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Czech Republic 31st most competitive country in the world: report

Prague Castle. Photo: Bohemist

Though seen as a favorable place to do business, the Czech Republic still suffers from government bureaucracy and a heavy tax burden.

By BOHEMIST STAFF

PRAGUE – Moving neither up or down on the scale, the Czech Republic remains the world’s 31st most competitive country in the world with regards to the ease of doing business, according to a new report issued last week by the World Economic Forum.

According to the “Global Competitiveness Report 2016–2017,” which assesses the business landscape in 138 countries, the Czech Republic fared well in a variety of topics that contributed to the composite ranking, finishing 19th in the world in terms of its macroeconomic environment and 25th in the health and primary education category.

The only category that the country ranked number one in was in HIV prevalence, meaning that the disease had the lowest penetration of any country in the word.

The overall ranking of 31st matches that of last year, and is one position ahead of Spain, and just behind Estonia. Slovakia, meanwhile ranked the 65th most competitive country, while Switzerland ranked number one in the world, just ahead of Singapore and the United States.

While the business climate in the Czech Republic is seen as favorable, the report also pointed to a slew of problems, such as with the burden of government regulation and the effect of taxation on the incentive to work, for which the country received a ranking of 111th and 110th in the world, respectively.

More generally speaking, the report shows that the three biggest problems the country faces in doing business are government bureaucracy, tax regulations and corruption. According to local newspapers, the Czech Republic is the ninth most corrupt country in Europe, while Slovakia is number two.

Indeed, taxation is a problem in the Czech Republic that many experts believe is about to get worse. Starting on December 1, the first phase of a new law requiring the compulsory use of electronic cash registers linked to local finance regulators could force several small shops around the country out of business.

While a more efficient way to tackle tax evasion the government estimates at just over US$6 billion annually, enforcing a very high sales tax in the Czech Republic — currently at 21% — will put a further squeeze on local restaurants and shops who will have to charge more. Experts believe the new system will push more and more consumers shopping to big-name outlets, who would likely offset smaller profit margins with a higher trading volumes.

About Bohemist

Bohemist is an upstart news outlet serving the Czech Republic. Feel free to write us at editor@bohemist.cz.

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