Whether you own a small-scale startup or a multi-million dollar firm, compliance with human resource policies is essential. The HR department establishes the procedures, codes of conduct, and other rules and regulations that the employees have to adhere to.

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Bangladesh is strategically located on the world map and has a fast-growing economy. It also houses a massive youth population, providing a large market for your products or services.

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China’s market has grown by leaps and bounds in the last 20 years, making the country’s economy the second largest in the world. Foreign companies are increasingly venturing into China, either via direct investment or through cross-border transactions.

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Both the United States and Singapore have fast-growing economies with substantial potential for foreign investment. They are known for their competitive business environment and ease of doing business. But they are, of course, quite different from each other.

The US offers a massive consumer market with a population of 328 million. Household spending in the US amounts to more than a quarter of worldwide household consumption. Moreover, the US has signed free trade agreements with many countries, giving businesses access to millions of more potential customers.

On the other hand, the Singapore economy is mostly based on the manufacturing and service sectors, which comprises one-fifth and two-thirds of the output respectively. Factors such as Singapore’s connectivity to neighboring markets, friendly tax regime, good employer-employee relations, and strict rule of law have allowed the economy to grow rapidly over the years.

The USA vs. Singapore: Entrepreneurship Comparison

There are several aspects to be analyzed when determining which country to choose for expanding your business. Here is a head-to-head comparison of the two:

Ease of Doing Business

According to the latest World Bank’s annual ratings, the US is in 6th place among 190 countries. Singapore ranks even higher, securing the 2nd position. The high ranking of both economies shows that they have a productive regulatory environment.

The lower ranking of the US as compared to Singapore signifies the higher number of challenges associated with starting a business in that country. Major objectives such as choosing the type of business entity and paying corporate taxes is more convenient in Singapore.

For instance, incorporating a company in Singapore takes 24 hours, while the same task could take up to 6 days and involves 6 procedures in the US. Singapore has sound business laws and a higher degree of transparency.

Every state in the US has separate court systems and laws. Nevertheless, federal law usually takes precedence over state rulings.

Moreover, the jury is considered a protective shield against any misuse of power. Therefore, the judge rules on law-related matters, and the jury determines the facts. In rare instances, a judge may overrule a jury.

On the other hand, the legal system in Singapore has its roots in English Common Law. In 1969, the system of trial by jury was put to an end. Singapore ranks 13th when it comes to rule of law, while the US stands in the 19th spot.

Taxation

In the paying taxes section of the World Bank’s Doing Business report, Singapore ranks 5th while the US ranks 64th. The index is based on the number of tax payments, time taken for preparing, filing, and paying taxes, and the ratio of profits paid in taxes.

For example, in Singapore, a medium-sized enterprise would make 5 tax payments and take 82 hours in a year for preparing, filing, and paying taxes. On the other hand, in the US, a business of the same size and type would make 11 payments and take 175 hours to prepare, file, and pay taxes.

In the US, the federal income tax is at a progressive rate of up to 39.6% of the taxable income. The taxes for federal social insurance programs are levied separately. On the other hand, the progressive tax rate for personal income in Singapore is only up to 22%.

In fact, the US has a reputation of having one of the most difficult tax regimes in the world, which becomes a hindrance for startups. On the contrary, Singapore’s tax system is rather favorable for business development.

Overall, Singapore is more attractive for entrepreneurs when it comes to taxation. It features a single-tier tax system, double tax relief, and no tax on dividends and capital gains.

Intellectual Property Protection

Other than the business environment and tax regimes, protection of Intellectual Property (IP) rights enhances investor confidence. IP pertains to any invention, design, or brand over which a businessman has legal rights. Common kinds of IP include patents, copyright, trademarks, and design right.

As per the Global Competitiveness Report (GCR), Singapore stands at 2nd place while the US ranks 25th. The US has ratified international IP agreements such as the Berne Convention, the Paris Convention, the Madrid Protocol, and the Patent Cooperation Treaty. However, the US has not signed the Hague Agreement, which protects designs in different countries via a single filing.

Likewise, Singapore is a signatory to the Paris Convention, the Patent Cooperation Treaty, the Madrid Protocol, and the Berne Convention. Moreover, the Hague Agreement is also ratified by Singapore.

In Singapore, the expense of acquiring and in-licensing IP rights can be paid via cash or corporate tax rebates. This has been facilitated through the Productivity and Innovation Credit (PIC) scheme, which focuses on helping Singapore businesses invest in more value-added ventures.

Singapore is in the first spot for IP rights protection in Asia, which boosts confidence among entrepreneurs to help them grow, deploy, and manage their intangible assets throughout the region and beyond.

Competitiveness

In both 2019 and 2020, Singapore was recognized as the most competitive across the globe according to the Global Competitiveness Report by the World Economic Forum. Singapore is also known for its low corruption levels and government efficiency (albeit an authoritarian state).

The country also ranked 1st and 2nd for the efficiency of labor markets and financial market performance respectively. As far as infrastructure is concerned, Singapore secures the top spot in the world.

The United States follows Singapore at the second spot in the Global Competitiveness Report. Issues that weakened the US’s ranking include goods and market inefficiency and unwise government spending.

According to the Heritage Foundation’s 2020 Index of Economic Freedom, Singapore secured the first position, while the US stands at the 17th spot. Singapore proved to be more efficient than the US in most aspects, such as ease of starting a business, operating or shutting down a business, ease of international trade, and protection of property rights against corruption.

The World Competitiveness Yearbook is published by the Institute for Management Development (IMD) also places Singapore at the top spot as in global economic competitiveness. The US, on the other hand, declined to the 10th position from the 1st in 2018.

Foreign Investment Friendliness

In order to attract and maintain the foreign investment, it is important for countries to have laws and regulations in place to safeguard them. This is popularly measured by the Sense of Investor Protection Index in the Doing Business Report.

The index takes into account factors such as transparency of transactions and the power of the stakeholders to sue the directors in case of misconduct. Singapore has a score of 9.3 out of 10, while the US followed close by with a score of 8.3.

This establishes Singapore in the 2nd position and the US in the 6th position worldwide. Hence, both countries offer substantial protection to investors.

Workforce

In Singapore, you would be able to find a skilled and intelligent workforce that is trained to excel. Just like the US, there is no language barrier as the locals are fluent in English.

According to Business Environmental Risk Intelligence (BERI)’s Labor Force Evaluation Measure, Singapore houses the best human capital in the world. The US follows in the second position.

The WEF ranks Singapore as the 2nd best in labor-employee relations and the most productive labor force globally. On the other hand, the US sits at the 33rd and 6th on both these scales.

According to the Global Competitiveness Report, both the United States and Singapore have an efficient labor market. The US has a decent score when it comes to 4 sub-indicators, which are country capacity to retain talent, country capacity to attract talent, redundancy costs, and hiring and firing practices.

For other sub-indicators, the US had a fair performance as it ranked under 50 out of 148 for every sub-indicator. As far as women’s proportion in the workforce is concerned, the US scored better. Other than that, Singapore maintained a good score in most sub-indicators.

Benefits of Doing Business in the USA and Singapore

The United States and Singapore are both attractive venues for expanding your business. Here is an overview of some of the prime benefits of investing in the two countries.

Benefits of Investing in the US

A question that many foreign investors have on their minds is: Why invest in the United States? Here are the top 5 reasons to help you make up your mind:

Best Global Economy

The US is known for being the largest economy in the world. The country has an approximately 24% lead share in the world market. Moreover, it ranks 2nd on the Global Competitiveness Report, which evaluates the position of countries on the basis of factors like business dynamism, health, infrastructure, and market size.

Talented Workforce

The labor in the US is skilled, diverse, innovative, and mobile, making it highly versatile. The US has prioritized international collaboration with public and private sector companies so that the workforce is able to meet present century challenges.

Government Incentives

Several states in the US offer financial incentives to foreign business owners to help them set up their companies in a particular location. The commercial real estate taxes have dropped and tax credits are also given to investors.

Technological Advancements

Businesses in the US have ample access to advanced technology, which makes it more appealing for business activities. Many foreign companies choose to expand to the US just to take advantage of the advanced technological innovations to boost their productivity.

Protection of Intellectual Property

The US has a robust legal system for international investors to benefit from. The predictability and transparency of laws go a long way towards the protection of intellectual property rights. The legal system focuses on strict law enforcement to protect your business against infringement.

Benefits of Investing in Singapore

Singapore is an economic powerhouse, thanks to its business-friendly policies. Here are the significant benefits of expanding your business to Singapore:

Strong Economy

Singapore has a modern free-market economy that is based on finance, trade, and manufacturing. Services makeup 75% of the nation’s GDP and account for 80% of the labor force. Singapore has succeeded in achieving a low employment rate and a low inflation rate at the same time.

Favorable Tax System

Singapore has a simple and rational tax regime. It does not levy any tax on dividends or capital gains received from a company. This means that the shareholders can receive the dividends tax-free. Moreover, Singapore has one of the lowest value-added tax rates globally.

Reliable Legal Framework

Singapore’s legal system follows the pattern of the English common law. Singapore secures the first spot in Asia for the best intellectual property protection. With low levels of corruption and a robust dispute resolution mechanism, Singapore is the perfect place to gain entry into Asian markets.

Strong Government Support

The Singaporean government highly encourages innovation through incentives like FinTech sandboxes and SGInnovate. This makes it easier for small business owners to access communicate with mentors and venture capitalists. Small firms are given opportunities to innovate, scale-up, and globalize.

Quality Infrastructure

Singapore has a burgeoning economy due to its superior infrastructure. The country recently secured the top spot among 200 cities for the city infrastructure, which takes into account a variety of aspects such as healthcare, education, recreation, and transport.

Final Thoughts

The United States and Singapore are leading world economies that facilitate foreign businesses. The legal system in both these countries is robust and a highly skilled workforce is available. If you are eyeing the Asian market, Singapore is a great place to start. On the other hand, if your products or services are more geared towards a western or even global audience, then opt for the US as it has an efficient and conducive business environment.

For further insight about expanding to different markets around the globe, click here to explore our website.

Due to its reassuring macroeconomic status and an economy that’s performing well, Morocco has been able to attract quite a bit of investment recently. Although Morocco is much cheaper than Tunisia and Egypt, it certainly offers a much higher standard of living. Besides its astonishingly great labor force potential, Morocco offers the opportunity to enjoy political stability and a business-supportive legal and banking framework.

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If you are expanding your reach to a different country and setting up outreach programs to harness local talent, there are certain dos and don’ts that you need to keep in mind. Avoiding common mistakes and following the best practices will ensure that you get smooth access to top local talent and don’t run into any regulatory issues.

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For many employees, the three magical words that make their world a little bit more beautiful are, “Today is payday.”  Of course, a payday is a joyous event for almost every worker, but what about the people at the other end of the spectrum? They need to ensure that the payroll goes as smoothly as possible. However, that does not always happen.

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One of the world’s fastest-growing economies and one of the most populous countries in the world, India is a great place to expand your business for one main reason: access to affordable and competent talent. With 1.4 billion people, India is just behind China when it comes to population, and unlike China which is a highly concentrated “domestic-business-focused” market, India is relatively more open.

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Europe tends to take the top spot when it comes to “regions” or “continents” with the most complex payrolls. Thanks to the complexities of navigating multiple layers of European Union regulations and financial landscape, several European countries tend to be where it is most difficult to run a payroll, especially for a foreign business expanding to those countries.

It’s important to appreciate these complexities and account for them when you are planning to expand into another country. It will help you run a more comprehensive cost-benefit analysis of establishing an international entity and give you a more realistic idea of your entity setup timeline.

5 Countries with Some of The Most Complex Payroll Requirements

Several different factors can make navigating payroll in different countries complex and challenging, including cultural differences, local labor laws, unions, union-driven contracts, shared benefit responsibilities of corporate entity and government, employee taxation, etc.

However, not all countries necessarily have all the challenges. In fact, each country has its own set of challenges. So even if you have experience running an international payroll, you might not be able to translate that knowledge and expertise accurately for another country. This is where professional global expansion services can help you out.

Let’s take a look at five countries with unusually complex payroll requirements.

1.     Belgium

Belgium is considered one of the most complex countries for running a global payroll, thanks to its unique payroll and HR requirements. Some complexities include:

  • The country is one of the few (eight, if you consider the EMEA ones with that rule) where employees receive mandatory pay raises.
  • Even temporary employees or contractors receive a 13-month salary (one month’s additional salary as a bonus) in a year.
  • A holiday bonus on top of holiday pay, which is equal to 92% of an employee’s monthly salary.
  • Payroll needs to be submitted in multiple countries.

While heavily in favor of employees and people working in Belgium, these stipulations can be a bit challenging for the employers expanding there. Another secondary complexity that might arise from this payroll structure is compensation disparity for your employees in Belgium and other countries. And if you try and lower the base pay in Belgium to cover the additional perks the government is getting for them, you might have trouble attracting and retaining the top talent.

2.     France

France, the third-largest economy in Europe (After Germany and the UK), is quite near the top when it comes to payroll complexity. France takes data protection very seriously, and it even affects payroll processing legislation. But that’s not the entirety of the problem. The main challenge is that France’s payroll rules and regulations change quite abruptly, and employers need to keep up.

Some of the challenges include:

  • A complex pay-slip with around 40 lines and it’s accompanied by several other documents
  • Gross compensation, which is a crucial variable in compensation management and calculation, is open for interpretation.
  • The labor code (even if you discount the language difference and subtleties of legal language) can be difficult to navigate.

Another factor that makes payrolls in France unusually difficult to process and navigate is that labor laws allow unions to negotiate with employers. This doesn’t just make it extremely difficult for employers to fire anyone; it also means that employers have to take into account the compensations and benefits that they are supposed to offer to their employees, in addition to what they must pay under local laws.

3.     Brazil

In South America, Brazil used to have one of the most complex payroll requirements and regulations about two or three years ago, when the country was transitioning to eSocial. Now the shift is complete, but the complexity still exists, thanks to two main factors:

  • Involvement of labor unions which are present in each and every industry and are regulated by the ministry of labor (at least for taxation)
  • Frequent changes to the labor laws

Unions make things a bit costlier and more complex for foreign employers as they need to pay union dues tax, even if they are not in the union. Another challenge is the social security contributions, which are not uniform and determined by the pay scale but by the industry and risk. However, the ministry of labor provides proper guidance. One thing to note about Brazil’s eSocial is that any change you make in your payroll must be reported to the government right away (through the eSocial portal).

4.     China

Despite a laser focus on commerce and business, China is a difficult country to expand to and run payroll in. Some payroll challenges in China include:

  • The different minimum wages for permanent (monthly) and temporary employees(hourly)
  • Minimum wage changes every year and can also change on a semi-annual basis
  • Local governments can impose specific income and social taxes on payroll based on local requirements (like heating, cooling, cleaning requirements, etc.)
  • Overtime is different for weekdays and holidays.
  • Some weekends can be converted to working weekdays if employees take additional days off during two designated holiday periods.

In China, any policies (including payroll) are changed and enforced swiftly, and as an employer, your duty is to stay on top of such changes.

 

5.     Japan

Despite the fact that over 2.5 million tourists visit Japan each year, attracted by its natural beauty and unique culture, it’s a difficult country to navigate both socially and from a business perspective. It also offers numerous payroll challenges. It has a complex year-end tax adjustment system that can be challenging for a foreign company. Benefit taxation is also relatively difficult. The payroll slip also contains over 70 different categories, making it very difficult for foreign entities not familiar with local compensation practices and intricacies of the labor laws.

Conclusion

It’s important to note that most challenges are challenges only because you don’t have the right information and assistance to surmount them. The seemingly complex payroll requirements of certain countries will become a breeze if you expand with the right professionals and leverage the corporate maintenance services of a business that has experience and resources in navigating payrolls in over a hundred countries.

Establishing a global business entails making it marketable to several kinds of clients in a manner such that communication barriers do not come in the way. Therefore, hiring translation services can help fulfill a variety of the communication needs of your business.

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