Taiwan dropped two spots to No. 15 among 190 economies in the latest “Doing Business” rankings released on Wednesday, due to a corporate income tax increase last year.
Taiwan received a score of 80.90 points, down 0.1 from a year earlier, when it was No. 13, the annual report released by the World Bank said.
Higher rankings in the report generally indicate simpler regulations for businesses and stronger protection of property rights.
In the Asia-Pacific region, Taiwan ranked fourth, an improvement from fifth last year, for ease of doing business, behind Singapore at No. 2, Hong Kong at No. 3 and Malaysia at No. 12. China was No. 31.
The report focuses on 10 areas to assess a nation’s business environment: starting a business; dealing with construction permits; getting electricity; registering property; getting credit; protecting minority investors; trading across borders; paying taxes; enforcing contracts; and resolving insolvency.
Among the 10 criteria, Taiwan maintained the same ranking in two — enforcing contracts (11) and resolving insolvency (23) — while dropping in the other eight.
The lowest ranking Taiwan received was in the “getting credit” category, where it was 104th, with a score of 50 out of 100.
The indicator evaluates an economy’s strength of credit reporting systems, and the effectiveness of its collateral and bankruptcy laws in facilitating lending.
The National Development Council said that the drop in the rankings was largely due to the survey believing that an increased corporate tax has a negative effect on doing business.
It was referring to tax reforms that increased corporate income tax to 20 percent from 17 percent, while reducing individual income tax rates.
Regarding the low ranking in the “getting credit” category, the council said that some foreign companies have complained that Taiwan does not recognize the concept of a floating charge, making it harder for them to get loans.
Discussions on amending the Personal Property Secured Transactions Act (動產擔保交易法) to introduce a floating charge system are under way, but no final decision has been made, it said in a news release.
A floating charge is a security interest over a group of nonconstant assets that companies use to secure loans.
Typically, a loan might be secured by fixed assets such as property or equipment, but with a floating charge, the underlying assets are usually current assets or short-term assets that can change in value.
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