The ideal country for starting a business isn’t necessarily the richest or the most glamorous—it’s one that balances opportunity with support, efficiency with fairness, and ambition with compassion. The country’s policies should aim to enable the growth of ideas. And when you find a country like that, it’s good for your business and everyone else.

Below, we cover what makes a country ideal for starting a business, the countries known for their business-friendly policies, and the top countries for specific startup types.

What’s in this article?

• What makes a country ideal for starting a business?
  
• Top countries known for business-friendly policies
  
• What are the top countries for specific types of startups?
  
• How tax structures affect startups
  

What makes a country ideal for starting a business?

To create an ideal environment for launching a business, a country must have the right conditions—legal, economic, and cultural—to let entrepreneurial ideas grow. Here are some important considerations that can prepare businesses for success.

Ease of doing business

Bureaucracy should be minimal: it should be relatively easy to register a business, obtain permits, and handle taxes. Every hour you spend deciphering regulations is an hour not spent building your business. Nations that excel in this area often have digital-first systems, so entrepreneurs can complete licensing applications or tax filings from a laptop instead of standing in line. In Estonia, for example, you can register a business online in minutes.

Access to capital

Access to funding, whether it’s venture capital (VC), bank loans, or government grants, can determine a startup’s trajectory. An ideal business environment ensures entrepreneurs can find the financial backing they need. Are local investors willing to bet on new ideas? Are interest rates manageable? Does the country have incentives for small businesses or startups? The US provides a flourishing VC environment, while Germany provides government-backed initiatives that support innovative startups.

Market opportunities

Countries with expanding economies, large populations, or untapped niches often make attractive markets. Stability and spending power matter, too. A smaller, high-income country creates different opportunities from those of a larger, lower-income one. For example, Sweden’s affluent population and high adoption of tech advancements present different market opportunities compared with those presented by India’s enormous, digitally savvy middle class.

Workforce quality

A business is only as good as the people behind it. The ideal nation has a well-educated, skilled, and diverse workforce that includes high-end tech talent and workers who specialize in operational roles. The ease of hiring, labor laws, and availability of training programs matter: Canada’s emphasis on skilled immigration has attracted tech startups, while countries such as Japan invest heavily in workforce development to maintain their competitive edge.

Taxes and friendly laws

Depending on how they’re structured, high taxes might not necessarily be a deal-breaker. A nation might reinvest corporate taxes into infrastructure and improvement or provide tax breaks for startups or specific industries. Legally, intellectual property (IP) protection is important, as are fairness and transparency. Ireland, with its low corporate tax rates, and Switzerland, with its legal stability, are great examples of countries where entrepreneurs can feel supported without fearing regulatory hurdles or corruption.

Quality of life

Starting a business is about people as well as profits. A high quality of life in a country benefits an entrepreneur, whether through affordable healthcare, safe cities, or a culture that values work-life balance. Places such as New Zealand and Denmark consistently rank high on global quality of life indices, which can attract entrepreneurs who also value lifestyle.

Top countries known for business-friendly policies

When it comes to business-friendly countries, a handful consistently rise to the top for their mix of low barriers to entry, strong support systems, and business incentives. Here are the top contenders and what makes them stand out.

Singapore

Singapore aims to quicken and clarify registration, taxes, and more. You can register a business online in less than a day, and corporate taxes are a flat 17%, with startups and smaller businesses getting exemptions on the first 200,000 Singapore dollars of income. The location and logistics infrastructure facilitate an expansion into Asia: it provides direct access to regional Asian markets while providing a quality foundation for doing so. This speed attracts global businesses and small startups alike to Singapore.

Switzerland

Switzerland has predictable policies, strong IP protections, and a focus on high-value industries such as biotech and finance. Total corporate tax rates vary between about 12% and 21% depending on the canton, and the government incentivizes research and development. Switzerland’s legal framework protects IP, which benefits biotechs, pharmaceutical businesses, and precision manufacturing. Switzerland also offers access to the wider European market while staying outside the European Union’s (EU’s) bureaucracy.

Estonia

Estonia is a case study in how governments can empower entrepreneurs. Through its e-Residency program, entrepreneurs anywhere can start and manage an Estonian business online, which eliminates physical barriers to starting and running a global business. Businesses pay corporate tax (20%) only on distributed profits. And the country’s flat income tax system and digitized public services mean you likely won’t lose time working through bureaucracy.

Ireland

Ireland’s low taxes, EU access, and startup incentives make it a strong choice for businesses targeting Europe. Its low standard corporate tax rate of 12.5% is part of a carefully designed system to attract and support businesses, which includes tax relief for startups during their first three years and grants for innovation. What further sets Ireland apart is its dual identity: it’s an EU member state with unfettered access to European markets and an English-speaking hub that feels accessible for global entrepreneurs. Dublin has become a nerve center for tech businesses that want to establish a foothold in Europe, and the country invests in maintaining its reputation as a hub for improvement.

United States

The US market is vast enough to support nearly any kind of business and provides a platform for scaling globally, along with unmatched access to capital and customer diversity. Federal corporate taxes are set at 21%, and some states don’t levy a corporate income tax. States such as Delaware, Nevada, and Texas have favorable tax climates, while hubs such as California and New York attract talent, investors, and improvement. The availability of VC and the depth of customer spending power further set the US apart.

Canada

Canada offers one of the most supportive environments for early-stage businesses with generous research and development (R&D) incentives, access to skilled talent, and proximity to the US market. The Scientific Research and Experimental Development (SR&ED) tax credit returns up to 35% of eligible R&D expenses (especially beneficial for tech startups and product inventors). Federal corporate taxes have a net rate of 15%, but various deductions and incentives keep the burden manageable. Canada’s pro-immigration policies also make it easier to recruit global talent, while its proximity to the US market enables easy cross-border trade.

United Arab Emirates (UAE)

The UAE has low corporate taxes for most businesses outside oil and gas, and the country’s free zones allow 100% foreign ownership, which is not typical for the region. Dubai and Abu Dhabi have built reputations as advancement hubs, particularly for tech, logistics, and finance. The nation’s geographic location connects Europe, Asia, and Africa—ideal for businesses targeting multiple continents.

Germany

Germany, Europe’s largest economy, offers startups a focus on engineering, improvement, and grants. Total corporate tax rates are around 30%, but the country invests heavily in infrastructure, R&D, and vocational education, which makes it ideal for high-tech and manufacturing businesses. Programs such as EXIST provide grants and mentorship for startups, especially in green technology and engineering. Germany also benefits from its location at the center of Europe, which provides easy access to major markets and a strong supply chain network.

New Zealand

In New Zealand, you can quickly start a business online. The corporate tax rate is a moderate 28%. What truly distinguishes New Zealand are its transparent legal environment and support for work-life balance, which make it a great place for founders who want to build without burning out. Its strong international trade agreements and focus on sustainability also make it a forward-thinking choice.

Hong Kong

Hong Kong has low corporate tax rates (16.5%), strong financial systems, and a geographic location that connects businesses to mainland China and global markets. Its free-market policies make it easy to move goods, services, and money. Though recent political developments have introduced uncertainty, businesses that rely on international trade still see Hong Kong as a launchpad for expansion into Asia.

What are the top countries for specific types of startups?

Some countries have built reputations as global hubs for specific business types by creating environments in which certain industries flourish. Whether you’re launching a fintech app, scaling a biotech, or building a green tech venture, where you choose to build your startup can shape its trajectory. Here are the standout countries for specific startup types and why they’re worth considering.

Fintech

In Singapore and the United Kingdom (UK), fintech startups can quickly scale. Here’s how:

• Singapore: With a highly developed financial system, strong government backing, and its Regulatory Sandbox for testing new ideas, Singapore is an ideal launchpad for digital payments, blockchain, and alternative finance platforms. The Monetary Authority of Singapore collaborates with startups, creating a rare pro-advancement regulatory climate.

• The UK: As a strong proponent of open banking and home to London’s financial system, the UK attracts fintech entrepreneurs. The UK’s Financial Conduct Authority balances oversight with experimentation, letting startups improve without eroding public trust.

Biotech

The US and Switzerland provide the funding, infrastructure, and expertise biotech startups need. Here’s what they offer:

• The US: With VC pouring into hubs such as Boston and San Francisco, biotechs in the US have access to funding, top-tier universities, and research facilities. The Food and Drug Administration (FDA) approval process, while rigorous, ensures credibility, which can open doors to global markets. The abundance of talent, especially in research-heavy fields, is unmatched.

• Switzerland: Switzerland’s strong patent system, focus on R&D, and existing pharmaceutical giants such as Roche and Novartis lay the foundation for biotech ventures. Government grants and partnerships with universities help early-stage businesses survive the field’s often long development time.

Green tech

Sweden and Germany have embraced sustainability as a core principle, which makes them ideal environments for green tech startups. Here’s how these countries support them:

• Sweden: Startups in Sweden benefit from generous government grants, tax breaks for environmentally focused ventures, and a population eager to adopt green technology. Businesses such as Flower, which is reshaping the energy industry, show what’s possible in a supportive environment.

• Germany: Germany’s strength lies in its industrial focus. It leads in renewable energy and energy-efficient technologies through policies such as the Energiewende (Energy Transition).

Ecommerce

China and the US already provide the advantages of large markets, widespread tech adoption, and infrastructure, letting startups focus on refining their products and reaching customers. Here’s how these nations benefit ecommerce startups:

• China: China’s massive digital-first customer market makes it an ecommerce powerhouse. Platforms such as Alibaba and JD.com dominate the market, but there’s room for niche businesses to expand. Integration with payment platforms such as WeChat Pay and Alipay facilitates transactions, while the quick pace of customer adoption gives startups a testing ground like no other.

• The US: The US combines size with infrastructure. Amazon’s dominance has set the standard for logistics, while platforms such as Shopify empower smaller businesses. US customers spent more than $1 trillion online in 2023, so startups can find their audience and scale relatively quickly.

AI

Canada and Israel give AI startups access to top-tier talent and a research environment that pushes boundaries. Here’s a closer look:

• Canada: Canada has become a global leader in AI research. In Montreal and Toronto, institutions such as the Vector Institute bolster talent. Government programs, including the Pan-Canadian Artificial Intelligence Strategy, provide funding and collaboration opportunities, while immigration-friendly policies attract global talent.

• Israel: Israel’s AI environment has its roots in the military development of data analysis and cybersecurity. The technical depth of Israeli startups attracts investors. Access to early-stage funding and a collaborative tech culture help turn complex ideas into flexible solutions.

Software-as-a-service (SaaS)

SaaS relies on scalability and cost efficiency, and India and Estonia have created pathways for businesses to grow and deliver their products globally. Here’s what each country provides:

• India: India has produced SaaS businesses such as Zoho, Freshworks, and BrowserStack. Affordable engineering talent, coupled with a deep understanding of global markets, lets Indian startups offer competitive pricing without sacrificing quality. Many focus on global small and medium-sized businesses, a segment often underserved by larger businesses.

• Estonia: Known for its e-Residency program and digital-first governance, Estonia is an attractive base for SaaS startups targeting international clients. The simplicity of its tax system and access to the EU market make it a strong contender for lean, global-first operations.

Creative industries

The UK and South Korea combine artistic talent with the tech and funding needed to bring creative ideas to life. Here’s how they do so:

• The UK: The UK has long been a hub for creative industries, including media, design, and gaming. Tax relief programs for film, TV, and video game development reduce up-front costs for startups, and London’s blend of cultural diversity and technical talent promotes innovative storytelling and digital experiences.

• South Korea: South Korea’s globally influential entertainment industry and strong government investment in tech let creative startups build solutions for culture and tech. Platforms for music, gaming, and virtual reality present opportunities.

How tax structures affect startups

Taxes can be the difference between an environment that’s business friendly and one that isn’t. Beyond the percentage of profits you owe, taxes are a signal of how much a government values entrepreneurship, improvement, and long-term investment. Whether you’re bootstrapping a startup or scaling a multinational, here’s how tax structures can affect your business.

Corporate tax rates

Lower corporate taxes often translate to higher retained profits, which means more funds to reinvest in growth. Countries such as Ireland, with its low corporate tax rate, have attracted global businesses that want to increase profits. But the tax rate isn’t the only consideration: the way taxable income is calculated (e.g., what’s deductible, what’s incentivized) matters just as much. Some countries with moderate rates, such as the Netherlands, offset them with generous deductions and exemptions for R&D, green initiatives, or reinvestment.

Progressive vs. flat tax systems

Some countries use a flat tax system, which taxes businesses at a single rate regardless of income. This simplicity can be appealing, especially for small businesses that might otherwise struggle to work through complex brackets. Estonia, for example, taxes profits only when they’re distributed as dividends. Progressive systems (in which higher profits mean higher tax rates) tend to fund stronger public services, but they can be challenging for businesses that experience fast growth. Entrepreneurs have to weigh the benefits of simplicity against the perks of well-funded public services.

Tax incentives

The most business-friendly countries often encourage growth through targeted incentives. These lower tax burdens nudge businesses toward areas the government wants to prioritize. The incentives can take many forms, including:

• R&D credits: Canada’s SR&ED program offers businesses tax incentives for a portion of their R&D spending, which can make the country ideal for tech and biotech startups.

• Startup tax holidays: Countries such as Singapore give temporary tax breaks to new businesses, which give them breathing room in their early years.

• Green incentives: Many European countries have substantial tax advantages for businesses that adopt renewable energy or sustainability practices.

Value-added tax (VAT) and sales tax

VAT or sales tax structures affect your day-to-day operations, especially if your business involves selling goods and services directly to customers. High VAT rates, such as those in many European countries, can increase the cost of doing business, but they’re often offset by well-developed infrastructure and public services that benefit businesses. Countries such as the US, with its patchwork of state sales taxes instead of a national VAT, present a different challenge: varying rules across regions.

Tax treaties

Tax treaties are an important consideration for businesses with international ambitions. These agreements prevent double taxation so that businesses are not taxed twice on the same income when they operate across borders. Countries such as Luxembourg and Singapore have become global business hubs in part because of their extensive treaty networks, which make them ideal bases for multinational businesses.

Payroll and Social Security taxes

Countries with high payroll taxes such as France often provide extensive benefits to employees, which can help attract top talent. But for lean startups, these costs can strain budgets. Countries with lower payroll taxes such as the US provide more flexibility but often require businesses to invest more directly in employee benefits.

Stability and predictability

Predictability helps businesses operate at their best. A low tax rate isn’t much help if the rules change every year. Countries such as Switzerland, which is known for stable tax policies, attract businesses that want to make long-term decisions without worrying about sudden shifts in tax laws. Conversely, countries with volatile tax regimes can scare off entrepreneurs, no matter how favorable the current rates.