The Global Corporate Complexity Index of TMF Group, which compares the main administrative and compliance requirements in 76 jurisdictions worldwide, positioned China, Germany, and Brazil among the ten most demanding countries in the world where multinational companies conduct business operations.
The Global Index of Corporate Complexity, which compares the main administrative and compliance requirements in 76 jurisdictions, positioned China, Germany, and Brazil, countries with the second, fifth, and eighth highest gross domestic product at a global level, among the ten most demanding in the world where multinational companies conduct business operations.
According to the measurement at a regional level, El Salvador (11th), Colombia (13th), and Argentina (18th) ranked between 10th and 20th in the Global Index of Corporate Complexity.
In the middle of the table, the research placed Uruguay (38 °), Mexico (39 °), Chile (40 °), and Ecuador (41 °). Meanwhile, the nations with the least complexity to do business in the Latin American region, the Index placed the Dominican Republic (63rd) and Paraguay (72nd).
Contrasts between world powers
The report also revealed marked contrasts between the world powers and the countries bordering on the world, while political, socio-economic, and legislative changes take place. The results confirm that the business scenario has become more challenging. The company that seeks to expand into new territories faces a wide variety of possible obstacles.
Trade disputes, tariffs, growing nationalism, and political instability point to a shift from globalization to economic fragmentation. That positioned some of the most attractive countries at a commercial level among the most complex countries to do business. More than ever, companies with international ambitions must have a good knowledge of the rules and regulations that prevail at the local level, and they must know how to manage them.
The report was prepared based on a combination of statistically evaluated information and qualitative research conducted among local market experts, focusing on three areas: rules, regulations, and penalties; accounting and taxes; and hiring, dismissal, and management of payment to employees.
Greece is considered the most complex country due to frequently changing legislation, different regional tax rates, and inconsistent treatment of companies by the authorities. In contrast, the three simplest places to do business are the Cayman Islands, Curacao, and Jersey, which thrive through politically stable and pro-business measures.
Europe is complex
In Europe, there are the most complex countries for business, with four countries ranked among the 10 most complex, including Germany. On the other hand, the continent leads the list of the ten simplest countries to do business, among which are the Netherlands, Denmark, Switzerland, and Jersey.
The United Kingdom ranked 43rd among the most complex countries. While it remains a solid place to do business, strict governance standards, a complex tax system, and the legislative changes planned after Brexit added complexity. It ranked below Russia but in a position significantly higher than France, where the president has pushed for more business-friendly policies.
Although China is the ninth most complex country, with regional variations in legislation, among other aspects, it presents a notable improvement over the corporate compliance complexity index 2018 prepared by the TMF Group. While these legislative changes pose short-term challenges, they are expected to bring great benefits to international companies that invest in China in the long term.
The United States ranked the eleventh least complex jurisdiction globally, due to its relatively simple regulatory standards and recent tax reforms, making it easier for companies to repatriate profits.
In almost one-third of the countries analyzed, local rules, regulations, and penalty systems present major challenges for companies. In many cases, frequent and significant changes, often designed to attract investors, add complexity.
Complexity is not a reason to avoid investment. It is a dimension that must be managed. With the right knowledge and local preparation, good companies can progress anywhere, concludes the report.
The complete ranking of the Global Complexity Index:
04.- United Arab Emirates
11.- El Salvador
30.- South Africa
31.- Costa Rica
43.- United Kingdom
47.- Czech Republic
56.- Hong Kong
63.- Dominican Republic
64.- New Zealand
66.- United States
67.- The Netherlands
68.- British Virgin Islands
76.- Cayman Islands
Source: TMF Group