More than ever, businesses with global ambitions must have a good understanding of the rules and regulations that prevail locally, and how to manage them.
The world of international business has become more challenging in the past year. Trade disputes, tariffs, rising nationalism and Brexit all point to a move from globalisation to economic fragmentation.
The knock-on effect for businesses looking to establish in new jurisdictions is the necessity to localise their presence. Processes such as paying staff, filing accounts, paying taxes and registering a company all differ between jurisdictions. In some instances, procedures can even vary between regions in the one jurisdiction.
And the complexity can be found where you may least expect it – in some of the world's largest and most commercially-attractive economies.
TMF Group's Global Business Complexity Index, which compares key administrative and compliance demands across 76 jurisdictions, ranks China, Germany and Brazil among the ten most demanding in the world for multinational firms to operate in.
The report reveals stark contrasts between global superpowers and among neighbouring countries around the world as political, socio-economic and legislative changes take hold.
The Global Business Complexity Index – top 10 most complex countries
- United Arab Emirates
The report, based on a combination of statistically weighted data and qualitative research among local market experts, focuses on three areas: rules, regulations and penalties; accounting and tax; and hiring, firing and paying employees.
Greece is deemed the most complex country overall due to frequently changing legislation, differing regional tax rates and inconsistent treatment of firms by the authorities.
By contrast, the three easiest places are the Cayman Islands, Curaçao and Jersey, which thrive on the back of politically-stable and pro-business policies.
Top 10 least complex countries
- Cayman Islands
- British Virgin Islands
Europe is home to the most complex countries for business, with four out of the top ten, including Germany. But the continent also tops the list for the ten easiest places to do business, with the Netherlands, Denmark, Switzerland and Jersey among them.
The USA (11th least complex) and China (9th most complex) are polar opposites in terms of business complexity. However China is making headway. Regional variations in legislation are seen as a short-term pain that will likely bring huge benefits to international firms investing in the country in the long term.
In over a third of the countries analysed for our report, local rules, regulations and penalty systems present major challenges. In many of cases, frequent and significant changes, often designed to attract investors, actually add to complexity. This report will help give businesses a better understanding of the idiosyncrasies that make up the global business landscape.
Complexity is no reason to avoid investing. It is a dimension which must be managed. With the right local knowledge and preparation, good companies can thrive anywhere.
Download your copy of the Global Business Complexity Index.
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