58399 Switzerland © 2010 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org All rights reserved. 1 2 3 4 08 07 06 05 A copublication of The World Bank and the International Finance Corporation. This volume is a product of the staff of the World Bank Group. The findings, interpretations and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. 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ISBN: 978-0-8213-7960-8 E-ISBN: 978-0-8213-8630-9 DOI: 10.1596/978-0-8213-7960-8 ISSN: 1729-2638 Library of Congress Cataloging-in-Publication data has been applied for. Printed in the United States Current features News on the Doing Business project http://www.doingbusiness.org Rankings How economies rank-from 1 to 183 http://www.doingbusiness.org/rankings/ Contents Reformers Short summaries of DB2011 reforms, lists of reformers since DB2004 Introduction and a ranking simulation tool and Aggregate Rankings http://www.doingbusiness.org/reforms/ 5 - Year Measure of Historical data Cumulative Change Customized data sets since DB2004 http://www.doingbusiness.org/custom-query/ Starting a Business Methodology and research Dealing with The methodologies and research papers underlying Doing Business Construction Permits http://www.doingbusiness.org/Methodology/ Registering Property Download reports Access to Doing Business reports as well as subnational and regional Getting Credit reports, reform case studies and customized country and regional profiles Protecting Investors http://www.doingbusiness.org/reports/ Paying Taxes Subnational and regional projects Differences in business regulations at the subnational and regional Trading Across Borders level http://www.doingbusiness.org/subnational-reports/ Enforcing Contracts Law Library Closing a Business Online collection of business laws and regulations relating to business and gender issues Doing Business 2011 http://www.doingbusiness.org/law-library/ Business Reforms http://wbl.worldbank.org/ Local partners More than 8,200 specialists in 183 economies who participate in Doing Business http://www.doingbusiness.org/Local-Partners/Doing-Business/ Business Planet Interactive map on the ease of doing business http://rru.worldbank.org/businessplanet Doing Business 2011 : Making a Difference for Entrepreneurs is the eighth in a series of annual reports investigating regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 economies, from Afghanistan to Zimbabwe, over time. A set of regulations affecting 9 stages of a business's life are measured: starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. Data in Doing Business 2011 are current as of June 1, 2010*. The indicators are used to analyze economic outcomes and identify what reforms have worked, where, and why. The Doing Business methodology has limitations. Other areas important to business such as an economy 's proximity to large markets, the quality of its infrastructure services (other than those related to trading across borders), the security of property from theft and looting, the transparency of government procurement, macroeconomic conditions or the underlying strength of institutions, are not studied directly by Doing Business. To make the data comparable across economies, the indicators refer to a specific type of business, generally a local limited liability company operating in the largest business city. Because standard assumptions are used in the data collection, comparisons and benchmarks are valid across economies. The data not only highlight the extent of obstacles to doing business; they also help identify the source of those obstacles, supporting policymakers in designing reform. The data set covers 183 economies: 46 in Sub-Saharan Africa, 32 in Latin America and the Caribbean, 25 in Eastern Europe and Central Asia, 24 in East Asia and Pacific, 18 in the Middle East and North Africa and 8 in South Asia, as well as 30 OECD high-income economies. The following pages present the summary Doing Business indicators for Switzerland. The data used for this economy profile come from the Doing Business database and are summarized in graphs. These graphs allow a comparison of the economies in each region not only with one another but also with the "good practice" economy for each indicator. The good-practice economies are identified by their position in each indicator as well as their overall ranking and by their capacity to provide good examples of business regulation to other countries. These good -practice economies do not necessarily rank number 1 in the topic or indicator, but they are in the top 10. More information is available in the full report. Doing Business 2011 : Making a Difference for Entrepreneurs presents the indicators, analyzes their relationship with economic outcomes and recommends reforms. The data, along with information on ordering the report, are available on the Doing Business website (www.doingbusiness.org). * Except for the Paying Taxes indicator that refers to the period January to December of 2009. Note: 2008-2010 Doing Business data and rankings have been recalculated to reflect changes to the methodology and the addition of new economies (in the case of the rankings). 1 Economy Rankings - Ease of Doing Business Switzerland is ranked 27 out of 183 economies. Singapore is the top ranked economy in the Ease of Doing Business. Switzerland - Compared to global good practice economy as well as selected economies: Switzerland's ranking in Doing Business 2011 Rank Doing Business 2011 Ease of Doing Business 27 Starting a Business 80 Dealing with Construction Permits 37 Registering Property 14 Getting Credit 15 Protecting Investors 167 Paying Taxes 16 Trading Across Borders 43 Enforcing Contracts 28 Closing a Business 41 2 Summary of Indicators - Switzerland Starting a Business Procedures (number) 6 Time (days) 20 Cost (% of income per capita) 2.1 Min. capital (% of income per capita) 27.2 Dealing with Construction Permits Procedures (number) 14 Time (days) 154 Cost (% of income per capita) 51.3 Registering Property Procedures (number) 4 Time (days) 16 Cost (% of property value) 0.4 Getting Credit Strength of legal rights index (0-10) 8 Depth of credit information index (0-6) 5 Public registry coverage (% of adults) 0.0 Private bureau coverage (% of adults) 22.3 Protecting Investors Extent of disclosure index (0-10) 0 Extent of director liability index (0-10) 5 Ease of shareholder suits index (0-10) 4 Strength of investor protection index (0-10) 3.0 Paying Taxes Payments (number per year) 19 Time (hours per year) 63 Profit tax (%) 8.9 Labor tax and contributions (%) 17.5 Other taxes (%) 3.6 Total tax rate (% profit) 30.1 Trading Across Borders Documents to export (number) 4 Time to export (days) 8 Cost to export (US$ per container) 1537 Documents to import (number) 5 Time to import (days) 9 Cost to import (US$ per container) 1540 3 Enforcing Contracts Procedures (number) 31 Time (days) 417 Cost (% of claim) 24.0 Closing a Business Recovery rate (cents on the dollar) 47.5 Time (years) 3.0 Cost (% of estate) 4 The 5 year measure of cumulative change illustrates how the business regulatory environment has changed in 174 economies from Doing Business 2006 to Doing Business 2011. Instead of highlighting which countries currently have the most business friendly environment, this new approach shows the extent to which an economy's regulatory environment for business has changed compared with 5 years ago. This snapshot reflects all cumulative changes in an economy's business regulation as measured by the Doing Business indicators-such as a reduction in the time to start a business thanks to a one-stop shop or an increase in the strength of investor protection index thanks to new stock exchange rules that tighten disclosure requirements for related -party transactions. This figure shows the distribution of cumulative change across the 9 indicators and time between Doing Business 2006 and Doing Business 2011 0.10 0.08 Doing 0.06 business has become easier (DB 0.04 change score) 0.02 0.00 Doing business has -0.02 become more difficult or more -0.04 United Belgium Spain Switzerland Germany Italy costly Kingdom 6 1. Benchmarking Starting a Business Regulations: Switzerland is ranked 80 overall for Starting a Business. Ranking of Switzerland in Starting a Business - Compared to good practice and selected economies: 7 The following table shows Starting a Business data for Switzerland compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of Min. capital (number) income per (% of income Economies capita) per capita) Denmark* 0.0 New Zealand* 1 1 0.0 Selected Economy Switzerland 6 20 2.1 27.2 Comparator Economies Belgium 3 4 5.4 19.6 Germany 9 15 4.8 0.0 Italy 6 6 18.5 10.1 Spain 10 47 15.1 13.5 United Kingdom 6 13 0.7 0.0 * The following economies are also good practice economies for : Procedures (number): Canada Cost (% of income per capita): Slovenia 8 2. Historical data: Starting a Business in Switzerland Starting a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 71 80 Procedures (number) 6 6 6 6 Time (days) 20 20 20 20 Cost (% of income per capita) 2.1 2.1 2.0 2.1 Min. capital (% of income per capita) 13.9 27.6 26.4 27.2 3. The following graphs illustrate the Starting a Business sub indicators in Switzerland over the past 4 years: 9 Starting a Business Summary - Switzerland This table summarizes the procedures and costs associated with setting up a business in Switzerland. STANDARDIZED COMPANY Legal Form: Société à responsabilité limitée / Gesellschaft mit beschränkter Haftung (SARL/GmbH) City: Zurich Registration Requirements: No: Procedure Time to complete Cost to complete 1 Draft the articles of association in the presence of a notary public, who 7 CHF 836 notarizes the personal and corporate signatures on the application form and authenticate the articles of association and the public deed of incorporation. 2 Place the paid-up capital in an escrow account with a bank 1 no charge 3 File the deed certifying the articles of association to the local 9 CHF 707 commercial register to obtain a legal entity 4 Pay stamp tax at post office or bank after receiving an assessment by 1 no charge mail 5 Register for VAT 1 no charge 6 Enroll employees in the social insurance system (federal and cantonal 1 no charge authorities) 10 Starting a Business Details - Switzerland Procedure 1 Draft the articles of association in the presence of a notary public, who notarizes the personal and corporate signatures on the application form and authenticate the articles of association and the public deed of incorporation. Time to complete: 7 Cost to complete: CHF 836 Comment: All signatures on the company registration application form have to be legalized (CHF 20 per personal or corporate signature). The Stampa Declaration Form (a negative declaration on investments in kind or chattels or founders' privileges, which is compulsory as documentary evidence) and the Lex Friedrich Declaration Form (a permit for foreigners to acquire real estate) must be signed and handed to the Register of Commerce. The filing of both declaration forms is obligatory for all company incorporation applicants, irrespective of nationality. The name check is not mandatory but is recommended. The fee is CHF 50. Along with the request for name check, required for incorporation and available on the Internet are the public deed, the application form, the Stampa Declaration Form, and the Lex Friedrich Declaration Form. Procedure 2 Place the paid-up capital in an escrow account with a bank Time to complete: 1 Cost to complete: no charge Comment: The capital is released by the bank upon completing the registration procedure at the Commercial Registry. Bank fees range from CHF 200 to CHF 2,000. A minimum bank fee of CHF 200 is charged for transferring capital from the escrow account to the company account after the company registration. Procedure 3 File the deed certifying the articles of association to the local commercial register to obtain a legal entity Time to complete: 9 Cost to complete: CHF 707 Comment: If by express mail, registration takes 3 to 5 days, and if by regular mail, about 7 days. The fee ranges from CHF 600 (for capital of CHF 20,000) to a maximum of CHF 10,000. In 5­9 days, the Registry publishes the date of the statutes and all names of shareholders in the Swiss Commercial Gazette; the announcement fee is included in the registration fee. Entry in the Commercial Register protects the company's trade name and gives it a legal personality. Required documents also include the Stampa Declaration Form and Lex Friedrich Declaration Form (described in Procedure 1), as well as automatic registration for income tax payment. Procedure 4 Pay stamp tax at post office or bank after receiving an assessment by mail Time to complete: 1 Cost to complete: no charge Comment: An application can be filed with the Federal Tax Administration after incorporating the company with the Commercial Registry. Because not every company is subject to tax, a procedure exists to determine whether the company is subject to the tax. 11 Procedure 5 Register for VAT Time to complete: 1 Cost to complete: no charge Comment: An application for VAT registration can be filed with the Federal Tax Administration only after incorporating the company with the Commercial Registry. Because not every company is subject to VAT, a procedure exists to determine whether the company is subject to this tax. Procedure 6 Enroll employees in the social insurance system (federal and cantonal authorities) Time to complete: 1 Cost to complete: no charge Comment: After the company has registered with the Commercial Registry, the cantonal social security office (Ausgleichskasse) will send the employer an application for registering employees in the social insurance system, which includes retirement and survivors' insurance benefits (AHV), disability insurance (IV), occupational accident insurance (UVG), and retirement pension (BVG). In practice, more applicants are using application forms in Internet. 12 13 1. Benchmarking Dealing with Construction Permits Regulations: Switzerland is ranked 37 overall for Dealing with Construction Permits. Ranking of Switzerland in Dealing with Construction Permits - Compared to good practice and selected economies: 14 The following table shows Dealing with Construction Permits data for Switzerland compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) income per Economies capita) Denmark 6 Qatar 0.8 Singapore 25 Selected Economy Switzerland 14 154 51.3 Comparator Economies Belgium 14 169 64.1 Germany 12 100 61.8 Italy 14 257 142.3 Spain 11 233 47.4 United Kingdom 11 95 70.9 15 2. Historical data: Dealing with Construction Permits in Switzerland Dealing with Construction Permits data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 32 37 Procedures (number) 14 14 14 14 Time (days) 154 154 154 154 Cost (% of income per capita) 52.7 52.1 49.9 51.3 3. The following graphs illustrate the Dealing with Construction Permits sub indicators in Switzerland over the past 4 years: 16 Dealing with Construction Permits in Switzerland The table below summarizes the procedures, time, and costs to build a warehouse in Switzerland. BUILDING A WAREHOUSE City: Zurich Registration Requirements: No: Procedure Time to complete Cost to complete 1 Obtain fire department approval 10 days CHF 1,000 2 Obtain construction Permit 120 days CHF 20,000 3 Receive on-site inspection by the municipal authority 1 day no charge 4 Seek approval from utility providers stating that the project will not affect 5 days CHF 300 utilities infrastructure (department for waste and recycling) 5 * Seek approval from utility providers stating that the project will not affect 4 days no charge utilities infrastructure (department of electric power supply) 6 * Seek approval from utility providers stating that the project will not affect 3 days no charge utilities infrastructure (water department) 7 * Seek approval from utility providers stating that the project will not affect 2 days no charge utilities infrastructure (telecom) 17 8 Obtain sewage connection from the department for waste and recycling 10 days CHF 5,000 9 * Receive sanitary inspection from the department for waste and recycling 1 day no charge 10 * Obtain power connection from the department of electric power supply 5 days CHF 8,000 11 * Obtain water connection from the water department 5 days CHF 2,000 12 * Obtain phone connection 1 day CHF 1,500 13 Receive final inspection from the municipal building authority 1 day no charge 14 Submit final records of construction project and obtain occupancy permit 7 days no charge from the municipal building authority * Takes place simultaneously with another procedure. 18 Dealing with Construction Permits Details - Switzerland Procedure 1 Obtain fire department approval Time to complete: 10 days Cost to complete: CHF 1,000 Agency: Fire Department Comment: Procedure 2 Obtain construction Permit Time to complete: 120 days Cost to complete: CHF 20,000 Agency: Municipal Building Authority Comment: The construction permit is issued by the Municipal Building Authority. The company must submit the situation plan, plans of the building, and several forms to the Building Authorities. Procedure 3 Receive on-site inspection by the municipal authority Time to complete: 1 day Cost to complete: no charge Agency: Municipal Building Authority Comment: Procedure 4 Seek approval from utility providers stating that the project will not affect utilities infrastructure (department for waste and recycling) Time to complete: 5 days Cost to complete: CHF 300 Agency: Department for waste and recycling Comment: Procedure 5 Seek approval from utility providers stating that the project will not affect utilities infrastructure (department of electric power supply) Time to complete: 4 days Cost to complete: no charge Agency: Department of electric power supply 19 Comment: Procedure 6 Seek approval from utility providers stating that the project will not affect utilities infrastructure (water department) Time to complete: 3 days Cost to complete: no charge Agency: Water Department Comment: Procedure 7 Seek approval from utility providers stating that the project will not affect utilities infrastructure (telecom) Time to complete: 2 days Cost to complete: no charge Agency: Swiss Telecom Comment: Procedure 8 Obtain sewage connection from the department for waste and recycling Time to complete: 10 days Cost to complete: CHF 5,000 Agency: Department for waste and recycling Comment: Procedure 9 Receive sanitary inspection from the department for waste and recycling Time to complete: 1 day Cost to complete: no charge Agency: Department for waste and recycling Comment: Procedure 10 Obtain power connection from the department of electric power supply Time to complete: 5 days Cost to complete: CHF 8,000 20 Agency: Department of electric power supply Comment: Procedure 11 Obtain water connection from the water department Time to complete: 5 days Cost to complete: CHF 2,000 Agency: Water Department Comment: Procedure 12 Obtain phone connection Time to complete: 1 day Cost to complete: CHF 1,500 Agency: Swiss Telecom Comment: Procedure 13 Receive final inspection from the municipal building authority Time to complete: 1 day Cost to complete: no charge Agency: Municipal Building Authority Comment: Procedure 14 Submit final records of construction project and obtain occupancy permit from the municipal building authority Time to complete: 7 days Cost to complete: no charge Agency: Municipal Building Authority Comment: 21 22 1. Benchmarking Registering Property Regulations: Switzerland is ranked 14 overall for Registering Property. Ranking of Switzerland in Registering Property - Compared to good practice and selected economies: 23 The following table shows Registering Property data for Switzerland compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) property Economies value) New Zealand* 2 Norway* 1 Saudi Arabia 0.0 Selected Economy Switzerland 4 16 0.4 Comparator Economies Belgium 8 79 12.7 Germany 5 40 5.1 Italy 8 27 4.5 Spain 4 18 7.1 United Kingdom 2 8 4.1 * The following economies are also good practice economies for : Procedures (number): United Arab Emirates Time (days): Saudi Arabia, Thailand, United Arab Emirates 24 2. Historical data: Registering Property in Switzerland Registering Property data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 15 14 Procedures (number) 4 4 4 4 Time (days) 16 16 16 16 Cost (% of property value) 0.4 0.4 0.4 0.4 3. The following graphs illustrate the Registering Property sub indicators in Switzerland over the past 4 years: 25 Registering Property in Switzerland This topic examines the steps, time, and cost involved in registering property in Switzerland. STANDARDIZED PROPERTY Property Value: 3,681,996.62 City: Zurich Registration Requirements: No: Procedure Time to complete Cost to complete 1 Notify the Registry of Deeds about the sale contract 1-2 days no cost 2 A notary public prepares the sale contract 7-14 days CHF 150 (Extract) 3 The contract is signed before the public notary 1 day 0.1% of property value (Includes the preparation in Procedure 2) 4 The title is registered at the Registry of Deeds 2-3 days 0.25% of property value 26 Registering Property Details - Switzerland Procedure 1 Notify the Registry of Deeds about the sale contract Time to complete: 1-2 days Cost to complete: no cost Agency: Registry of Deeds Comment: The parties (usually the seller) must give notification to the competent notary office (Notariatsamt) regarding a sales contract. In the case of the Canton of Zurich, this is a public office, which is in charge of the public notary function as well as the land register. In Swiss legislation, a real estate transfer contract cannot be established between private persons. The contract does not legally exist until it is authenticated with the help of a notary or the corresponding officer. From a legal point of view, even if buyer and seller agree on the conditions of the future contract, there is no contract. With the result of their negotiations, they will go to the notary office to explain what they have agreed upon. The notary then will verify that these agreements are valid (conditions are legal, possible, seller and buyer are able from a civil point of view), and when necessary, the notary must help the parties to complete the contract to insure its validity. Procedure 2 A notary public prepares the sale contract Time to complete: 7-14 days Cost to complete: CHF 150 (Extract) Comment: Preparation of the sale contract by a notary is mandatory in the canton Zurich, due to the cantonal law concerning land registration. For e.g. in the canton Basel-Stadt the parties can do it themselves. The sales contract must include the price of the land, the land parcel number, the information on both parties, and the extract from land register concerning this land parcel, as well as all costs which emerge by this contract. In the case of the Canton of Zurich, the "Notariatsamt" (notary) is also the "Grundbuchamt" (land registry). Therefore the extract is obtained at the same time. Otherwise an extract in the Canton of Zurich is obtained in 7-14 days and costs approximately CHF 150. Procedure 3 The contract is signed before the public notary Time to complete: 1 day Cost to complete: 0.1% of property value (Includes the preparation in Procedure 2) Comment: If the contract is in order for both parties, it will be signed before the public notary, who will inform the parties about duties and rights concerning this contract. After the parties have examined the contract, it is returned to the public notary who then arranges a meeting between the parties and himself. The stamp duty is included in the notary fees. Procedure 4 The title is registered at the Registry of Deeds Time to complete: 2-3 days 27 Cost to complete: 0.25% of property value Agency: Registry of Deeds Comment: If the contract has been signed and the money transferred the transfer of ownership title will be entered in writing in the register of the deeds by the registrar. In such contracts, before transfer of ownership title can take place, the money will be transferred to a blocked bank account and will only be released after registration. The registration fee (0.25% of property value) is paid at the moment of registration. As of January 1st. 2005, the transfer tax (1% of property value) has been abolished in Zurich. 28 29 1. Benchmarking Getting Credit Regulations: Switzerland is ranked 15 overall for Getting Credit. Ranking of Switzerland in Getting Credit - Compared to good practice and selected economies: 30 The following table shows Getting Credit data for Switzerland compared to good practice and comparator economies: Good Practice Strength of Depth of Public Private legal rights credit registry bureau Economies index (0-10) information coverage (% coverage (% index (0-6) of adults) of adults) New Zealand* 100.0 Portugal 67.1 Singapore* 10 United Kingdom 6 Selected Economy Switzerland 8 5 0.0 22.3 Comparator Economies Belgium 7 4 57.2 0.0 Germany 7 6 1.0 98.4 Italy 3 5 16.6 80.5 Spain 6 5 54.6 10.7 United Kingdom 9 6 0.0 100.0 * The following economies are also good practice economies for : Strength of legal rights index (0-10): Hong Kong, China, Kenya, Kyrgyz Republic, Malaysia Private bureau coverage (% of adults): Argentina, Australia, Canada, Iceland, Ireland, Norway, Sweden, United Kingdom, United States 27 countries have the highest credit information index. 31 2. Historical data: Getting Credit in Switzerland Getting Credit data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 14 15 Strength of legal rights index (0-10) 8 8 8 8 Depth of credit information index (0-6) 5 5 5 5 Private bureau coverage (% of adults) 24.0 22.5 22.5 22.3 Public registry coverage (% of adults) 0.0 0.0 0.0 0.0 3. The following graphs illustrate the Getting Credit sub indicators in Switzerland over the past 4 years: 32 Getting Credit in Switzerland The following table summarize legal rights of borrowers and lenders, and the availability and legal framework of credit registries in Switzerland. Getting Credit Indicators (2010) Indicator Private credit Public credit Private bureau coverage (% of adults) 5 bureau registry Are data on both firms and individuals distributed? No No 0 Are both positive and negative data distributed? Yes No 1 Does the registry distribute credit information from retailers, trade Yes No 1 creditors or utility companies as well as financial institutions? Are more than 2 years of historical credit information distributed? Yes No 1 Is data on all loans below 1% of income per capita distributed? Yes No 1 Is it guaranteed by law that borrowers can inspect their data in the Yes No 1 largest credit registry? Coverage 22.3 0.0 Number of individuals .. 0 Number of firms 0 0 33 Strength of legal rights index (0-10) 8 Can any business use movable assets as collateral while keeping possession of the assets; and any financial Yes institution accept such assets as collateral ? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, Yes without requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without No requiring a specific description of collateral? May a security right extend to future or after-acquired assets, and may it extend automatically to the products, Yes proceeds or replacements of the original assets ? Is a general description of debts and obligations permitted in collateral agreements, so that all types of obligations Yes and debts can be secured by stating a maximum amount rather than a specific amount between the parties ? Is a collateral registry in operation, that is unified geographically and by asset type, as well as indexed by the No grantor's name of a security right ? Do secured creditors have absolute priority to their collateral outside bankruptcy procedures? Yes Do secured creditors have absolute priority to their collateral in bankruptcy procedures? Yes During reorganization, are secured creditors' claims exempt from an automatic stay on enforcement? Yes Does the law authorize parties to agree on out of court enforcement? Yes 34 35 1. Benchmarking Protecting Investors Regulations: Switzerland is ranked 167 overall for Protecting Investors. Ranking of Switzerland in Protecting Investors - Compared to good practice and selected economies: 36 The following table shows Protecting Investors data for Switzerland compared to good practice and comparator economies: Good Practice Strength of investor Economies protection index (0-10) New Zealand 9.7 Selected Economy Switzerland 3.0 Comparator Economies Belgium 7.0 Germany 5.0 Italy 5.7 Spain 5.0 United Kingdom 8.0 37 2. Historical data: Protecting Investors in Switzerland Protecting Investors data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 165 167 Strength of investor protection index (0-10) 3.0 3.0 3.0 3.0 3. The following graph illustrates the Protecting Investors index in Switzerland compared to best practice and selected Economies: 9.7 8.0 7.0 5.7 5.0 5.0 3.0 m y al iu y nd n d gd ed an ai n It lg om a la t Sp ni m Be al er Ze U er itz G in ew Sw K N Note: The higher the score, the greater the investor protection. 38 Protecting Investors in Switzerland The table below provides a full breakdown of how the disclosure, director liability, and shareholder suits indexes are calculated in Switzerland. Protecting Investors Data (2010) Indicator Extent of disclosure index (0-10) 0 0 What corporate body provides legally sufficient approval for the transaction? 0 Whether immediate disclosure of the transaction to the public and/or shareholders is required? 0 Whether disclosure of the transaction in published periodic filings (annual reports) is required? 0 Whether disclosure of the conflict of interest by Mr. James to the board of directors is required? 0 Whether an external body must review the terms of the transaction before it takes place? Extent of director liability index (0-10) 5 1 Whether shareholders can hold Mr. James liable for the damage that the Buyer-Seller transaction causes to the company? 1 Whether shareholders can hold the approving body (the CEO or board of directors) liable for the damage that the Buyer-Seller transaction causes to the company? 0 Whether a court can void the transaction upon a successful claim by a shareholder plaintiff? 1 Whether Mr. James pays damages for the harm caused to the company upon a successful claim by the shareholder plaintiff? 39 1 Whether Mr. James repays profits made from the transaction upon a successful claim by the shareholder plaintiff? 0 Whether fines and imprisonment can be applied against Mr. James? 1 Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller transaction causes to the company? Ease of shareholder suits index (0-10) 4 3 Whether the plaintiff can obtain any documents from the defendant and witnesses during trial? 0 Whether the plaintiff can directly question the defendant and witnesses during trial? 0 Whether the plaintiff can request categories of documents from the defendant without identifying specific ones? 1 Whether shareholders owning 10% or less of Buyer's shares can request an inspector to investigate the transaction? 0 Whether the level of proof required for civil suits is lower than that of criminal cases? 0 Whether shareholders owning 10% or less of Buyer's shares can inspect transaction documents before filing suit? Strength of investor protection index (0-10) 3.0 40 41 1. Benchmarking Paying Taxes Regulations: Switzerland is ranked 16 overall for Paying Taxes. Ranking of Switzerland in Paying Taxes - Compared to good practice and selected economies: 42 The following table shows Paying Taxes data for Switzerland compared to good practice and comparator economies: Good Practice Payments Time (hours Total tax rate (number per per year) (% profit) Economies year) Maldives* 3 0 Timor-Leste 0.2 Selected Economy Switzerland 19 63 30.1 Comparator Economies Belgium 11 156 57.0 Germany 16 215 48.2 Italy 15 285 68.6 Spain 8 197 56.5 United Kingdom 8 110 37.3 * The following economies are also good practice economies for : Payments (number per year): Qatar 43 2. Historical data: Paying Taxes in Switzerland Paying Taxes data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 16 16 Total tax rate (% profit) 29.1 28.9 29.7 30.1 Payments (number per year) 19 19 19 19 Time (hours per year) 63 63 63 63 3. The following graphs illustrate the Paying Taxes sub indicators in Switzerland over the past 4 years: 44 Paying Taxes in Switzerland The table below addresses the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year in Switzerland, as well as measures of administrative burden in paying taxes. Tax or mandatory Payments Notes on Time Statutory tax Tax Totaltax rate Notes on contribution (number) Payments (hours) rate base (% profit) TTR Value added tax (VAT) 4 8 7.6% value added Stamp duty on insurance 1 2.5-5% insurance 0.00 contracts premium Environmental tax 1 fixed fee and 0.10 variable amount on weight Vehicle tax 1 various rates load capacity 0.20 Capital tax 1 0.2% taxable 0.30 capital Tax on interest 0 withheld 35.0% interest 0.90 income Unemployment insurance 0 paid jointly 1.0% gross salaries 1.10 contributions Mandatory family fund 1 1.2% + 0.5% gross salaries 1.40 contributions and (admin fee) administrative costs 45 Transport Taxes 1 various rates type of truck 1.40 Fuel tax 1 CHF 0.759 fuel 1.60 per liter consumption Real estate gains tax 1 45.9% capital gains 4.00 Corporate income tax 1 15 21.3% taxable profit 4.90 Social Security 2 40 5.1% gross salaries 5.70 contributions Pension fund 4 8.3% gross salaries 9.30 Totals 19 63 30.1 46 47 1. Benchmarking Trading Across Borders Regulations: Switzerland is ranked 43 overall for Trading Across Borders. Ranking of Switzerland in Trading Across Borders - Compared to good practice and selected economies: 48 The following table shows Trading Across Borders data for Switzerland compared to good practice and comparator economies: Good Practice Documents to Time to Cost to Documents to Time to Cost to export export (days) export (US$ import import (days) import (US$ Economies (number) per (number) per container) container) Denmark* 5 France 2 2 Malaysia 450 Singapore 4 439 Selected Economy Switzerland 4 8 1537 5 9 1540 Comparator Economies Belgium 4 8 1619 5 9 1600 Germany 4 7 872 5 7 937 Italy 4 20 1245 4 18 1245 Spain 6 9 1221 7 10 1221 United Kingdom 4 7 950 4 6 1045 * The following economies are also good practice economies for : Time to export (days): Estonia 49 2. Historical data: Trading Across Borders in Switzerland Trading Across Borders data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 43 43 Cost to export (US$ per container) 1238 1537 1537 1537 Cost to import (US$ per container) 1333 1505 1540 1540 Documents to export (number) 4 4 4 4 Documents to import (number) 5 5 5 5 Time to export (days) 8 8 8 8 Time to import (days) 9 9 9 9 3. The following graphs illustrate the Trading Across Borders sub indicators in Switzerland over the past 4 years: 50 51 Trading Across Borders in Switzerland These tables list the procedures necessary to import and export a standardized cargo of goods in Switzerland. The documents required to export and import the goods are also shown. Nature of Export Procedures (2010) Duration (days) US$ Cost Documents preparation 3 125 Customs clearance and technical control 1 50 Ports and terminal handling 1 260 Inland transportation and handling 3 1102 Totals 8 1537 Nature of Import Procedures (2010) Duration (days) US$ Cost Documents preparation 3 125 Customs clearance and technical control 2 100 Ports and terminal handling 1 215 Inland transportation and handling 3 1100 Totals 9 1540 52 Documents for Export and Import Export Certificate of origin Commercial invoice Customs export declaration Bill of lading Import Bill of lading Certificate of origin Commercial invoice Customs import declaration Packing list 53 54 1. Benchmarking Enforcing Contracts Regulations: Switzerland is ranked 28 overall for Enforcing Contracts. Ranking of Switzerland in Enforcing Contracts - Compared to good practice and selected economies: 55 The following table shows Enforcing Contracts data for Switzerland compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) claim) Economies Bhutan 0.1 Ireland 20 Singapore 150 Selected Economy Switzerland 31 417 24.0 Comparator Economies Belgium 26 505 16.6 Germany 30 394 14.4 Italy 41 1210 29.9 Spain 39 515 17.2 United Kingdom 28 399 23.4 56 2. Historical data: Enforcing Contracts in Switzerland Enforcing Contracts data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 28 28 Procedures (number) 31 31 31 31 Time (days) 417 417 417 417 Cost (% of claim) 21.2 24.0 24.0 24.0 3. The following graphs illustrate the Enforcing Contracts sub indicators in Switzerland over the past 4 years: 57 Enforcing Contracts in Switzerland This topic looks at the efficiency of contract enforcement in Switzerland. Nature of Procedure (2010) Indicator Procedures (number) 31 Time (days) 417 Filing and service 37.0 Trial and judgment 320.0 Enforcement of judgment 60.0 Cost (% of claim)* 24.00 Attorney cost (% of claim) 14.1 Court cost (% of claim) 9.1 Enforcement Cost (% of claim) 0.8 58 Court information: Zurich Commercial Court ("Handelsgericht Zuerich") * Claim assumed to be equivalent to 200% of income per capita. 59 60 1. Benchmarking Closing Business Regulations: Switzerland is ranked 41 overall for Closing a Business. Ranking of Switzerland in Closing Business - Compared to good practice and selected economies: 61 The following table shows Closing Business data for Switzerland compared to good practice and comparator economies: Good Practice Recovery rate Time (years) Cost (% of (cents on the estate) Economies dollar) Ireland 0.4 Japan 92.7 Singapore* 1 Selected Economy Switzerland 47.5 3.0 4 Comparator Economies Belgium 87.6 0.9 4 Germany 53.1 1.2 8 Italy 58.0 1.8 22 Spain 76.3 1.0 11 United Kingdom 88.6 1.0 6 * The following economies are also good practice economies for : Cost (% of estate): Colombia, Kuwait, Norway 62 2. Historical data: Closing Business in Switzerland Closing a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 38 41 Time (years) 3.0 3.0 3.0 3.0 Cost (% of estate) 4 4 4 4 Recovery rate (cents on the dollar) 47.1 46.8 46.8 47.5 3. The following graphs illustrate the Closing Business sub indicators in Switzerland over the past 4 years: 63 Since 2004 Doing Business has been tracking reforms aimed at simplifying business regulations, strengthening property rights, opening access to credit and enforcing contracts by measuring their impact on 10 indicator sets . * Nearly 1,000 reforms have had an impact on these indicators. Doing Business 2011, covering June 2009 to June 2010, reports that 117 economies implemented 216 reforms to make it easier to start a business. 64% of economies measured by Doing Business have reformed this year, focusing on easing business start-up, lightening the tax burden, simplifying import and export regulations and improving credit information systems. The top 10 most-improved in Doing Business 2011 Dealing with Construction Trading Across Borders Positive Change Registering Property Enforcing Contracts Protecting Investors Starting a Business Closing a Business Negative Change Getting Credit Paying Taxes Permits Economy Kazakhstan Rwanda Peru Vietnam Cape Verde Tajikistan Zambia Hungary Grenada Brunei Darussalam * For Doing Business 2011 the Employing Workers indicator is not included in the aggregate ease of doing business ranking. 64 Summary of changes to business regulation in top 10 most improved economies in Doing Business 2011 and selected comparator economies. Belgium Belgium's capital city, Brussels, made it more difficult to transfer property by requiring a clean-soil certificate. Belgium introduced a new law that will promote and facilitate the survival of viable businesses experiencing financial difficulties. Brunei Darussalam Brunei Darussalam made starting a business easier by improving efficiency at the company registrar and implementing an electronic system for name searches. Brunei Darussalam reduced the corporate income tax rate from 23.5% to 22% while also introducing a lower tax rate for small businesses, ranging from 5.5% to 11%. The introduction of an electronic customs system in Brunei Darussalam made trading easier. Cape Verde Cape Verde made start-up easier by eliminating the need for a municipal inspection before a business begins operations and computerizing the system for delivering the municipal license. Cape Verde eased property registration by switching from fees based on a percentage of the property value to lower fixed rates. Cape Verde abolished the stamp duties on sales and checks. Germany Germany eased business start-up by increasing the efficiency of communications between the notary and the commercial registry and eliminating the need to publish an announcement in a newspaper. Grenada Grenada eased business start-up by transferring responsibility for the commercial registry from the courts to the civil administration. The appointment of a registrar focusing only on property cut the time needed to transfer property in Grenada by almost half. Grenada's customs administration made trading faster by simplifying procedures, reducing inspections, improving staff training and enhancing communication with users. Hungary Hungary implemented a time limit for the issuance of building permits. Hungary reduced the property registration fee by 6% of the property value. Hungary simplified taxes and tax bases. Amendments to Hungary's bankruptcy law encourage insolvent companies to consider reaching agreements with creditors out of court so as to avoid bankruptcy. Italy Italy made starting a business easier by enhancing an online registration system. Kazakhstan Kazakhstan eased business start-up by reducing the minimum capital requirement to 100 tenge ($0.70) and eliminating the need to have the memorandum of association and company charter notarized. Kazakhstan made dealing with construction permits easier by implementing a one-stop shop related to technical conditions for utilities. Kazakhstan strengthened investor protections by requiring greater corporate disclosure in company annual reports. Kazakhstan speeded up trade through efforts to modernize customs, including implementation of a risk management system and improvements in customs automation. Peru Peru eased business start-up by simplifying the requirements for operating licenses and creating an online one-stop shop for business registration. Peru streamlined construction permitting by implementing administrative reforms. Peru introduced fast-track procedures at the land registry, cutting by half the time needed to register property. Peru made trading easier by implementing a new web-based electronic data interchange system, risk-based inspections and payment deferrals. Rwanda Rwanda made dealing with construction permits easier by passing new building regulations at the end of April 2010 and implementing new time limits for the issuance of various permits. Rwanda enhanced access to credit by allowing borrowers the right to inspect their own credit report and mandating that loans of all sizes be reported to the central bank's public credit registry. Rwanda reduced the number of trade documents required and enhanced its joint border management procedures with Uganda and other neighbors, leading to an improvement in the trade logistics environment. Spain Spain streamlined the documentation for imports by including tax-related information on its single administrative document. Spain amended its regulations governing insolvency proceedings with the aim of reducing the cost and time. The new regulations also introduced out-of-court workouts. Tajikistan Tajikistan made starting a business easier by creating a one-stop shop that consolidates registration with the state and the tax authority. Tajikistan strengthened investor protections by requiring greater corporate disclosure in the annual report and greater access to corporate information for minority investors. Tajikistan lowered its corporate income tax rate. 65 United Kingdom The United Kingdom improved the process for enforcing contracts by modernizing civil procedures in the commercial court. Amendments to the United Kingdom's insolvency rules streamline bankruptcy procedures, favor the sale of the firm as a whole and improve the calculation of administrators' fees. Vietnam Vietnam eased company start-up by creating a one-stop shop that combines the processes for obtaining a business license and tax license and by eliminating the need for a seal for company licensing. Vietnam made dealing with construction permits easier by reducing the cost to register newly completed buildings by 50% and transferring the authority to register buildings from local authorities to the Department of National Resources and Environment. Vietnam improved its credit information system by allowing borrowers to examine their own credit report and correct errors. Zambia Zambia eased business start-up by eliminating the minimum capital requirement. Zambia eased trade by implementing a one-stop border post with Zimbabwe, launching web-based submission of customs declarations and introducing scanning machines at border posts. Zambia improved contract enforcement by introducing an electronic case management system in the courts that provides electronic referencing of cases, a database of laws, real-time court reporting and public access to court records. 66 67