Sterling Heights, MI (PRWEB) January 30, 2014
The USA is lagging behind most major economies in terms of its ability to attract foreign direct investment, according to a new study by UHY, the international accountancy network.
Over the five years since the global credit crunch, the USA has attracted FDI equivalent to just 6.6% of its GDP (USD$1.043trillion in total). On average, countries around the world have attracted FDI worth 17% of their GDP in the five years since the credit crunch.
The study looked at net FDI inflow over the last five years in 33 major economies around the world, measuring how successful they have been in attracting FDI compared to their GDP.
The USA also lagged behind neighbouring Canada which attracted foreign direct investment equivalent to 11% of its GDP (a total of US$200billion).
Winning foreign direct investment provides an important boost to national economies, creating new jobs and tax revenues in the short term, and in the longer term improving productivity by helping to fund capital investment and making domestic companies more competitive.
UHY explains that several countries, such as Ireland and Singapore have been enormously successful in setting up favourable tax and regulatory environments that have encouraged companies to set up regional headquarters there. For example, Yahoo, Google, Apple, PayPal and LinkedIn all have European headquarters in Ireland, and Asian headquarters in Singapore.
UHY explains that the USA imposes relatively high tax rates, which has a potential disincentive to investors. Overseas investors acquiring a US company or asset may also have to comply with complex bureaucratic hoops to gain approval.
Rick David, Chief Operating Officer at UHY Advisors, Inc., said: “The USA is the biggest economy in the world and of course exposure to that huge market is attractive for most international investors. On a daily basis, we are being called upon to assist the foreign investor in navigating the FDI process. When measured against the US GDP, the US may not be amongst the leaders as a location for FDI, however, it is still a target of much FDI, especially by SME’s.”
“Lowering our relatively high corporation tax could help attract more international businesses to invest in the US.”
Belgium, which took top place in the study, has attracted net FDI equivalent to 91.4% of its GDP over the last five years – FDI totaling over US $442 billion. In terms of the absolute amount of FDI received it was behind only the USA (which received over $1 trillion) and China ($563 billion).
Belgium has been particularly innovative in its use of tax legislation to attract international companies. While it has recently phased out the role of so-called ‘co-ordination centres’ for inter-company loans which helped companies to manage their global tax liabilities, it now hopes to differentiate itself by providing tax reliefs for companies that fund their businesses through equity rather than debt. In addition, Belgium has generous tax breaks for R&D and investment in capital goods, as well as fiscal incentives for hiring employees. Belgium’s attractiveness as a European HQ is reinforced by the access it offers to EU decision makers and its importance as a logistics location
Ladislav Hornan, Chairman UHY, comments: “Small economies such as Singapore and Ireland can punch well above their weight by offering significant tax incentives to companies choosing to locate there.”
“But those tax incentives only work because they also have a well-educated workforce, strong infrastructure and the sophisticated ecosystem of suppliers that a multinational needs when they decide to locate to a country.”
“Although labour, real estate and energy costs tend to be far lower in emerging markets than in developed economies these figures show that developed economies that offer the right incentives, are able to attract in even higher levels of FDI.”
Please see attached chart.
About UHY Advisors
UHY Advisors provides tax and consulting services to a variety of sectors. UHY LLP, a licensed CPA firm, provides audit and other attest services to public and private companies. UHY Advisors FLVS provides forensic, valuation, intellectual property, electronic discovery and international arbitration services to law firms and their clients. Many of these services grew from client business needs and their requests for assistance in a variety of areas of expertise.
UHY Advisors, operating in an alternative practice structure with UHY LLP, forms one of the largest professional services firms in the US. While that scale might provide confidence for some clients, others tell us our greatest value is the way we bring these resources to bear to help address today’s evolving business challenges. It’s a philosophy we call “The Next Level of Service”. To learn more visit http://www.uhy-us.com.
All of the above entities are members of UHY International, a global network of independent professional services firms that provide audit, tax and consulting services around the world. UHY International member firms comprise one of the top international accounting networks in the world. As a member firm, we provide our clients with resources in business centers strategically located around the globe. We are an active member in this organization with significant participation that brings the power of an international network to bear for our clients.
UHY Advisors, Inc. provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of “UHY Advisors.” UHY Advisors, Inc. and its subsidiary entities are not licensed CPA firms. 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 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.