Canada Tops Forbes Business Rankings

by Mike Godfrey, Tax-News.com, Washington

12 October 2011

Canada is the 'best country for business', according to a new Forbes report, with its improved tax standing accounting for its high ranking. On the other hand, the high tax burden faced by US citizens means the country has slipped down to tenth position.

Forbes' annual Best Countries for Business argues that Canada’s economy has held up better than most, with the US 'paralyzed' by fears of a double-dip recession and Europe struggling with sovereign debt issues. Canada now has the world's ninth largest economy, at CAD1.6 trillion, growing at a rate of 3.1% last year, and projected to expand by 2.4% in 2011.

11 metrics were factored in to determine the Forbes list, with 134 countries investigated. Forbes considered property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape, investor protection and stock market performance in its study. Research and published reports from the Central Intelligence Agency, Freedom House, Heritage Foundation, Property Rights Alliance, Transparency International, the World Bank and World Economic Forum were all used to compile the rankings.

Canada is the only country ranking in the top 20 for 10 of the factors considered. In addition, Canada placed in the top five for both investor protection as well as lack of red tape, which measures how easy it is to start a business.

The main reason for Canada's improved position is its tax standing, Forbes says. The country now ranks ninth for overall tax burden compared to 23rd in 2010. Forbes regards the government's goal as to make Canadian businesses more competitive, citing the introduction of a reformed tax structure with the implementation of a harmonized sales tax in Ontario and British Columbia in 2010. Canada’s tax status also improved thanks to reduced corporate and employee tax rates.

The US was ranked 10th this year, down from ninth position in 2010. Forbes says that what hurts the US is its heavy tax burden. In 2011 it has surpassed Japan to have the highest corporate tax rate among developed countries.

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