DOING BUSINESS 2009 - JOHN J. HADDAD, Ph.D.

DATA NOTES 75mercial depreciation. To compute thecommercial depreciation, a straight-linedepreciation method is applied, with thefollowing rates: 0% for the land, 5% forthe building, 10% for the machinery,33% for the computers, 20% for the officeequipment, 20% for the truck and10% for business development expenses.Commercial profit amounts to 59.4 timesincome per capita.This methodology is consistent withthe Total Tax Contribution frameworkdeveloped by PricewaterhouseCoopers.This framework measures taxes that areborne by companies and affect their incomestatements, as does Doing Business.But while PricewaterhouseCoopersbases its calculation on data fromthe largest companies in the economy,Doing Business focuses on a standardizedmedium-size company.The data details on paying taxes can befound for each economy at http://www.doingbusiness.org. This methodology wasdeveloped in Djankov, Ganser, McLiesh,Ramalho and Shleifer (2008).Trading across bordersDoing Business compiles procedural requirementsfor exporting and importinga standardized cargo of goods by oceantransport (table 12.10). Every officialprocedure for exporting and importingthe goods is recorded—from the contractualagreement between the 2 partiesto the delivery of goods—along with thetime and cost necessary for completion.All documents needed by the traderfor clearance of the goods across theborder are also recorded. For exportinggoods, procedures range from packingthe goods at the factory to their departurefrom the port of exit. For importinggoods, procedures range from the vessel’sarrival at the port of entry to the cargo’sdelivery at the factory warehouse. Thetime and cost for ocean transport are notincluded. Payment is made by letter ofcredit, and the time, cost and documentsrequired for the issuance of a letter ofcredit are taken into account.Local freight forwarders, shippinglines, customs brokers, port officials andbanks provide information on requireddocuments and cost as well as the timeto complete each procedure. To makethe data comparable across economies,several assumptions about the businessand the traded goods are used.Assumptions about the businessThe business:• Has 60 employees.• Is located in the economy’s largestbusiness city.• Is a private, limited liability company.It does not operate in an exportprocessing zone or an industrialestate with special export or importprivileges.• Is domestically owned with no foreignownership.• Exports more than 10% of its sales.Assumptions about the tradedgoodsThe traded product travels in a drycargo,20-foot, full container load. Itweighs 10 tons and is valued at $20,000.The product:• Is not hazardous nor does it includemilitary items.• Does not require refrigeration or anyother special environment.• Does not require any specialphytosanitary or environmentalsafety standards other than acceptedinternational standards.DocumentsAll documents required per shipmentto export and import the goods are recorded.It is assumed that the contracthas already been agreed upon and signedby both parties. Documents required forclearance by government ministries, customsauthorities, port and container terminalauthorities, health and technicalcontrol agencies and banks are taken intoaccount. Since payment is by letter ofcredit, all documents required by banksfor the issuance or securing of a letter ofcredit are also taken into account. Documentsthat are renewed at least annuallyTable 12.10What does trading across bordersmeasure?Documents required to export and import(number)• Bank documents• Customs clearance documents• Port and terminal handling documents• Transport documentsTime required to export and import (days)• Obtaining all the documents• Inland transport• Customs clearance and inspections• Port and terminal handling• Does not include ocean transport timeCost required to export and import(US$ per container)• Obtaining all the documents• Inland transport• Customs clearance and inspections• Port and terminal handling• Official costs only, no bribes or tariffsSource: Doing Business database.and that do not require renewal per shipment(for example, an annual tax clearancecertificate) are not included.TimeThe time for exporting and importingis recorded in calendar days. The timecalculation for a procedure starts from themoment it is initiated and runs until it iscompleted. If a procedure can be acceleratedfor an additional cost and is availableto all trading companies, the fastest legalprocedure is chosen. Fast-track proceduresapplying to firms located in an exportprocessing zone are not taken into accountbecause they are not available to alltrading companies. Ocean transport timeis not included. It is assumed that neitherthe exporter nor the importer wastes timeand that each commits to completingeach remaining procedure without delay.Procedures that can be completed in parallelare measured as simultaneous. Thewaiting time between procedures—forexample, during unloading of the cargo—is included in the measure.(c) The International Bank for Reconstruction and Development / The World Bank