Selecting the best country to start a business in 2024 requires a nuanced understanding of the global economic landscape and an awareness of the dynamic changes that define it. Entrepreneurs must weigh various factors, including shifts in economic growth, corporate tax regimes, market accessibility, and currency stability. The quest for a country with a conducive business environment becomes even more critical as the economy faces a projected slowdown.
Amidst the backdrop of tightening monetary policies and a looming cost-of-living crisis, the determination of the best country for business ventures in 2024 demands a careful examination of incentives, regulatory frameworks, and the potential for market penetration. We explore the intricate factors that shape the business landscapes of the United Arab Emirates, Switzerland, Singapore, and New Zealand. We offer insight for those looking to embark on new entrepreneurial journeys within these diverse economies.
The Global Business Landscape
Shifts in the Global Economy
The global economy is undergoing significant changes, with growth projections indicating a decline from an estimated 3.5% in 2022 to around 3.0% in both 2023 and 2024.
This slowdown is influenced by a variety of factors, including the tightening of monetary policies by central banks worldwide as they combat inflation, which has been at its highest in several decades. The impact of these higher policy rates is evident in the dampening of economic activities across the board.
Inflation, a critical concern for economies around the world, is expected to decrease from a peak of 8.7% in 2022 to 6.8% in 2023 and further to 5.2% in 2024.
However, the core inflation rate, which excludes volatile items such as food and energy, is anticipated to decline more slowly, with forecasts for 2024 being revised upwards. This suggests that the return to target inflation rates might not occur until 2025 or later for most countries.
Advanced economies are particularly affected, with growth forecasts dropping from 2.7% in 2022 to a mere 1.3% in 2023. In a scenario where financial stress intensifies, global growth could fall to about 2.5% in 2023, with advanced economies growing by less than 1%.
This would represent the weakest growth profile since 2001, excluding the global financial crisis and the acute phase of the COVID-19 pandemic.
The war in Ukraine and the ongoing repercussions of the COVID-19 pandemic continue to exert pressure on economic activity. However, China’s recent reopening is contributing to a faster-than-expected recovery, which could provide some relief to the global slowdown.
Despite these challenges, the World Economic Outlook Update from January 2023 projects a slight uptick in global growth to 3.1% in 2024, although this remains below the historical average.
The cost-of-living crisis, exacerbated by the pandemic, the conflict in Ukraine, and tightening financial conditions, is a significant burden on the global outlook. To address these issues, monetary policy is expected to remain firm to restore price stability. In contrast, fiscal policy should aim to alleviate cost-of-living pressures without undermining the efforts of monetary policy. Structural reforms and multilateral cooperation are also essential to improve productivity, ease supply constraints, and accelerate the transition to green energy, thereby preventing further economic fragmentation.
Important Factors to Consider When Starting A Business In A Foreign Country
When you’re considering a business venture in a foreign country, meticulous research and a solid grasp of the market environment are key. You’ll need to conduct thorough market research to understand the dynamics of the market you’re entering, identify your target customer base, and get a handle on the competitive landscape.
Location is a critical factor, with demographics such as population size, age distribution, and income levels playing a pivotal role in your decision-making process. Being close to transportation hubs is crucial to ensure efficient logistics if you’re dealing with perishable goods.
Cost-effectiveness is another key consideration, with technology offering avenues to reduce operational costs. But you’ve also got to be mindful of additional expenses that are often overlooked, such as currency fluctuation and the costs associated with obtaining special licences and permits.
Building strong relationships with suppliers and customers from the outset is fundamental to business success. A robust online presence, particularly on social media, can help you connect with customers and promote your brand effectively. Implementing an accounting system to monitor finances and customer relationship management (CRM) software is also advisable for managing customer interactions.
The challenges of starting a business abroad are manifold, ranging from navigating the legal and regulatory framework to overcoming language barriers and cultural differences. Access to capital can be a hurdle, and in some regions, political instability and corruption can pose significant risks to business operations.
Getting to know the local legal system is imperative to ensure compliance with all laws and regulations. Language proficiency is essential for building trust and relationships, and an appreciation of local cultures and customs can be the difference between success and failure. You’ve got to stay motivated and positive, as the journey to achieving your full potential will undoubtedly be fraught with challenges.
United Arab Emirates
Corporate Tax
The UAE implemented a CT regime which commenced 1 January 2024, introducing a new dimension to the nation’s fiscal environment. Companies now need to familiarise themselves with the new tax laws to manage their financial obligations effectively.
Businesses established in the FZs will enjoy a 0% Corporate Tax (CT) rate, presenting an attractive proposition for new ventures. Nevertheless, adhering to transfer pricing guidelines is essential to maintain compliance.
Foreign entities may also be liable for CT based on their activities within the UAE. Ensuring that flexible and resilient financial and tax systems will be crucial for adapting to these legislative changes.
Market Accessibility and Size
Characterised by a vibrant and varied economy, the UAE has been a key export destination for global markets since 2009. With a projected 4% economic expansion in 2024, primarily fueled by the non-oil sector, the nation offers a fertile ground for startups.
Real estate, tourism, financial services, and business sectors have become substantial economic drivers. With a gross GDP of $499 billion in 2023, the UAE is the fourth-largest economy in the Middle East, presenting a substantial market with opportunities for new enterprises.
Currency Stability and Exchange Rates
The UAE’S AED outlook for 2024 is positive, with expectations of an appreciable increase in its value.
Contributing factors include Dubai’s inflation rate, which has fallen to 3.6% in the first quarter of 2024, and the government’s diligent debt repayment efforts. The real estate sector, supported by GREs, plays a role in the economic resurgence, contributing to the AED’s stability.
The AED’s trajectory against major currencies is expected to show varying trends. Technical analysis provides a moderate forecast for the AED/EUR exchange rate. At the same time, a 1-year projection places the exchange rate at $2 (7.3766 AED) to 1 GBP. This monetary stability is advantageous for startups aiming to mitigate the financial uncertainties tied to exchange rate movements.
Economic Incentives for Startups
The UAE’s authorities are dedicated to fostering a thriving startup environment, with ambitions to double the GDP and cultivate 20 startups with valuations exceeding $1 billion by 2031. The Future 100 initiative underscores this dedication, aiming to identify and bolster SMEs that will play a role in the nation’s future economic domains.
The program facilitates swift engagement with investors, regulatory bodies, and the business sector, providing assistance in financing, legal matters, commercial strategies, and skill development. By promoting synergies between governmental and private entities, the Future 100 initiative is a cornerstone of the UAE’s strategy to diversify its economy, enhance its robustness, and secure long-term prosperity.
To date, the initiative has garnered the support of 25 new strategic and acceleration partners, aiding 100 nascent companies with a forward-looking vision. This nurturing environment is a significant attraction for entrepreneurs planning to launch their businesses in 2024, offering a solid foundation for advancement and creativity.
Switzerland
Corporate Tax
With the adoption of the OECD/G20 tax reform, Switzerland is set to introduce a minimum tax rate of 15% for large multinational enterprises from January 2024.
This measure targets groups with annual revenues over $813,948,750 (€750 million). The additional funds generated will be distributed between the cantons and the federal government.
Despite this change, the country’s federal CIT remains at 8.5% on profit after tax, with total effective rates ranging from 11.9% to 21.0% depending on the canton.
Market Accessibility and Size
With a population of 8.7 million, of which a quarter are foreign nationals, Switzerland boasts a robust GDP. It is recognised for its innovation and substantial investment in research and development. The nation enjoys a strong trade relationship with the United States, its second-largest trading partner, and has seen significant U.S. exports.
The Swiss market is open and growing, with an increase in new company registrations, making it an ideal test market for new products and a strategic location for international business.
Currency Stability and Exchange Rates
The Swiss franc’s highest value against the U.S. dollar was recorded in 2020, reflecting its strength. The Swiss Financial Market Supervisory Authority and the Swiss National Bank, which are responsible for monetary policy, ensure the currency’s stability. This predictability is beneficial for companies planning their financial strategies.
Economic Incentives for Startups
Switzerland provides a range of economic incentives for startups, including a skilled workforce supported by a system that recognises various apprenticeships and vocational qualifications. The country’s commitment to sustainable production and fair trade aligns with the increasing focus on corporate social responsibility.
With a strong manufacturing sector, including MEM industries and watchmaking, Switzerland shows resilience and growth in vital economic areas. The collaboration between academia and industry, coupled with liberal labour laws, further bolsters Switzerland as a favourable location for new businesses.
Singapore
Corporate Tax
Singapore’s CT system is attractive for its competitive flat rate of 17% on chargeable income, applicable to both domestic and international companies. This positions Singapore as a tax-friendly jurisdiction in Asia.
A tax exemption scheme is available for new startups, offering a 75% exemption on the first $100,000 of normal chargeable income and a further 50% exemption on the next $100,000 for their initial three years. Subsequently, companies can benefit from a partial tax exemption, which includes a 75% exemption on the first $10,000 of chargeable income and a 50% exemption on the next $190,000.
These tax incentives are designed to support emerging businesses and foster an environment conducive to entrepreneurship. However, certain entities, such as investment holding companies and property development firms, are not eligible for the startup tax exemption but can still utilise the partial tax exemption.
Market Accessibility and Size
Singapore’s geographical location offers unparalleled access to burgeoning Asian markets. The city-state has established over 80 double taxation avoidance agreements and multiple free trade agreements with key economies, enhancing its position as a gateway for international trade.
With a robust GDP per capita and consistent economic growth, Singapore’s service sector and manufacturing industry significantly contribute to its economic strength. This positions the city as an attractive destination for startups looking to penetrate the Asian market.
Currency Stability and Exchange Rates
The Singapore dollar is characterised by its stability, underpinned by the nation’s strong economic fundamentals and prudent fiscal policies. This stability is advantageous for businesses engaged in international trade, providing a predictable environment for cross-border financial activities.
Economic Incentives for Startups
The Singaporean government actively promotes a dynamic startup ecosystem through various initiatives. The Startup SG Tech grant and the Enterprise Development Grant (EDG) are designed to accelerate the growth and innovation of new businesses.
The EIS introduces tax benefits for companies investing in innovation and R&D. The government’s support extends to incubator and accelerator programs that provide mentorship and access to funding. Local venture capital funds are bolstered by foreign funds through a co-investment model, enhancing the financial resources available to startups.
Singapore’s regulatory framework supports innovative business models, exemplified by the Licensing Experimentation and Adaptation Programme, which offers a regulatory sandbox for new ideas. The absence of capital gains tax and favourable CT rates attract venture capital and investors.
New Zealand
Corporate Tax
Companies in New Zealand are subject to a flat CT rate of 28%. The country’s tax system is straightforward, with no additional levies imposed by states or municipalities.
The nation is preparing to introduce the GloBE Rules, part of the OECD’s efforts to tackle the tax challenges arising from the digitisation of the economy. These include the IIR and the UTPR, which are expected to be implemented in 2024 and 2025. The IIR will apply to New Zealand-based multinationals and local branches of foreign multinationals from countries that have not adopted the rule, while the UTPR will affect foreign multinationals operating in New Zealand.
A domestic minimum tax of 15% is also under consideration for New Zealand-headquartered multinational groups with ‘undertaxed’ income. This would target large multinationals with annual global revenue exceeding $814,676,400, with some potential exemptions.
Market Accessibility and Size
New Zealand’s digital infrastructure is highly regarded, facilitating growth in fintech, health IT, and digital and creative technologies. The ICT sector significantly contributes to the economy, with over 7,500 organisations adding nearly $6 billion to the GDP in 2022.
The government’s investment in technology is evident, with a record $450 million invested in the tech sector in 2022. The digital technologies sector has experienced a compound annual growth rate of 10.4% since 2016.
Connectivity is further bolstered by direct high-speed broadband links to the United States, such as the Southern Cross Cable and the Hawaiki Cable. Collaborations with companies like Space-X aim to enhance internet access in remote areas and provide comprehensive cellular coverage through satellite technology.
Currency Stability and Exchange Rates
The NZD (New Zealand Dollar) is currently facing downward pressure, with the Reserve Bank of New Zealand indicating that interest rates will remain at 5.5% for a prolonged period. This stance may diverge from market expectations of additional rate increases.
The effects of interest rate adjustments on inflation are anticipated to become more apparent in 2024.
The NZD has shown weakness compared to other G10 currencies in 2023, with a rolling 12-month trade deficit reaching $15 billion. This imbalance suggests the currency may be overvalued, which could impact the nation’s competitive edge. Addressing this may require domestic economic adjustments or a depreciation of the NZD.
Economic Incentives for Startups
New Zealand provides various economic incentives to bolster startups and promote self-employment. The Flexi-wage for self-employment is a grant that assists with the initial costs of starting or sustaining a business.
Callaghan Innovation offers Getting Started Grants to fund R&D activities and student grants to foster the integration of technical skills into the commercial sector. The R&D Tax Incentive encourages innovation and aims to strengthen the economy.
These initiatives reflect the government’s commitment to fostering a supportive environment for startups, making New Zealand an appealing destination for entrepreneurs and investors.
Forge Ahead with Confidence
Venturing into the business world in 2024 may seem like a trek through uncertain terrain. Still, with the right location, entrepreneurial spirit, and strategic planning, the journey can lead to rewarding destinations. The UAE, Switzerland, Singapore, and New Zealand each offer unique advantages that cater to various business needs, from tax incentives and market accessibility to currency stability and robust economic support systems.
While each country presents a compelling case, your decision ultimately hinges on aligning your business goals with the benefits and opportunities present in these potential havens. Forge ahead with the insights you’ve gained here, and let the spirit of innovation, resilience, and strategic foresight guide you to success in the global market of tomorrow. The world is your oyster—select your pearl with care and confidence.
