With new and varying regulatory legalisation in countries all over the globe, staying compliant with reporting and avoiding penalties can be a real headache for businesses.
TMF Group's Global Business Complexity Index (GBCI), a report which compares key administrative and compliance demands across 76 jurisdictions, positions Greece at the peak of business complexity. With complicated and rapidly changing legislation, we found this country unexpectedly surpassing the usual suspects – UAE, China and Brazil, which were high in the rankings.
The GBCI report helps guide anyone who wants to invest and operate around the world through three fundamental and inextricably-linked enterprise areas: rules, regulations and penalties; accounting and tax; and HR (hiring, paying and firing employees). All critical to operating and expanding businesses globally.
Global and local knowledge are essential for businesses
With new and varying legalisation coming into effect in many jurisdictions, companies need to report more information, more frequently. From 2018, GDPR privacy rules and Ultimate Beneficial Owner (UBO) regulations have had a considerable impact on international businesses in terms of the time, people and investment that companies have had to put in to get up to speed. Expanding global businesses need to operate on a global and local level to comply with every regulation and strengthen corporate resilience.
Enforcement of penalties on the rise
While many legislative developments from past years continue to evolve into 2019 and beyond, jurisdictions that have implemented new reporting requirements for transparency with large penalties and fines if found as non-compliant. Until now, except for some well-publicised media stories, companies have not felt the full intensity or pressure from institutions monitoring the applicability of legislation to comply. That is now changing. We increasingly see how businesses try to keep ahead of these developments to avoid risk and reputational damage. With complexity and enforcement of penalties rising, it is imperative to maintain full compliance.
The good news is, just like the song "New York, New York", enterprises that take the time to invest in understanding the regulatory and governance requirements of the environment they operate in, can make it anywhere!
Technology transition takes its toll
With the increase in the above obligations comes the implementation of new regulatory driven technology, both reducing and increasing business complexity. Countries undergoing technological implementation may be perceived, for a short time, as more complex than others and will have a harder transition period, ultimately increasing complexity and their ranking in the Global Complexity Index. Once fully implemented, the speed or ease of doing business is likely to increase exponentially. However, not every business will have the time to manage such a transition, opting to partner with local corporate governance and corporate secretarial specialists well versed in the new regulatory environment. Until then, we will continue to witness operational disruption requiring extra attention to legislative compliance and enhanced governance.
The sooner complexity is embraced and understood, with all the commitment this implies from investment to competent personnel, the faster companies can blossom --- even in the most complex countries.
The GBCI provides a 360-degree view of complexity that any organization would benefit from especially ahead of strategic decisions on sustainable growth and expansion.
Download your complimentary copy of the Global Business Complexity Index here.
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