Over the past few years, economic headwinds and government shortfalls have started to push governments in most developed nations to start revising business tax rates upward. The UK, for example, announced an increase from 19% to 25% for companies with more than £250,000 in annual profits. In the US, the recently-passed Inflation Reduction Act came with a provision levying a 15% minimum tax rate on large firms to go along with the 21% base rate already on the books. And the EU, for its part, is on the verge of a bloc-wide business tax overhaul that promises to simplify its business tax codes—including the imposition of a 15% minimum business tax.
Taken together, the recent changes represent the most significant simultaneous tax increases on business in decades. Plus, their scope makes it such that few firms can avoid them without relocating operations or making significant organizational changes. For new businesses, however, that’s not so much of a problem. They, by contrast, can choose a more business-friendly country in which to incorporate, thereby sparing their bottom lines the pain of the recent tax increases. To help entrepreneurs looking for the most advantageous nation to set up shop, here’s an overview of four business-friendly countries to found a new venture within.
Of all of the countries on this list, Macedonia features the lowest business tax rates, with its 10% flat tax structure. That means businesses incorporating there won’t have to worry about a graduated tax rate hampering their growth prospects. And the rate’s low enough that even a nascent venture can afford it without much difficulty. Plus, Macedonia’s surrounded by EU member states, which represent the lion’s share of its trade relationships. In addition, the nation features generous paths to legal residency and citizenship, especially for entrepreneurs who employ Macedonian nationals within its borders.
The next country on the list is Georgia. It features a flat business tax rate of 15%, which offers a decent tax cut relative to the rates in more developed countries. Plus, Georgia’s tax law specifies that businesses only have to pay taxes on profits they distribute, not all income. That means a young business can reinvest in itself to grow and lower its tax liability at the same time. And now may be the perfect time to start a business there. Georgia’s economy is booming due to an influx of investment and the country’s now decades-long track record for stability. Plus, its rising banking sector is one of the most stable in the world.
According to local business legal expert Lika Tsintsabadze from the NOMOS law firm, Georgia’s also one of the easiest places to start a business in eastern Europe, thanks to its comprehensive Law of Georgia on Entrepreneurs. She says, “The process of registering a business in Georgia is about as simple as can be. After paying a registration fee and submitting a shareholders agreement, all you need is a legal local address. That’s about it. An entrepreneur can even relocate here and pay just 1% in taxes on their small business income as part of the country’s aggressive economic development program.”
Another option for entrepreneurs looking for a business-friendly country within which to find a business in Serbia. Like Georgia, it features a flat 15% business tax model, and experts predict that the rate should remain stable for the foreseeable future. Also, it’s remarkably easy to start a business there, with an analysis by the World Bank finding that the process takes less than 12 days in most instances. Combine that with low operational overhead for things like electricity, postal services, and vehicle maintenance, and you’ve got the makings of a great place to start a business.
With its rock-bottom 10% business tax rate, Bulgaria would have been at the top of this list, were it not for one thing. As an EU member state, the coming 15% minimum business tax agreed to by the bloc may soon apply. However, starting a business in an EU member state has its advantages. With easy access to talent from across the continent and an available path to legal residency for entrepreneurs, there’s quite a bit to like in Bulgaria. The only downside is that Bulgaria isn’t part of the Schengen Area, which limits the movements of EU nationals there. However, they’re in the process of joining, so that may not be a problem for much longer.
The bottom line here is that all four of the countries identified here make for appealing destinations for entrepreneurs looking to start a business. And they’re likely to get even more appealing as the bigger developed economies continue to raise tax rates on businesses. If nothing else, it’s reasonable to expect a flood of new business activity in these places in the years to come. And anyone fortunate enough to be a part of that should reap a significant financial windfall.