Why should you move your business out of India?

Tuesday, 07 November 2006

A recently publised World Bank report on Business Friendliness data from 175 countries around the globe honour India as:

* The world's most extensive tax administration system.

* India's taxation law contains 9,000 pages to protect the corrupted life style of caste clad civil servants.

The report says that an Indian medium-size company should pay a total tax rate of 81.1% on profit and will eat 264 hours of administrative burden and cause 59 steps for submission.

Even though such a high rated tax system is in place, the tax revenue receipts have remained below 10 per cent of GDP of Indian economy due to corruption of the civil service regime.

Enforcing commercial contracts in India is not an easy job. It can take 56 procedures and 1420 days and will cover only up to 35.7% of the debt!

The time to resolve bankruptcies in India take 10 years. Import and export procedures in India is a very hard process due to the restrictions of security regime. This part is rated at 139.

In India,the number of steps entrepreneurs can expect to go through to launch of a new business is 11 and it takes on average 35 days, and the cost required as a percentage of gross national income (GNI) per capita is 73.7%.

Dealing with licences in India take 270 days and the number of procedures counted as 20. It requires an amount closer to of 606 % GNI (Income Per Captia).

The World Bank's Doing Business Project assesses how many obstacles the tax system puts in the way of a business in every one of 175 nations on earth. The aim is to encourage faster administration, leading to more profitable business activities and hence economic growth. Reduced paperwork and lower taxes are the hallmark of wealthier nations, the World Bank notes. The bureaucrats of India are in love with tax rules.

Over all, India is ranked with a low rating of 134.

Corrupt practices are most likely to be found in the highest taxing nations, as entrepreneurs find themselves forced to bribe officials in order to cut through red tape or just to operate outside of the official economy altogether.

Middle Eastern states such as the United Arab Emirates and Asian locations like Hong Kong come in the top five of easy tax locations. The place on earth with the most difficult tax regime is the former Soviet republic of Belarus.

Report on India