of a high-tax, high-spend northern European economy. So, when politicians in various parts of the world debate fiscal policy, they sometimes ask the electorate if they would rather live in a country like Denmark in preference to their own i.e. would they be prepared to put up with high taxes in return for a welfare state in which nobody is left behind economically. Indeed, the small Scandinavian nation, barely twice the size of Massachusetts, became an unexpected focal point in the last election campaign, and was held up by Democratic candidate Bernie Sanders as a model of social democracy. Those on the right tend to argue of course that prosperity and individual liberty go hand-in-hand with low taxes and a small government. Singapore, for example, would be much closer to their ideal of a classically liberal economy than Denmark. However, as is usually the case in life, the answers aren't clear cut. Both countries (although Singapore is more akin to a city-state than a country), with their divergent economic models, are rich: Denmark's GDP per capita is well above the EU average; Singapore's is the best in Asia, and one of the highest in the world (although there is a separate debate to be had about how extensively that wealth is spread among the populace). And, arguably, overall, the inhabitants of each place are happy: Singapore is frequently rated as one of the safest cities in the world in which to live; Denmark is famous for its contented, laid back approach to life, and they even have a word for it – hygge. What's more – and serving to emphasize that we are living through strange, unpredictable times – recent tax developments in Denmark and Singapore should give politicians pause for thought when debating the merits of Singaporean dynamism and Danish hygge. For while the Danish Government is keen to cut taxes, Singapore is raising its level of taxation, largely to fund more comprehensive public services. What this shows us, perhaps, is that no system is ever going to be perfect, and that change, both incremental and revolutionary, including in tax policy, is permanent. For its part, the Danish Government is aware that high marginal tax rates, combined with a generous welfare state, is a disincentive to work. Conversely, Singapore appears to have come to the realization that its low-tax, low-spend paradigm cannot generate the revenues needed for high-quality education, health services, and infrastructure. Ultimately, perhaps the question should be not how much a government can raise in tax, but how well it spends it. I have never lived in Denmark, but I must admit that the prospect of seeing over half my income taken in tax, and my alcohol consumption drastically reduced due to eye-wateringly high prices (mainly due to tax) is not an attractive one. But then, by all accounts, given what they get back in return – in a word, Hygge – the Danes wouldn't have it any other way. So good luck to the Government if it can cut tax without also reducing rates of happiness. Similarly, it will be interesting to see if Singapore can maintain its position as one of the world's premier business and investment hubs, while asking those who run the businesses to pay more tax.
Oct 31, 2016 Denmark: surprisingGlobal competitive rankings, like the latest Doing Business Index from the World Bank, often throw up some surprising results. New Zealand usually performs well in such surveys, but who'd have thought that it is literally the best place in the world to set up and run a company from a regulatory, administrative, and tax point of view – better even than low-tax Singapore, according to Doing Business 2017? Or, perhaps even more startling, that Denmark – yes, high-tax, high-spend Denmark – the object of derision from the right and praise from the left, during the US presidential election campaign, is the fourth best place to operate a firm, exceeding laissez-faire Hong Kong as a business location? Similarly, Sweden's brand of social democracy is often criticized as overbearing and fiscally unsustainable. Yet, Sweden is just behind the United States in ninth place. If these results seem scarcely credible, it is probably because we are looking at them through a tax-focussed lens. And Doing Business shows there are a whole host of other considerations that go into the mix when investors decide where to set up a business. New Zealand's top score is attributable to several non-tax factors, including simple company formation and property registration procedures, hassle-free construction permit processes, strong minority investor protections, and the ease with which credit can be obtained. Sweden also scores quite highly in most of these categories, excelling particularly in the "getting electricity" segment of the index. It doesn't fair as well when it comes to getting credit or paying taxes though. The opposite also holds true; there are countries you'd think would be occupying the top spots in the league table but are only fair-to-middling, like Switzerland. Doing Business tells us that Switzerland's taxes are not overly difficult to comply with, but it's not a great place to start a business in a hurry, or to get credit. Dealing with construction permits is also difficult, and protecting minority shareholders virtually impossible. On the other hand, some of the findings are not so surprising for those who follow international tax developments. For instance, it doesn't come as a huge shock to find France down in 29th place. But, given the index includes 190 jurisdictions, this still isn't a disastrous score. And I'm sure the fact that France finished ahead of Switzerland in the table – two countries with something of tense relationship around tax and banking secrecy rules, as illustrated by the French tax authority's recent request for an unusually large amount of data from UBS – wasn't entirely lost on the French Government. Indeed, we are living in an era where the normal order of things is being shaken up on a regular basis. Think Brexit, Trump versus Clinton, and, perhaps the most unexpected event of all, India passing GST. We can now add to that list Wallonia's entrance onto the world diplomatic stage.
Nov 24, 2015 Denmark: competitiveThere's nothing rotten in the state of Denmark according to Bernie Sanders, the Democrat long-shot for the 2016 presidential race, who views the Scandinavian country as the sort of socialist utopia that the United States should be aping. His view has sparked one of the most unlikely US political debates of recent times. Naturally, most Republicans think Denmark is just the sort of high-tax, high-welfare, peace-and-love Nordic state that is the very antithesis of the American Way. But, in fact, both they and he are wrong; as is so often the case in such polarized debates, the truth lies somewhere in the middle. Yes, Denmark does spend generously on social programs (total public expenditure was 57 percent of GDP in 2014) and individual tax also exceeds 50 percent in certain circumstances, but it's also one of the most business-friendly countries in world. Its business tax regime is more competitive that America's, certainly. In fact, according to PwC's newly published Paying Taxes Index, it could be said that it's a more business-friendly than the US in general. According to this, Denmark's total tax rate (consisting of corporate, labor, and other taxes) on an average-sized manufacturing firm is 24.5 percent. In the United States it's 43.9 percent. In Denmark it takes 130 hours each year to comply with taxation. In the US it takes 175 hours. Hence, Denmark is in 12th place in the index, and is second among EU countries. The US is 53rd. The World Bank rates Denmark the third-best place in the world to do business, with only Singapore and New Zealand rating better. Here the US is a more creditable 7th, but you get my gist.
Apr 18, 2013 Denmark: mistreat ChinaOne country which is conspicuous by its absence from the TPP talks is of course China. Although there are ongoing negotiations between the Middle Kingdom and various other countries, and China has FTAs with a scattering of other countries, notably including ASEAN and New Zealand, on the whole it is lagging. And it considers itself as an injured party in trade affairs, complaining this week about the level of "dumping" and "counter-vailing" measures it is subject to, particular emanating from the USA. A lot of the problem revolves around the designation of China as a "non-market economy" (NME). For anyone who, like me, finds it extraordinary that China should still be regarded as an NME, a word of explanation is in order: an NME is a country in which the State subsidizes enterprises or indulges in other non-market behaviour, despite WTO rules against it. So, an NME is allowed to cheat, if you will; but the other side of the coin is that for an aggrieved counter-party, the burden of proof is lower in anti-dumping proceedings. China's accession agreement to the WTO allows it to retain NME status only until 2015; but the change is not in China's gift, and both the USA and the EU persist in regarding China as an NME, despite frequent requests from China for them to treat it as a market economy.
Oct 11, 2012 Denmark: Denmark has an attack of the BrusselsWhat has happened to Denmark? It used to be one of the bulwarks against assorted Brussels madnesses, but has turned left, and now, horror of horrors, one of its ruling left-wing coalition partners has thrown its lot in with the Tobin brigade, coming out in support of an FTT. But that's only one coalition partner, and Denmark wasn't included among the eleven member states which lined up later in the week in geometrical hari-kiri formation behind Algirdas Semeta. He's a Bad Thing, but he's not a country, so I can't give him an Execration, more's the pity. That's what you get if you put academics in charge of the real world.