Singapore and Hong Kong continue to dominate the Heritage Foundation’s Economic Freedom Index, but a number of lesser‑known jurisdictions also rank highly for business‑friendly policies. The index, which evaluates 37 “free” or “mostly free” economies, highlights eight countries that combine low taxes, strong property rights, and relatively open markets—making them attractive for entrepreneurs and investors seeking alternatives to traditional Western economies.
Key takeaways from the Heritage Foundation rankings
- The United States has slipped to rank 17, while many Western nations have fallen further down the list.
- 37 countries are classified as “free” or “mostly free” economies.
- The following eight jurisdictions stand out for their combination of low tax burdens, limited corruption, and supportive regulatory environments.
1. Taiwan (rank 11)
- Government spending: Reasonably low.
- Taxation: Relatively low rates across the board.
- Property rights: Strong protection, a critical factor for larger enterprises.
- Business climate: Highly rated for starting and scaling operations.
2. Georgia (rank 12)
- Tax reforms: Corporate tax reduced from 21 % to 6 %, then to 5 %; flat‑rate structure.
- Corruption: Significant reductions noted.
- Regulatory environment: Low bureaucracy and constitutional safeguards that limit sudden policy changes.
- Risk note: Rapid improvements can sometimes lead to political shifts that may affect future tax or regulatory policies.
3. Lithuania (rank 16)
- EU member: Recognized as one of the best performers within the European Union.
- Trade freedom: Liberalized trade policies.
- Regulatory reforms: Ongoing reductions in red tape to attract businesses.
- Related model: Estonia’s e‑residence and corporate tax framework has inspired similar reforms in Lithuania.
4. United Arab Emirates (rank 18)
- Taxation: Near‑zero corporate tax; a modest VAT introduced recently.
- Labor and business freedom: High scores for labor market flexibility and overall business environment.
- Fiscal health: Strong public finances contribute to its high ranking.
5. Mauritius (rank 21)
- Tax regime: Low rates, making it a popular offshore hub.
- Government integrity: Improvements in anti‑corruption measures.
- Business freedom: Open market with relatively stable fiscal health.
6. Malaysia (rank 24)
- Economic expansion: Rapid development and diversification.
- Tax policies: Reasonable rates, with a special “tax haven” zone (Labuan) for offshore activities.
- Property rights: Foreigners can legally own land, a rarity in many Asian markets.
- Business suitability: More geared toward larger enterprises; smaller e‑commerce operators may find incorporation on the mainland less advantageous.
7. Rwanda (rank 33)
- Business reforms: Streamlined procedures for company registration and utility connections.
- Taxation: Moderate rates with ongoing efforts to keep them competitive.
- Trade policies: Pro‑business trade environment despite remaining challenges in certain administrative processes.
8. Armenia (rank 34)
- Regulatory improvements: Continuous reduction of regulations and corruption.
- Tax trends: Declining corporate tax rates, with incentives for small and micro‑businesses.
- Economic direction: Emulating neighboring Georgia’s strategy to attract tourism and foreign investment.
Contextual notes
- While these economies score well on the Economic Freedom Index, the relevance of each factor varies by business size and sector. Large manufacturers may prioritize logistics and tax structures, whereas solo consultants or e‑commerce sellers might focus more on ease of incorporation and digital infrastructure.
- Some traditionally “free” economies, such as Denmark, score high on business openness but have high tax burdens, illustrating that a high overall ranking does not guarantee low taxes.
- The list suggests that many Western countries could continue to decline in the rankings, potentially opening further opportunities in the highlighted jurisdictions.
