USA Falls Behind Europe and China in Race to Harness Globalisation

The USA is falling behind Europe and China in the race to capitalise on globalisation and could potentially miss out on future economic growth as a result, according to a new survey by UHY, the international accounting and consultancy network.

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Sterling Heights, MI (PRWEB) December 09, 2013

•    Would-be American multinationals held back by tax policy

The USA is falling behind Europe and China in the race to capitalise on globalisation and could potentially miss out on future economic growth as a result, according to a new survey by UHY, the international accounting and consultancy network.

UHY taxation and business advisory professionals in 27 countries rated their economies on several factors, including taxation and trade policy, that indicate how internationalised an economy already is and how well positioned it is to take advantage of future globalisation of trade.

The factors examined in UHY’s study included; how successful a country has been in negotiating favourable tax arrangements with potential trading partners, how successful it has been in growing exports, how important a part trade already plays in its economy, how much tax it imposes on companies ‘repatriating’ overseas profits, how it is rated in the World Bank’s ‘Ease of Doing Business’ survey and labour costs.

Assessed on these factors, the USA scored 3.7, surprisingly far behind both China, with its score of 4.6, and the EU member states, with an average score of 5.2 out of a maximum of 10.

While the USA did well on their ‘Ease of Doing Business’ rating placing 4th globally, its economy still remained more aligned to domestic activity than many of their competitors. UHY explains that this means companies in the USA are not fully exposed to international competition, which may make them less efficient. Additionally, the USA also had low scores for certain factors measuring success in negotiating favourable tax treatment by trading partners. At 35%, the USA levied the highest gross tax charge on repatriated profits of any country we looked at.

Germany topped the ratings with a score of 6.4 out of ten, while Slovakia was not far behind on 6.3 points. China was the best performing of the world’s top 3 economies with a score of 4.6, and India was the best-performing BRIC country with a score of 5.1, helped by its low labour costs with an average monthly salary less than half as high as China’s.

Rick David of UHY Advisors, a member firm of UHY in the USA, stated: “The USA ranked poorly in the survey suggesting that while it is cushioned by the sheer size of its own domestic economy, it could achieve more by doing more to encourage and support American companies in exporting and expanding overseas.”

“One key factor hampering the US from fully harnessing globalisation is that it levies the highest tax charge on repatriated profits of all countries, potentially acting as a significant barrier to domestic companies looking to expand overseas.”

“In the past Canada, Mexico, Japan and the EU have been some of our most important and most co-operative trading partners, but it is perhaps time for policy makers to look at how we can improve relationships with emerging economies in Africa and Southern and South East Asia as they become bigger consumers and larger importers as their incomes grow.”

Would-be Chinese and American multinationals held back by tax policy

While China did far better overall than the USA, with an overall score of 4.6 out of 10, both of the world’s two largest economies’ scores were brought down by the high taxes their governments impose on corporates ‘repatriating’ overseas profits.

UHY says that these taxes reduce the incentive for businesses to set up subsidiaries overseas, particularly for SMEs for whom the costs of setting up international operations would be proportionately more expensive. Just under half of the countries in the study imposed no tax on repatriated dividends at all.

Rick David added: “American firms are often household names around the world but actually our taxation system is very poorly geared towards encouraging US companies from growing overseas, with the highest tax rate on ‘repatriated’ profits of any country in the study.”

Rankings showing 27 countries’ ability to take advantage of future globalisation of trade.

Ranking    Country    Marks out of 10
1    Germany                 6.4
2    Slovakia                 6.3
3    Netherlands    6.0
3    New Zealand    6.0
3    United Kingdom    6.0
6    Denmark                    5.4
7    France                    5.3
8    Czech Republic    5.1
8    India                    5.1
8    Croatia                    5.1
8    UAE                    5.1
12    Romania                    5.0
12    Brazil                    5.0
12    Ireland                    5.0
15    Russia                    4.7
15    Australia                    4.7
17    China                    4.6
17    Uruguay                    4.6
17    Spain                    4.6
20    Mexico                    4.4
21    Canada                    4.3
21    Austria                    4.3
23    Israel                    4.1
24    Nigeria                    4.0
25    Italy                    3.7
25    United States    3.7
27    Japan                    3.0

Notes:

Countries’ overall scores are based on their rankings for the detailed measures included in the study.

Data drawn from: the World Bank, World Trade Organisation, International Labour Organisation and national governments.

ENDS

A full in-depth report detailing the research findings is available from the press contacts below.

About UHY Advisors, Inc.
UHY Advisors, Inc. provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of “UHY Advisors.” UHY LLP is a licensed independent CPA firm that performs attest services in an alternative practice structure with UHY Advisors, Inc. and its subsidiary entities. UHY Advisors, Inc. and its subsidiary entities are not licensed CPA firms. UHY LLP and UHY Advisors, Inc. are U.S. members of Urbach Hacker Young International Limited, a UK company, and form part of the international UHY network of legally independent accounting and consulting firms. “UHY” is the brand name for the UHY international network. Any services described herein are provided by UHY LLP and/or UHY Advisors (as the case may be) and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members.

Press enquiries:
Richard G. David, Chief Operating Officer
UHY Advisors, Inc.
1 586 254 1040

Catherine Sirikanda or Nick Mattison
Mattison Public Relations
+44 20 7645 3636 or +44 7963 496 144

Additional information for Editors

About UHY
Established in 1986 and based in London, UK, UHY is a network of independent audit, accounting, tax and consulting firms with offices in over 270 major business centres in 86 countries.

Our staff members, over 7,100 strong, are proud to be part of the 25th largest international accounting and consultancy network/association. Each member of UHY is a legally separate and independent firm. Each member of UHY is a legally separate and independent firm. For further information on UHY please go to http://www.uhy.com.

UHY is a full member of the Forum of Firms, an association of international networks of accounting firms. For additional information on the Forum of Firms, visit http://www.forumoffirms.org.

For more information on UHY, please contact Dominique Maeremans, marketing & business development manager, UHY International, Quadrant House, 4 Thomas More Square, London E1W 1YW, UK. Tel: +44 20 7767 2621, or email: d.maeremans(at)uhy.com.


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    UHY LLP
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