Incentives provided by the government in the form of tax reduction, subsidies and grants help a new business to grow into a strong and stable entity. If you are looking for the right location for your English language franchise, it might be beneficial to consider the financial and tax incentives offered by these countries and cities.
Grants and subsidies such as EXIST, FLÜGGE, BayTOU, SIGNO sponsorship for SMEs, innovation vouchers for SMEs, and Erasmus for young entrepreneurs are provided by the German or state government, or by the European Union. The size of an incentive varies according to the total investment, the number of new jobs created, and the size of the company. Generally, grants are offered like this: 40% to small companies, 30% to medium-sized companies, and 20% to large companies. Also, loans, grants, equity financing and wage costs subsidies can be achieved by businesses located in Frankfurt (Oder) or Eisenhüttenstadt. Usually, funding is offered for investments, working capital, R&D, specific purposes, and personnel.
Vietnam signed a free trade agreement with the European Union in 2016 according to which trade tariffs will be removed by 2018. Steps are also taken to increase the ease of doing business in the country. According to the World Bank’s “Doing Business in 2017”, Vietnam ranked 82 out of 190 countries, up nine ranks from 2016.
Tax incentives are provided to businesses based on their sector, location and the size of their projects. Some of these sectors include education, high technology, healthcare, sport/culture and scientific research. Qualifying businesses enjoy two preferential tax rates of 10% for 15 years and 17% for 10 years. Qualifying investors also receive tax holidays and tax reductions.
3. Xi’an, China
Though the corporate tax rate in China is 25%, it can be reduced to 15% if a business meets certain criterion. Since incentives are given in the form of tax benefits, companies can gain benefits in the form of reduced value added tax, customs and income tax. Companies in Special Economic Zones, and special sectors and regions receive the most benefits. To encourage growth in the western regions of the country, China has the policy to provide greater investment and support especially to businesses located in these regions. For the rest of the country, there are provided incentives, including support for small and medium-sized enterprises, and preferential policies for widening the channels of investment and financing.
Portugal is one of the most investor friendly countries in Europe where foreign and domestic businesses receive the same benefits. Companies can obtain various kinds of incentives based on the type and amount of investment. Businesses that create jobs for those under the age of 30 get an increased salary tax deduction of 50% of the salary expense.[i] Companies that are based in certain areas get their corporate tax reduced to 15%.[i] For new businesses in such areas, the corporate tax rate is 10% for the first five years.[i] Additionally, if the company creates any permanent jobs in these areas, they can deduct an additional 50% of social security payments.[i]
5. Buenos Aires, Argentina
As Argentina has had an open economic policy towards foreign investors, today it has some 2,000 foreign subsidiaries operating in the country.[ii] Foreign investors are protected by the foreign investment law and require no prior approval. They have the same rights and obligations as domestic investors.
Argentina has signed bilateral investment promotion and protection treaties with a number of countries, including Australia, U.S., U.K., China, Germany, Canada, and Spain. Moreover, it has double taxation agreements with Australia, the U.K., Canada, Brazil, and others to help companies avoid double taxation. This provides considerable protection and opportunities to an English language franchise business. Additionally, the government offers deductions and tax incentives to businesses to help them limit their liability.
6. Taipei, Taiwan
Foreign companies can obtain incentives and subsidies from the government, as part of the Ordinance ‘Taipei Municipal Self-Government Ordinance for Industrial Development’. To attract businesses, the government coughed up NT$474.31 million in incentives and subsidies to businesses.[iii] Other programs for SMEs are also being utilised in Taipei. Thirteen companies received central government subsidies totaling NT$32.7 million in 2014, and NT$29 million were given in aid to 41 companies as part of the Small Business Innovation Research program. [iii] Taipei is the first city in Taiwan to establish an ‘Asia-Pacific Economic and Trade Service Center’ to attract businesses.
7. Chengdu, China
In order to increase investment in Chengdu, the government altered the guidelines for investment in infrastructure development. It also made administrative procedures easy for projects of under 50 million yuan. For investments of over 1 billion in the service sector, the government offers loans at preferential interest rates.[iv] In 2012, the Chengdu Investment Promotion Commission (CIPC) said that major companies headquartered in the city and “actively encouraged by the government” would receive a 15% corporate income tax rate.[v] Further, the CIPC said that the tax breaks would be applicable until 2020.