DOING BUSINESS 2019

Ease of Doing BusinessScore and Ease of
Doing Business
Ranking
The Doing Business report presents results for two aggregate measures:the ease of doing business score (formerly called the distance tofrontier score) and the ease of doing business ranking, which is basedon the ease of doing business score. The ease of doing business ranking
compares economies with one another; the ease of doing business scorebenchmarks economies with respect to regulatory best practice, showing
the absolute distance to the best regulatory performance on each Doing
Business indicator. When compared across years, the ease of doing
business 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 theregulatory environment has changed relative to that in other economies.

EASE OF DOING BUSINESSSCOREThe ease of doing business score
captures the gap between an economy’s
performance and a measure of bestpractice 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 and Georgia
have the lowest number of procedures
required (1). New Zealand also holds theshortest time to start a business (0.5days), while Slovenia has the lowest cost(0.0). Australia, Colombia and 115 othereconomies have no paid-in minimum
capital requirement (table 9.1).

Calculation of the ease of doing
business score
Calculating the ease of doing businessscore for each economy involves two
main steps. In the first step individualcomponent indicators are normalized
to a common unit where each of the
41 component indicators y (except for
the total tax and contribution rate) is
rescaled using the linear transformation (worst − y)/(worst − best). In thisformulation the highest score represents
the best regulatory performance on theindicator across all economies since2005 or the third year in which data
for the indicator were collected. Boththe best regulatory performance andthe worst regulatory performance areestablished every five years based on
the Doing Business data for the year inwhich they are established and remain
at that level for the five years regardlessof any changes in data in interim years.
Thus an economy may establish the best
regulatory performance for an indicatoreven though it may not have the highest
score in a subsequent year. Conversely,an economy may score higher thanthe best regulatory performance if theEASE OF DOING BUSINESS SCORE AND EASE OF DOING BUSINESS RANKINGTABLE 9.1 Which economies set the best regulatory performance?
Topic and indicator

Economy establishing best regulatory performanceBestregulatory
performance

Worst
regulatory
performance

Starting a business

Procedures (number)

Georgia; New ZealandTime (days)

New Zealand

Cost (% of income per capita)

Slovenia

Minimum capital (% of income per capita)

Australia; Colombia

c

1

18a

0.5

100b

0.0

200.0b0.0

400.0b

Dealing with construction permits

Procedures (number)

No economy was a best performer as of May 1, 2018.

530aTime (days)

No economy was a best performer as of May 1, 2018.

26

373b

Cost (% of warehouse value)No economy was a best performer as of May 1, 2018.

0.0

20.0b

Building quality control index (0–15)

Luxembourg; New Zealand; United Arab Emirates

15

0d

Procedures (number)

Germany; Republic of Korea; United Kingdome

39aTime (days)

Republic of Korea; St. Kitts and Nevis; United Arab Emirates

18

248b

Cost (% of income per capita)

China; Japan; United Arab Emirates

0.0

8,100.0b80dGetting electricity

Reliability of supply and transparency of tariffs index (0–8) Belgium; Ireland; MalaysiafRegistering property

Procedures (number)

Georgia; Norway; Portugal; Sweden

113aTime (days)

Georgia; New Zealand

1

210b

Cost (% of property value)

Saudi Arabia

0.0

15.0b

Quality of land administration index (0–30)

No economy has reached the best performance yet.

30

0dStrength of legal rights index (0–12)

Montenegro; Puerto Rico (U.S.)g120d

Depth of credit information index (0–8)

Ecuador; United Kingdom

80d

Extent of disclosure index (0–10)

China; Malaysiai

100dExtent of director liability index (0–10)

Cambodia; Kenya

100dEase of shareholder suits index (0–10)

Djibouti

100d

Extent of shareholder rights index (0–10)

India; Kazakhstan

100dExtent of ownership and control index (0–10)

No economy has reached the best performance yet.

100dExtent of corporate transparency index (0–10)

Azerbaijan; France; Lithuania; Norway; Saudi Arabia;
Taiwan, China

100d

Payments (number per year)

Hong Kong SAR, China; Saudi Arabia

363bTime (hours per year)

Singapore

49j

696b

Total tax and contribution rate (% of profit)

Canada; Singapore

l

26.1

84.0b

Postfiling index (0–100)

No economy with both CIT and VAT has reached the best
performance yet.

100

0

0

50b

3.2

55b

1.5

56b

No CIT audit

32b

Getting credithProtecting minority investors

Paying taxeskTime to comply with VAT refund (hours)

Croatia; Netherlandsm

Time to obtain VAT refund (weeks)

Austria; Estonia	Time to comply with corporate income tax correction Lithuania; Portugaln(hours)	Time to complete a corporate income tax correction(weeks)Sweden; United Stateso(continued)

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TABLE 9.1 Which economies set the best regulatory performance? (continued)
Topic and indicator

Economy establishing best regulatory performanceBestregulatory
performance

Worst
regulatory
performance

Trading across borders

Time to export
Documentary compliance (hours)

Canada; Poland; Spainp

1q

170b

Border compliance (hours)

Austria; Belgium; Hong Kong SAR, Chinar

1q

160b

Documentary compliance (US$)

Hungary; Luxembourg; Norways

0

400b

Border compliance (US$)

France; Netherlands; Portugalt

0

1,060bDocumentary compliance (hours)

Republic of Korea; Latvia; Maltau

1q

240b

Border compliance (hours)

Bulgaria; France; Germany

1

q

280b

Documentary compliance (US$)

Iceland; Latvia; United Kingdomw

0

700b

Border compliance (US$)

Armenia; Denmark; Estoniax

01,200b

Cost to export

Time to importv

Cost to import

Enforcing contracts

Time (days)

No economy was a best performer as of May 1, 2018.

120

1,340b

Cost (% of claim)

No economy was a best performer as of May 1, 2018.

0.1

89.0b

Quality of judicial processes index (0–18)

No economy has reached the best performance yet.

18

0d

Recovery rate (cents on the dollar)

No economy was a best performer as of May 1, 2018.

92.9

0d

Strength of insolvency framework index (0–16)

No economy has reached the best performance yet.

160dResolving insolvency

Source: Doing Business database.
a. Worst performance is defined as the 99th percentile among all economies in the Doing Business sample.
b. Worst performance is defined as the 95th percentile among all economies in the Doing Business sample.
c. Another 115 economies also have a paid-in minimum capital requirement of 0.0.
d. Worst performance is the worst value recorded.
e. In 23 other economies it takes no more than 3 procedures to get an electricity connection.
f. Another 24 economies score 8 out of 8 on the reliability of supply and transparency of tariffs index.
g. Three additional economies score 12 out of 12 on the strength of legal rights index.
h. Another 40 economies score 8 out of 8 on the depth of credit information index.
i. Another 11 economies score 10 out of 10 on the extent of disclosure index.
j.	Defined as the lowest time recorded among all economies in the Doing Business sample that levy the three major taxes: profit tax, labor taxes and mandatory contributions,and VAT or sales tax.
k. Another 30 economies have a total tax and contribution rate equal to or lower than 26.1% of profit.
l.	Defined as the highest total tax and contribution rate among the 15% of economies with the lowest total tax and contribution rate in the Doing Business sample for all years
included in the analysis up to and including Doing Business 2015.
m. Another eight economies also have a compliance time for VAT refund of 0 hours.
n. Another 11 economies also have a compliance time for corporate income tax audit of no more than 1.5 hours.
o. Another 94 economies also do not impose a corporate income tax audit.
p. Another 23 economies also have a documentary compliance time to export of no more than 1 hour.
q. Defined as 1 hour even though in many economies the time is less.
r. Another 16 economies also have a border compliance time to export of no more than 1 hour.
s. Another 17 economies also have a documentary compliance cost to export of 0.0.
t. Another 16 economies also have a border compliance cost to export of 0.0.
u. Another 27 economies also have a documentary compliance time to import of no more than 1 hour.
v. Another 22 economies also have a border compliance time to import of no more than 1 hour.
w. Another 27 economies also have a documentary compliance cost to import of 0.0.
x. Another 25 economies also have a border compliance cost to import of 0.0.

EASE OF DOING BUSINESS SCORE AND EASE OF DOING BUSINESS RANKING

economy reforms after the best regulatory performance is set. For example, thebest regulatory performance for the timeto get electricity is set at 18 days. In the
Republic of Korea it now takes 13 days to
get electricity while in the United ArabEmirates it takes just 10 days. Although
the two economies have different times,
both economies score 100 on the timeto get electricity because they haveexceeded the threshold of 18 days.
For scores such as those on the strengthof legal rights index or the quality of land
administration index, the best regulatory performance is set at the highest
possible value (although no economy
has yet reached that value in the case of
the latter). For the total tax and contribution rate, consistent with the use ofa threshold in calculating the rankings
on this indicator, the best regulatory
performance is defined as the total tax
and contribution rate at the 15th percentile of the overall distribution for all
years included in the analysis up to andincluding Doing Business 2015. For thetime to pay taxes, the best regulatory
performance 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 totrade across borders, the best regulatory
performance is defined as 1 hour eventhough in many economies the time isless than that.
In the same formulation, to mitigate theeffects of extreme outliers in the distributions of the rescaled data for mostcomponent indicators (very few economies need 700 days to complete theprocedures to start a business, but manyneed 9 days), the worst performance iscalculated 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, andthe time and cost indicators), and the99th percentile is used for number ofprocedures. No outlier is removed forcomponent indicators bound by definition or construction, including legal index
scores (such as the depth of credit information index, extent of disclosure index

FIGURE 9.1

and strength of insolvency framework
index) and the recovery rate (figure 9.1).
In the second step for calculating theease of doing business score, the scoresobtained for individual indicators foreach economy are aggregated throughsimple averaging into one score, first

How are scores calculated for indicators?
A time-and-motion topic: getting electricity

Getting electricity
score for procedures
100

Best regulatory performance
Best regulatory
performance:
3 procedures

80

60

40
Worst regulatory
performance(99th percentile):
9 procedures

20

0

0

1

2

3

5
4
6
7
Procedures (number)

8

9

10

A legal topic: protecting minority investors
Protecting minority investorsscore for extent of disclosure index
Best regulatory performance
100

80

60
Best regulatory
performance:
10 points
40

20

0

Worst regulatory
performance:
0 points
01

2

Source: Doing Business database.

3
4
5
6
7
Extent of disclosure index (0–10)

8

9

10

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DOING BUSINESS 2019

for each topic and then across all 10
topics: starting a business, dealing withconstruction permits, getting electricity,
registering property, getting credit,
protecting minority investors, paying
taxes, trading across borders, enforcing
contracts and resolving insolvency. Morecomplex aggregation methods—such as
principal components and unobserved
components—yield a ranking nearly
identical to the simple average used
by Doing Business.1 Thus Doing Business
uses the simplest method: weighting all
topics equally and, within each topic,
giving equal weight to each of the
topic components.2
An economy’s score is indicated on ascale from 0 to 100, where 0 represents
the worst regulatory performance and100 the best regulatory performance.
All score calculations are based on a
maximum of five decimals. However,topic ranking calculations and the ease of
doing business ranking calculations are
based on two decimals.
The difference between an economy’sscore in any previous year and its score in
Doing Business 2019 illustrates the extent
to which the economy has closed the gap
between its score and the best regulatory
performance over time. In any given year
the score measures how far an economy
is from the best regulatory performanceat that time.

Treatment of the total tax andcontribution rate
The total tax and contribution ratecomponent of the paying taxes topic
enters the score calculation in a different
way than any other indicator. The scoreobtained for the total tax and contribution rate is transformed in a nonlinear
fashion before it enters the score forpaying taxes. As a result of the nonlinear
transformation, an increase in the total
tax and contribution rate has a smaller
impact on the score for the total tax
and contribution rate—and therefore
on the score for paying taxes—for
economies with a below-average total

acknowledges the need of economies tocollect taxes from firms.

tax and contribution rate than it would
have had before this approach was
adopted in Doing Business 2015 (line B issmaller than line A in figure 9.2). And for
economies with an extreme total tax andcontribution rate (a rate that is very highrelative to the average), an increase hasa greater impact on both these scoresthan it would have had before (line D isbigger than line C in figure 9.2).

Calculation of scores for
economies with two cities
coveredFor each of the 11 economies in which
Doing Business collects data for thesecond largest business city as well as
the largest one, the score is calculated as
the population-weighted average of thescores for these two cities (table 9.2).
This is done for the aggregate ease of
doing business score, the scores for each
topic and the scores for all the component indicators for each topic.

The nonlinear transformation is not basedon 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 empiricalin nature. The nonlinear transformation
along with the threshold reduces the bias
in the indicator toward economies that
do not need to levy significant taxes oncompanies like the Doing Business standardized case study company because
they raise public revenue in other ways—
for example, through taxes on foreigncompanies, through taxes on sectors
other than manufacturing or from natural
resources (all of which are outside thescope of the methodology). In addition, it

Variability of economies’ scores
across topics
Each Doing Business topic measures adifferent aspect of the business regulatory environment. The scores andassociated rankings of an economy canvary, sometimes significantly, acrosstopics. The average correlation coefficient between the 10 topics includedin the aggregate ease of doing business score is 0.49, and the coefficients

FIGURE 9.2 How the nonlinear transformation affects the paying taxes score for the
total tax and contribution rate
Paying taxes score for total
tax and contribution rate
Best regulatory performance

100

80
A

B

60

40

D
C

20

0

0

10

20

30

40

50

60

70

80

90

100

Total tax and contribution rate (% of profit)
Linear paying taxes score fortotal tax and contribution rate

Nonlinear paying taxes score fortotal tax and contribution rate

Source: Doing Business database.
Note: The nonlinear paying taxes score for the total tax and contribution rate is equal to the paying taxes score forthe total tax and contribution rate to the power of 0.8.

EASE OF DOING BUSINESS SCORE AND EASE OF DOING BUSINESS RANKINGTABLE 9.2 Weights used in calculating
the scores for economies with twocities covered
EconomyCity

Weight (%)

Bangladesh

Dhaka

78

Chittagong

22São Paulo61

Rio de Janeiro

39

Shanghai

55

Beijing45

Mumbai

47

Delhi

53

Jakarta78

Surabaya

22

Tokyo

65

Osaka

35

Mexico City

83

Monterrey

17

Lagos

77

Kano

23

Karachi

65

BrazilChina
India
Indonesia
Japan
MexicoNigeria
Pakistan

Lahore35

RussianFederation

Moscow

70

St. Petersburg

30

United States

New York City

60

Los Angeles

40

Source: United Nations, Department of Economic andSocial Affairs, Population Division, World Urbanization
Prospects, 2014 Revision, “File 12: Population of
Urban Agglomerations with 300,000 Inhabitants orMore in 2014, by Country, 1950–2030 (thousands),”
http://esa.un.org/unpd/wup/CD-ROM/Default.aspx.

between 2 topics range from 0.34
(between getting credit and paying
taxes) to 0.63 (between getting electricity and trading across borders; andalso between dealing with construction
permits and getting electricity). These
correlations suggest that economies
rarely score universally well or universally badly on Doing Business topics(table 9.3).
Consider the example of Portugal. Itsaggregate ease of doing business scoreis 76.55. It scores 90.89 for starting abusiness and 100.00 for trading acrossborders, but only 60.00 for protecting
minority investors and 45.00 for
getting credit.

Figure 2.1 in the chapter About Doing
Business illustrates the degree of variability for each economy’s performanceacross the different areas of businessregulation covered by Doing Business. The
figure draws attention to economies witha particularly uneven performance byshowing, for each economy, the distance
between the average of its highest threescores and the average of its lowest threeacross the 10 topics included in thisyear’s aggregate ease of doing businessscore. While a relatively small distance
between these two averages suggests a
broadly consistent approach across theareas of business regulation measured by
Doing Business, a relatively large distancesuggests a more uneven approach, withgreater room for improvement in someareas than in others.
Variation in performance across topics is
not at all unusual. It reflects differencesin the degree of priority that government authorities give to particular areasof business regulation reform and in theability of different government agencies to deliver tangible results in theirarea of responsibility.

Change in the score gap
Many topics use the magnitude of thechange in their score gap to classify
changes as reforms. The change in thescore gap is defined as (scoreprior year
– scorecurrent year)/(100 – scoreprior year),
where “score” is the aggregate score
for the specific topic. For indicators
using macroeconomic variables, suchas the cost of starting a business as apercentage of income per capita, themacroeconomic data for the prior year
are used to control for exogenous factors
such as a change in income per capita.
For example, in 2017/18 Algeria reduced
the time to trade across borders, resulting
in an improvement in Algeria’s aggregate
score for trading across borders from27.74 to 38.43. This reduced the score
gap for Algeria by (27.74 – 38.43)/(100– 27.74) or 14.79% on trading acrossborders in Doing Business 2019. For acomplete discussion of the methodology

for classifying changes as reforms, see
the data notes.

Economies improving the mostacross three or more Doing
Business topics in 2017/18
Doing Business 2019 uses a simple method
to calculate which economies improved
the ease of doing business the most. First,
it selects the economies that in 2017/18
implemented regulatory reforms making
it easier to do business in three or moreof the 10 topics included in this year’s
aggregate ease of doing business score.3
Forty-six economies meet this criterion: Afghanistan; Armenia; Azerbaijan;
Brazil; Brunei Darussalam; Burundi;
Chad; China; the Democratic Republicof Congo; Côte d’Ivoire; Djibouti; theArab Republic of Egypt; Ethiopia; France;
Gabon; Georgia; Guinea; India; Indonesia;
Jordan; Kazakhstan; Kenya; Kosovo; theKyrgyz Republic; Lithuania; Madagascar;
Malaysia;
Mauritania;
Mauritius;
Morocco; Niger; Nigeria; Pakistan; theRussian Federation; Rwanda; Saudi
Arabia; Sri Lanka; Sudan; Thailand;
Togo; Tunisia; Turkey; the United ArabEmirates; Uzbekistan; Vietnam; andZimbabwe. Second, Doing Business sorts
these economies on the increase in theirease of doing business score over theprevious year and the scores for both
years are calculated using the same
macroeconomic data (such as income
per capita and currency conversion
rates) to remove the effect of changes inthese variables.
Selecting the economies that implemented regulatory reforms in at least
three topics and had the biggest improvements in their ease of doing businessscores is intended to highlight economies with ongoing, broad-based reform
programs. The improvement in the easeof doing business score is used to identify
the top improvers because this allows afocus on the absolute improvement—incontrast with the relative improvement
shown by a change in rankings—that
economies have made in their regulatoryenvironment for business.

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TABLE 9.3 Correlations between economy scores for Doing Business topics

Starting a business

Dealing withconstruction
permits

Getting
electricity

Registering
property

Getting
creditProtecting
minority
investors

Payingtaxes

Tradingacrossborders

Enforcing
contracts

Resolving
insolvency

0.49

0.51

0.40

0.40

0.58

0.54

0.42

0.38

0.49

0.63

0.48

0.41

0.46

0.46

0.51

0.39

0.41

0.50

0.45

0.52

0.57

0.63

0.51

0.56

0.47

0.53

0.51

0.51

0.61

0.53

0.56

0.34

0.42

0.38

0.53

0.48

0.42

0.47

0.61

0.55

0.50

0.44

0.50

0.55

Dealing withconstruction permits
Getting electricity
Registering property
Getting credit
Protecting minority
investors
Paying taxes
Trading across borders
Enforcing contracts

0.46

Source: Doing Business database.

EASE OF DOING BUSINESSRANKINGNOTES
1.

The ease of doing business ranking
ranges from 1 to 190. The ranking of
economies is determined by sorting theaggregate ease of doing business scores,
rounded to two decimals.

2.

3.

See Djankov and others 2005. Principal
components and unobserved components
methods yield a ranking nearly identicalto that from the simple average method
because both these methods assign roughly
equal weights to the topics, since thepairwise correlations among topics do notdiffer much. An alternative to the simple
average method is to give different weights
to the topics, depending on which areconsidered of more or less importance in thecontext of a specific economy.
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 informationindex. Indicators for all other topics are
assigned equal weights.
Changes making it more difficult to dobusiness are subtracted from the total numberof those making it easier to do business.