(2017) Haïti Doing Business 2017: Profil de l'économie

Haiti Doing Business 2017 SoEconomy Economy Profile 2017 Haiti Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized 2 Haiti Doing Business 2017 © 2017 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 19 18 17 16 This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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ISBN (paper): 978-1-4648-0948-4 ISBN (electronic): 978-1-4648-0984-2 DOI: 10.1596/978-1-4648-0948-4 ISSN: 1729-2638 COVER DESIGN: CORPOR ATE VISIONS, INC. 3 Haiti Doing Business 2017 CONTENTS Introduction .................................................................................................................................. 4 Starting a business ..................................................................................................................... 17 Dealing with conustruction permits ........................................................................................ 25 Getting electricity ....................................................................................................................... 37 Registering property .................................................................................................................. 45 Getting credit .............................................................................................................................. 56 Protecting minority investors ................................................................................................... 61 Paying taxes ................................................................................................................................ 68 Trading across borders .............................................................................................................. 73 Enforcing contracts .................................................................................................................... 80 Resolving insolvency .................................................................................................................. 87 Labor market regulation ........................................................................................................... 91 Distance to frontier and ease of doing business ranking ...................................................... 97 Resources on the Doing Business website ............................................................................ 100 4 Haiti Doing Business 2017 INTRODUCTION Doing Business sheds light on how easy or difficult it is for a local entrepreneur to open and run a small to medium-size business when complying with relevant regulations. It measures and tracks changes in regulations affecting 11 areas in the life cycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and labor market regulation. Doing Business 2017 presents the data for the labor market regulation indicators in an annex. The report does not present rankings of economies on labor market regulation indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business. In a series of annual reports Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 190 economies, from Afghanistan to Zimbabwe, over time. The data set covers 48 economies in Sub- Saharan Africa, 32 in Latin America and the Caribbean, 25 in East Asia and the Pacific, 25 in Eastern Europe and Central Asia, 20 in the Middle East and North Africa and 8 in South Asia, as well as 32 OECD high-income economies. The indicators are used to analyze economic outcomes and identify what reforms have worked, where and why. This economy profile presents the Doing Business indicators for Haiti. To allow useful comparison, it also provides data for other selected economies (comparator economies) for each indicator. The data in this report are current as of June 1, 2016 (except for the paying taxes indicators, which cover the period January–December 2015). 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 and getting electricity), the security of property from theft and looting, the transparency of government procurement, macroeconomic conditions or the underlying strength of institutions—are not directly studied by Doing Business. 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 policy makers in designing regulatory reform. More information is available in the full report. Doing Business 2017 presents the indicators, analyzes their relationship with economic outcomes and presents business regulatory reforms. The data, along with information on ordering Doing Business 2017, are available on the Doing Business website at http://www.doingbusiness.org. 5 Haiti Doing Business 2017 CHANGES IN DOING BUSINESS 2017 As part of a three-year update in methodology, Doing Business 2017 expands further by adding postfiling processes to the paying taxes indicator, including a gender component in three of the indicators and developing a new pilot indicator on selling to the government. Also, for the first time this year Doing Business collects data on Somalia, bringing the total number of economies covered to 190. The paying taxes indicator is expanded this year to include postfiling processes – those processes that occur after a firm complies with its regular tax obligations. These include tax refunds, tax audits and tax appeals. In particular, Doing Business measures the time it takes to get a value added tax (VAT) refund, deal with a simple mistake on a corporate tax return that can potentially trigger an audit and good practices with administrative appeals process. This year’s Doing Business report presents a gender dimension in four of the indicator sets: starting a business, registering property, enforcing contracts and labor market regulation. Three of these areas are included in the distance to frontier score and in the ease of doing business ranking, while the fourth—labor market regulation—is not. Doing Business has traditionally assumed that the entrepreneurs or workers discussed in the case studies were men. This was incomplete by not reflecting correctly the Doing Business processes as applied to women—which in some economies may be different from the processes applied to men. Starting this year, Doing Business measures the starting a business process for two case scenarios: one where all entrepreneurs are men and one where all entrepreneurs are women. In economies where the processes are more onerous if the entrepreneur is a woman, Doing Business now counts the extra procedures applied to roughly half of the population that is female (for example, obtaining a husband’s consent or gender-specific requirements for opening a personal bank account when starting a business). Within the registering property indicators, a gender component has been added to the quality of land administration index. This component measures women’s ability to use, own, and transfer property according to the law. Finally, within the enforcing contracts indicator set, economies will be scored on having equal evidentiary weight of women’s testimony in court. Also for the first time this year Doing Business collects data on Somalia, bringing the total number of economies covered to 190. For more details on the changes, see the “”Old and new factors covered in Doing Business” section in the Overview chapter starting on page 1 of the Doing Business 2017 report. For more details on the data and methodology, please see the “Data Notes” chapter starting on page 114 of the Doing Business 2017 report. For more details on the distance to frontier metric, please see the “Distance to frontier and ease of doing business ranking” chapter in this profile. 6 Haiti Doing Business 2017 THE BUSINESS ENVIRONMENT For policy makers trying to improve their economy’s regulatory environment for business, a good place to start is to find out how it compares with the regulatory environment in other economies. Doing Business provides an aggregate ranking on the ease of doing business based on indicator sets that measure and benchmark regulations applying to domestic small to medium-size businesses through their life cycle. Economies are ranked from 1 to 190 by the ease of doing business ranking. Doing Business presents results for 2 aggregate measures: the distance to frontier score and the ease of doing business ranking. The ranking of economies is determined by sorting the aggregate distance to frontier scores, rounded to two decimals. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier. (See the chapter on the distance to frontier and ease of doing business). The ease of doing business ranking compares economies with one another; the distance to frontier score benchmarks economies with respect to regulatory best practice, showing the absolute distance to the best performance on each Doing Business indicator. When compared across years, the distance to frontier score shows how much the regulatory environment for local entrepreneurs in an economy has changed over time in absolute terms, while the ease of doing business ranking can show only how much the regulatory environment has changed relative to that in other economies. The 10 topics included in the ranking in Doing Business 2017: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. The labor market regulation indicators are not included in this year’s aggregate ease of doing business ranking, but the data are presented in the economy profile. ECONOMY OVERVIEW Region: Latin America & Caribbean Income category: Low income Population: 10,711,067 GNI per capita (US$): 820 DB2017 rank: 181 DB2016 rank: 180* Change in rank: -1 DB 2017 DTF: 38.66 DB 2016 DTF: 38.51 Change in DTF: 0.15 * DB2016 ranking shown is not last year’s published ranking but a comparable ranking for DB2016 that captures the effects of such factors as data revisions and the changes in methodology. See the data notes starting on page 114 of the Doing Business 2017 report for sources and definitions. Haiti Doing Business 2017 THE BUSINESS ENVIRONMENT Figure 1.1 Where economies stand in the global ranking on the ease of doing business Source: Doing Business database. Haiti Doing Business 2017 THE BUSINESS ENVIRONMENT For policy makers, knowing where their economy stands in the aggregate ranking on the ease of doing business is useful. Also useful is to know how it ranks relative to comparator economies and relative to the regional average (figure 1.2). The economy’s rankings (figure 1.3) and distance to frontier scores (figure 1.4) on the topics included in the ease of doing business ranking provide another perspective. Figure 1.2 How Haiti and comparator economies rank on the ease of doing business Note: The rankings are benchmarked to June 2016 and based on the average of each economy’s distance to frontier (DTF) scores for the 10 topics included in this year’s aggregate ranking. The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier. For the economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities. Source: Doing Business database. 9 Haiti Doing Business 2017 THE BUSINESS ENVIRONMENT Figure 1.3 Rankings on Doing Business topics - Haiti (Scale: Rank 190 center, Rank 1 outer edge) Figure 1.4 Distance to frontier scores on Doing Business topics - Haiti (Scale: Score 0 center, Score 100 outer edge) Source: Doing Business database. Note: The rankings are benchmarked to June 2016 and based on the average of each economy’s distance to frontier (DTF) scores for the 10 topics included in this year’s aggregate ranking. The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier. For the economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities. 10 Haiti Doing Business 2017 THE BUSINESS ENVIRONMENT Just as the overall ranking on the ease of doing business tells only part of the story, so do changes in that ranking. Yearly movements in rankings can provide some indication of changes in an economy’s regulatory environment for firms, but they are always relative. Moreover, year-to-year changes in the overall rankings do not reflect how the business regulatory environment in an economy has changed over time—or how it has changed in different areas. To aid in assessing such changes, Doing Business introduced the distance to frontier score. This measure shows how far on average an economy is from the best performance achieved by any economy on each Doing Business indicator. Comparing the measure for an economy at 2 points in time allows users to assess how much the economy’s regulatory environment as measured by Doing Business has changed over time—how far it has moved toward (or away from) the most efficient practices and strongest regulations in areas covered by Doing Business (figure 1.5). Figure 1.5 How far has Haiti come in the areas measured by Doing Business? Note: The distance to frontier score shows how far on average an economy is from the best performance achieved by any economy on each Doing Business indicator. Starting a business is comparable to 2010. Getting credit, protecting minority investors, paying taxes and resolving insolvency had methodology changes in 2014 and thus are only comparable to 2013. Dealing with construction permits, registering property, trading across borders, enforcing contracts and getting electricity had methodology changes in 2015 and thus are only comparable to 2014. The measure is normalized to range between 0 and 100, with 100 representing the best performance (the frontier). See the data notes starting on page 114 of the Doing Business 2017 report for more details on the distance to frontier score. Source: Doing Business database. 11 Haiti Doing Business 2017 THE BUSINESS ENVIRONMENT The absolute values of the indicators tell another part of the story (table 1.1). The indicators, on their own or in comparison with the indicators of a good practice economy or those of comparator economies in the region, may reveal bottlenecks reflected in large numbers of procedures, long delays or high costs. Or they may reveal unexpected strengths in an area of business regulation—such as a regulatory process that can be completed with a small number of procedures in a few days and at a low cost. Comparison of the economy’s indicators today with those in the previous year may show where substantial bottlenecks persist—and where they are diminishing. Table 1.1 Summary of Doing Business indicators for Haiti Indicator Haiti DB2017 Haiti DB2016 Dominican Republic DB2017 Guyan a DB2017 Jamaica DB2017 Mexico DB2017 Puerto Rico (U.S.) DB2017 Suriname DB2017 Best performer globally DB2017 Starting a Business (Rank) 188 189 115 99 12 93 51 185 1 (New Zealand) Starting a Business (DTF Score) 33.61 33.53 83.34 85.45 95.61 85.74 91.23 47.82 99.96 (New Zealand) Procedure – Men (number) 12.0 12.0 7.0 7.0 2.0 7.8 6.0 13.0 1.0 (New Zealand) Time – Men (days) 97.0 97.0 14.5 18.0 10.0 8.4 5.5 84.0 0.5 (New Zealand) Cost – Men (% of income per capita) 219.3 235.3 16.3 10.7 4.3 17.8 1.3 101.4 0.0 (Slovenia) Procedure – Women (number) 12.0 12.0 7.0 7.0 2.0 7.8 6.0 14.0 1.0 (New Zealand) Time – Women (days) 97.0 97.0 14.5 18.0 10.0 8.4 5.5 85.0 0.5 (New Zealand) Cost – Women (% of income per capita) 219.3 235.3 16.3 10.7 4.3 17.8 1.3 101.4 0.0 (Slovenia) Paid-in min. capital (% of income per capita) 15.5 16.7 36.5 0.0 0.0 0.0 0.0 0.3 0.0 (127 Economies*) Dealing with Construction Permits 166 166 45 148 75 83 131 112 1 (New Zealand) 12 Haiti Doing Business 2017 Indicator Haiti DB2017 Haiti DB2016 Dominican Republic DB2017 Guyan a DB2017 Jamaica DB2017 Mexico DB2017 Puerto Rico (U.S.) DB2017 Suriname DB2017 Best performer globally DB2017 (Rank) Dealing with Construction Permits (DTF Score) 53.76 52.86 75.20 59.28 71.15 69.79 62.17 66.43 87.40 (New Zealand) Procedures (number) 12.0 12.0 13.0 15.0 17.0 13.0 20.0 10.0 7.0 (4 Economies*) Time (days) 80.0 80.0 184.0 188.0 129.5 86.4 165.0 223.0 28.0 (Korea, Rep.) Cost (% of warehouse value) 14.9 15.7 1.7 0.6 0.8 9.8 6.2 0.2 0.1 (Trinidad and Tobago) Building quality control index (0-15) 5.0 5.0 13.0 4.0 10.0 11.7 12.0 6.5 15.0 (Luxembourg*) Getting Electricity (Rank) 139 139 148 129 101 98 65 84 1 (Korea, Rep.) Getting Electricity (DTF Score) 54.82 55.04 52.18 58.46 68.00 68.32 76.55 71.51 99.88 (Korea, Rep.) Procedures (number) 4.0 4.0 7.0 8.0 7.0 6.8 5.0 4.0 3.0 (15 Economies*) Time (days) 60.0 60.0 67.0 82.0 95.0 100.4 32.0 113.0 18.0 (Korea, Rep.*) Cost (% of income per capita) 3708.5 3639.1 267.1 404.6 231.6 336.7 354.1 484.4 0.0 (Japan) Reliability of supply and transparency of tariff index (0-8) 0.0 0.0 0.0 4.0 6.0 6.2 4.0 4.0 8.0 (26 Economies*) Registering Property (Rank) 180 180 82 122 123 101 153 176 1 (New Zealand) Registering Property (DTF Score) 32.10 32.00 65.61 54.31 53.70 61.05 47.29 37.52 94.46 (New Zealand) Procedures (number) 5.0 5.0 6.0 6.0 8.0 7.7 8.0 6.0 1.0 (4 Economies*) 13 Haiti Doing Business 2017 Indicator Haiti DB2017 Haiti DB2016 Dominican Republic DB2017 Guyan a DB2017 Jamaica DB2017 Mexico DB2017 Puerto Rico (U.S.) DB2017 Suriname DB2017 Best performer globally DB2017 Time (days) 312.0 312.0 45.0 75.0 18.0 42.1 191.0 106.0 1.0 (3 Economies*) Cost (% of property value) 7.0 7.1 3.5 4.6 9.8 5.2 1.2 13.7 0.0 (Saudi Arabia) Quality of the land administration index (0- 30) 2.5 2.5 14.5 7.5 14.0 16.3 14.0 10.0 29.0 (Singapore) Getting Credit (Rank) 175 174 101 82 16 5 7 175 1 (New Zealand) Getting Credit (DTF Score) 10.00 10.00 45.00 50.00 80.00 90.00 85.00 10.00 100.00 (New Zealand) Strength of legal rights index (0-12) 2.0 2.0 1.0 3.0 9.0 10.0 10.0 2.0 12.0 (3 Economies*) Depth of credit information index (0-8) 0.0 0.0 8.0 7.0 7.0 8.0 7.0 0.0 8.0 (30 Economies*) Credit registry coverage (% of adults) 1.6 1.6 25.2 0.0 0.0 0.0 0.0 0.0 100.0 (3 Economies*) Credit bureau coverage (% of adults) 0.0 0.0 74.9 16.4 23.3 100.0 100.0 0.0 100.0 (23 Economies*) Protecting Minority Investors (Rank) 188 188 87 87 63 53 87 165 1 (New Zealand*) Protecting Minority Investors (DTF Score) 20.00 20.00 53.33 53.33 58.33 60.00 53.33 35.00 83.33 (New Zealand*) Strength of minority investor protection index (0-10) 2.0 2.0 5.3 5.3 5.8 6.0 5.3 3.5 8.3 (New Zealand) Extent of conflict of interest regulation index (0-10) 3.0 3.0 5.3 6.0 5.7 6.0 7.0 2.3 9.3 (New Zealand) Extent of shareholder governance index (0- 1.0 1.0 5.3 4.7 6.0 6.0 3.7 4.7 8.3 (Norway) 14 Haiti Doing Business 2017 Indicator Haiti DB2017 Haiti DB2016 Dominican Republic DB2017 Guyan a DB2017 Jamaica DB2017 Mexico DB2017 Puerto Rico (U.S.) DB2017 Suriname DB2017 Best performer globally DB2017 10) Paying Taxes (Rank) 159 158 129 136 116 114 135 103 1 (United Arab Emirates) Paying Taxes (DTF Score) 53.1 53.1 60.7 59.27 65.18 65.81 59.82 69.44 99.44 (United Arab Emirates) Payments (number per year) 47.0 47.0 7.0 35.0 11.0 6.0 16.0 30.0 3.0 (Hong Kong SAR, China*) Time (hours per year) 184.0 184.0 317.0 256.0 268.0 286.0 218.0 199.0 55.0 (Luxembourg) Total tax rate (% of profit) 40.3 40.3 42.4 32.3 34.3 52.0 62.3 27.9 26.1 (32 Economies*) Postfiling index (0-100) 26.8 14.1 31.0 19.5 41.4 48.4 98.5 (Estonia) Trading across Borders (Rank) 76 77 58 135 131 61 62 78 1 (10 Economies*) Trading across Borders (DTF Score) 76.69 76.08 83.51 59.33 60.70 82.09 81.86 75.02 100.00 (10 Economies*) Time to export: Border compliance (hours) 28 28 16 72 58 20 48 84 0 (18 Economies*) Cost to export: Border compliance (USD) 368 368 488 378 876 400 386 468 0 (18 Economies*) Time to export: Documentary compliance (hours) 22 24 10 200 47 8 2 12 1 (25 Economies*) Cost to export: Documentary compliance (USD) 48 48 15 78 90 60 75 40 0 (19 Economies*) Time to import: Border compliance (hours) 83 91 24 84 80 44 48 48 0 (25 Economies*) 15 Haiti Doing Business 2017 Indicator Haiti DB2017 Haiti DB2016 Dominican Republic DB2017 Guyan a DB2017 Jamaica DB2017 Mexico DB2017 Puerto Rico (U.S.) DB2017 Suriname DB2017 Best performer globally DB2017 Cost to import: Border compliance (USD) 583 583 579 265 906 450 386 658 0 (28 Economies*) Time to import: Documentary compliance (hours) 28 30 14 156 72 18 2 24 1 (29 Economies*) Cost to import: Documentary compliance (USD) 150 150 40 63 90 100 75 40 0 (30 Economies*) Enforcing Contracts (Rank) 123 123 131 91 117 40 97 187 1 (Korea, Rep.) Enforcing Contracts (DTF Score) 52.49 52.49 51.03 57.62 53.60 67.01 56.13 25.94 84.15 (Korea, Rep.) Time (days) 530.0 530.0 505.0 581.0 550.0 340.7 630.0 1715.0 164.0 (Singapore) Cost (% of claim) 42.6 42.6 40.9 25.2 45.6 33.0 25.6 37.1 9.0 (Iceland) Quality of judicial processes index (0-18) 7.0 7.0 5.5 7.0 8.5 10.1 7.0 3.5 15.5 (Australia) Resolving Insolvency (Rank) 169 169 160 154 38 30 9 129 1 (Finland) Resolving Insolvency (DTF Score) 0.00 0.00 23.55 25.55 69.15 73.11 84.84 34.14 93.89 (Finland) Recovery rate (cents on the dollar) 0.0 0.0 8.9 18.4 64.6 69.1 70.5 8.3 92.9 (Norway) Time (years) no practice no practice 3.5 3.0 1.1 1.8 2.5 5.0 0.4 (22 Economies*) Cost (% of estate) no practice no practice 38.0 28.5 18.0 18.0 11.0 30.0 1.0 (22 Economies*) Strength of insolvency framework index (0-16) 0.0 0.0 6.0 5.0 11.0 11.5 15.0 9.5 15.0 (6 Economies*) Source: Doing Business database. 16 Haiti Doing Business 2017 Note: DB2016 rankings shown are not last year’s published rankings but comparable rankings for DB2016 that capture the effects of such factors as data revisions and changes to the methodology. The global best performer on time for paying taxes is defined as the lowest time recorded among all economies in the DB2017 sample that levy the 3 major taxes: profit tax, labor taxes and mandatory contributions, and VAT or sales tax. If an economy has no laws or regulations covering a specific area—for example, insolvency—it receives a “no practice” mark. Similarly, an economy receives a “no practice” mark if regulation exists but is never used in practice or if a competing regulation prohibits such practice. Either way, a “no practice” mark puts the economy at the bottom of the ranking on the relevant indicator. * Two or more economies share the top ranking on this indicator. A number shown in place of an economy’s name indicates the number of economies that share the top ranking on the indicator. For a list of these economies, see the Doing Business website (http://www.doingbusiness.org). 17 Haiti Doing Business 2017 STARTING A BUSINESS Formal registration of companies has many immediate benefits for the companies and for business owners and employees. Legal entities can outlive their founders. Resources are pooled as several shareholders join forces to start a company. Formally registered companies have access to services and institutions from courts to banks as well as to new markets. And their employees can benefit from protections provided by the law. An additional benefit comes with limited liability companies. These limit the financial liability of company owners to their investments, so personal assets of the owners are not put at risk. Where governments make registration easy, more entrepreneurs start businesses in the formal sector, creating more good jobs and generating more revenue for the government. What do the indicators cover? Doing Business records all procedures officially required, or commonly done in practice, for an entrepreneur to start up and formally operate an industrial or commercial business, as well as the time and cost to complete these procedures and the paid- in minimum capital requirement. These procedures include obtaining all necessary licenses and permits and completing any required notifications, verifications or inscriptions for the company and employees with relevant authorities. The ranking of economies on the ease of starting a business is determined by sorting their distance to frontier scores for starting a business. These scores are the simple average of the distance to frontier scores for each of the component indicators. To make the data comparable across economies, several assumptions about the business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. Assumptions about the business:  Is a limited liability company (or its legal equivalent). If there is more than one type of limited liability company in the economy, the limited liability form most common among domestic firms is chosen. Information on the most common form is obtained from incorporation lawyers or the statistical office.  Operates in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. WHAT THE STARTING A BUSINESS INDICATORS MEASURE Procedures to legally start and operate a company (number) Preregistration (for example, name verification or reservation, notarization) Registration in the economy’s largest business city 1 Postregistration (for example, social security registration, company seal) Obtaining approval from spouse to start a business, to leave the home to register the company or open a bank account. Obtaining any gender specific document for company registration and operation, national identification card or opening a bank account. Time required to complete each procedure (calendar days) Does not include time spent gathering information Each procedure starts on a separate day (2 procedures cannot start on the same day). Procedures that can be fully completed online are recorded as ½ day. Procedure completed once final document is received No prior contact with officials Cost required to complete each procedure (% of income per capita) Official costs only, no bribes No professional fees unless services required by law or commonly used in practice Paid-in minimum capital (% of income per capita) Deposited in a bank or with a notary before registration (or within 3 months)  The size of the entire office space is approximately 929 square meters (10,000 square feet). 18 Haiti Doing Business 2017  Is 100% domestically owned and has five owners, none of whom is a legal entity.  Has start-up capital of 10 times income per capita  Performs general industrial or commercial activities, such as the production or sale to the public of products or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily polluting production processes.  Leases the commercial plant or offices and is not a proprietor of real estate.  The amount of the annual lease for the office space is equivalent to 1 times income per capita.  Does not qualify for investment incentives or any special benefits.  Has at least 10 and up to 50 employees one month after the commencement of operations, all of them domestic nationals.  Has a turnover of at least 100 times income per capita.  Has a company deed 10 pages long The owners:  Have reached the legal age of majority and are capable of making decisions as an adult. If there is no legal age of majority, they are assumed to be 30 years old.  Are sane, competent, in good health and have no criminal record.  Are married, the marriage is monogamous and registered with the authorities.  Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population. 19 Haiti Doing Business 2017 STARTING A BUSINESS Where does the economy stand today? What does it take to start a business in Haiti? According to data collected by Doing Business, starting a business there requires 12.0 procedures , takes 97.0 days, costs 219.3% of income per capita for men, and requires 12.0 procedures , takes 97.0 days, costs 219.3% of income per capita for women. A requirement of paid-in minimum capital of 15.5% of income per capita (figure 2.1) is legally mandatory for both men and women. Most indicator sets refer to a case scenario in the largest business city of an economy, except for 11 economies for which the data are a population-weighted average of the 2 largest business cities. See the chapter on distance to frontier and ease of doing business ranking at the end of this profile for more details. Figure 2.1 What it takes to start a business in Haiti Paid-in minimum capital (% of income per capita): 15.5 Source: Doing Business database. Note: Time shown in the figure above may not reflect simultaneity of procedures. Online procedures account for 0.5 days in the total time calculation. For more information on the methodology of the starting a business indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Procedures in light blue for married women only. 20 Haiti Doing Business 2017 STARTING A BUSINESS Globally, Haiti stands at 188 in the ranking of 190 economies on the ease of starting a business (figure 2.2). The rankings for comparator economies and the regional average ranking provide other useful information for assessing how easy it is for an entrepreneur in Haiti to start a business. Figure 2.2 How Haiti and comparator economies rank on the ease of starting a business Source: Doing Business database. [... middle sections omitted for long document ...] 97 Haiti Doing Business 2017 DISTANCE TO FRONTIER AND EASE OF DOING BUSINESS RANKING Doing Business presents results for two aggregate measures: the distance to frontier score and the ease of doing business ranking, which is based on the distance to frontier score. The ease of doing business ranking compares economies with one another; the distance to frontier score benchmarks economies with respect to regulatory best practice, showing the absolute distance to the best performance on each Doing Business indicator. When compared across years, the distance to frontier score shows how much the regulatory environment for local entrepreneurs in an economy has changed over time in absolute terms, while the ease of doing business ranking can show only how much the regulatory environment has changed relative to that in other economies. Distance to Frontier The distance to frontier score captures the gap between an economy’s performance and a measure of best practice across the entire sample of 41 indicators for 10 Doing Business topics (the labor market regulation indicators are excluded). For starting a business, for example, New Zealand has the smallest number of procedures required (1), and New Zealand the shortest time to fulfill them (0.5 days). Slovenia has the lowest cost (0.0), and Australia, Colombia and 111 other economies have no paid -in minimum capital requirement (table 14.1 in the Doing Business 2017 report). Calculation of the distance to frontier score Calculating the distance to frontier score for each economy involves two main steps. In the first step individual component indicators are normalized to a common unit where each of the 41 component indicators y (except for the total tax rate) is rescaled using the linear transformation (worst − y)/(worst − frontier). In this formulation the frontier represents the best performance on the indicator across all economies since 2005 or the third year in which data for the indicator were collected. Both the best performance and the worst performance are established every five years based on the Doing Business data for the year in which they are established, and remain at that level for the five years regardless of any changes in data in interim years. Thus an economy may set the frontier for an indicator even though it is no longer at the frontier in a subsequent year. For scores such as those on the strength of legal rights index or the quality of land administration index, the frontier is set at the highest possible value. For the total tax rate, consistent with the use of a threshold in calculating the rankings on this indicator, the frontier is defined as the total tax rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015. For the time to pay taxes the frontier is defined as the lowest time recorded among all economies that levy the three major taxes: profit tax, labor taxes and mandatory contributions, and value added tax (VAT) or sales tax. For the different times to trade across borders, the frontier is defined as 1 hour even though in many economies the time is less than that. In the same formulation, to mitigate the effects of extreme outliers in the distributions of the rescaled data for most component indicators (very few economies need 700 days to complete the procedures to start a business, but many need 9 days), the worst performance is calculated after the removal of outliers. The definition of outliers is based on the distribution for each component indicator. To simplify the process two rules were defined: the 95th percentile is used for the indicators with the most dispersed distributions (including minimum capital, number of payments to pay taxes, and the time and cost indicators), and the 99th percentile is used for number of procedures. No outlier is removed for component indicators bound by definition or construction, including legal index scores (such as the depth of credit information index, extent of conflict of interest regulation index and strength of insolvency framework index) and the recovery rate (figure 14.1 in the Doing Business 2017 report). In the second step for calculating the distance to frontier score, the scores obtained for individual indicators for each economy are aggregated through simple averaging into one distance to frontier score, first for each topic and then across all 10 topics: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. More complex aggregation methods—such as principal components and unobserved components—yield a ranking nearly 98 Haiti Doing Business 2017 identical to the simple average used by Doing Business 2 . Thus Doing Business uses the simplest method: weighting all topics equally and, within each topic, giving equal weight to each of the topic components 3 . An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier. All distance to frontier calculations are based on a maximum of five decimals. However, indicator ranking calculations and the ease of doing business ranking calculations are based on two decimals. The difference between an economy’s distance to frontier score in any previous year and its score in 2017 illustrates the extent to which the economy has closed the gap to the regulatory frontier over time. And in any given year the score measures how far an economy is from the best performance at that time. Treatment of the total tax rate The total tax rate component of the paying taxes indicator set enters the distance to frontier calculation in a different way than any other indicator. The distance to frontier score obtained for the total tax rate is transformed in a nonlinear fashion before it enters the distance to frontier score for paying taxes. As a result of the nonlinear transformation, an increase in the total tax rate has a smaller impact on the distance to frontier score for the total tax rate—and therefore on the distance to frontier score for paying taxes—for economies with a below-average total tax rate than it would have had before this approach was adopted in Doing Business 2015 (line B is smaller than line A in figure 14.2 of the Doing Business 2017 report). And for economies with an extreme total tax rate (a rate that is very high relative to the average), an increase has a greater impact on both these distance to frontier scores than it would have had before (line D is bigger than line C in figure 14.2 of the Doing Business 2017 report). 2 See Djankov, Manraj and others (2005). Principal components and unobserved components methods yield a ranking nearly identical to that from the simple average method because both these methods assign roughly equal weights to the topics, since the pairwise correlations among indicators do not differ much. An alternative to the simple average method is to give different weights to the topics, depending on which are considered of more or less importance in the context of a specific economy. 3 For getting credit, indicators are weighted proportionally, according to their contribution to the total score, with a weight of 60% assigned to the strength of legal rights index and 40% to the depth of credit information index. Indicators for all other topics are assigned equal weights The nonlinear transformation is not based on any economic theory of an “optimal tax rate” that minimizes distortions or maximizes efficiency in an economy’s overall tax system. Instead, it is mainly empirical in nature. The nonlinear transformation along with the threshold reduces the bias in the indicator toward economies that do not need to levy significant taxes on companies like the Doing Business standardized case study company because they raise public revenue in other ways—for example, through taxes on foreign companies, through taxes on sectors other than manufacturing or from natural resources (all of which are outside the scope of the methodology). In addition, it acknowledges the need of economies to collect taxes from firms. Calculation of scores for economies with 2 cities covered For each of the 11 economies in which Doing Business collects data for the second largest business city as well as the largest one, the distance to frontier score is calculated as the population-weighted average of the distance to frontier scores for these two cities (table 13.1). This is done for the aggregate score, the scores for each topic and the scores for all the component indicators for each topic. 99 Haiti Doing Business 2017 Table 13.1 Weights used in calculating the distance to frontier scores for economies with 2 cities covered Source: United Nations, Department of Economic and Social Affairs, Population Division, World Urbanization Prospects, 2014 Revision. http://esa.un.org/unpd/wup/CD- ROM/Default.aspx. Economies that improved the most across 3 or more Doing Business topics in 2015/16 Doing Business 2017 uses a simple method to calculate which economies improved the ease of doing business the most. First, it selects the economies that in 2015/16 implemented regulatory reforms making it easier to do business in 3 or more of the 10 topics included in this year’s aggregate distance to frontier score. Twenty-nine economies meet this criterion: Algeria; Azerbaijan; Bahrain; Belarus; Brazil; Brunei Darussalam; Burkina Faso; Côte d’Ivoire; Georgia; India; Indonesia; Kazakhstan; Kenya; Madagascar; Mali; Mauritania; Morocco; Niger; Pakistan; Poland; Senegal; Serbia; Singapore; Thailand; Togo; Uganda; the United Arab Emirates; Uzbekistan and Vanuatu. Second, Doing Business sorts these economies on the increase in their distance to frontier score from the previous year using comparable data. Selecting the economies that implemented regulatory reforms in at least three topics and had the biggest improvements in their distance to frontier scores is intended to highlight economies with ongoing, broad- based reform programs. The improvement in the distance to frontier score is used to identify the top improvers because this allows a focus on the absolute improvement—in contrast with the relative improvement shown by a change in rankings—that economies have made in their regulatory environment for business. Ease of Doing Business ranking The ease of doing business ranking ranges from 1 to 190. The ranking of economies is determined by sorting the aggregate distance to frontier scores, rounded to 2 decimals. 100 Haiti Doing Business 2017 RESOURCES ON THE DOING BUSINESS WEBSITE Current features News on the Doing Business project http://www.doingbusiness.org Rankings How economies rank—from 1 to 190 http://www.doingbusiness.org/rankings Data All the data for 190 economies—topic rankings, indicator values, lists of regulatory procedures and details underlying indicators http://www.doingbusiness.org/data Reports Access to Doing Business reports as well as subnational and regional reports, case studies and customized economy and regional profiles http://www.doingbusiness.org/reports Methodology The methodologies and research papers underlying Doing Business http://www.doingbusiness.org/methodology Research Abstracts of papers on Doing Business topics and related policy issues http://www.doingbusiness.org/research Doing Business reforms Short summaries of DB2017 business regulation reforms and lists of reforms since DB2008 http://www.doingbusiness.org/reforms Historical data Customized data sets since DB2004 http://www.doingbusiness.org/custom-query Law library Online collection of business laws and regulations relating to business http://www.doingbusiness.org/law-library Contributors More than 12,500 specialists in 190 economies who participate in Doing Business http://www.doingbusiness.org/contributors/doing- business Entrepreneurship data Data on business density (number of newly registered companies per 1,000 working-age people) for 136 economies http://www.doingbusiness.org/data/exploretopics/ent repreneurship Distance to frontier Data benchmarking 190 economies to the frontier in regulatory practice and a distance to frontier calculator http://www.doingbusiness.org/data/distance-to- frontier Information on good practices Showing where the many good practices identified by Doing Business have been adopted http://www.doingbusiness.org/data/good-practice 101 Haiti Doing Business 2017