Some of the world’s largest economies are the most complex and unpredictable places to do business, according to an independent report commissioned by TMF Group.
The Global Business Complexity Index, which compares key administrative and compliance demands across 76 jurisdictions, has found that China, Germany and Brazil – countries with the second, fifth and eighth largest GDP worldwide – are among the 10 most demanding in the world for multinational firms to operate.
The ranking placed Jersey as the 74th most complex location and Guernsey the 60th – which means Jersey is the third easiest place in which to do business, Guernsey the 17th easiest.
The report revealed stark contrasts between global superpowers and among neighbouring countries around the world as political, socio-economic and legislative changes take hold.
“The findings confirm that the business landscape has become more challenging. Any business looking to expand into new territories faces a formidable array of potential hurdles,” according to Mark Weil, CEO of TMF Group.
“Trade disputes, tariffs, rising nationalism and political unrest point to a shift from globalisation to economic fragmentation. This has made some of the world’s most commercially attractive countries among the most complex to operate in.”
Focus of the report
The report, a combination of statistically weighted data and qualitative research by local market specialists, 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.
Europe is home to the most complex countries for business, with four out of the top 10, including Germany. Conversely, the continent tops the list for the 10 easiest places to do business, with the Netherlands, Denmark, Switzerland and Jersey among them.
The UK was deemed the 43rd most complex country. While it remains a robust place to do business, strict governance standards, a complex tax system and anticipated legislative changes following Brexit were seen to add to complexity. It sits just below Russia, but was still ranked significantly higher than France, where its president has been pushing for more pro-business policies.
China improves
While China is the ninth most complex country, with regional variations in legislation among the issues, this is a marked improvement on the 2018 compliance complexity list produced by TMF Group. Although these legislative changes are seen as posing challenges in the short term, they are likely to bring huge benefits to international businesses investing in China in the long term.
The US was deemed the 11th least complex jurisdiction worldwide, due to its relatively straightforward regulatory standards and recent tax reforms making it easier for firms to repatriate profits.
“In over a third of countries analysed, local rules, regulations and penalty systems present major challenges for companies. In many cases, frequent and significant changes, often designed to attract investors, actually add to complexity,” added Weil.
Global Complexity Index: full rankings
01 Greece
02 Indonesia
03 Brazil
04 United Arab Emirates
05 Bolivia
06 Slovakia
07 Germany
08 Turkey
09 China
10 Peru
11 El Salvador
12 France
13 Colombia
14 Ukraine
15 Belgium
16 Portugal
17 Qatar
18 Argentina
19 Spain
20 Philippines
21 Poland
22 Kazakhstan
23 Nicaragua
24 Italy
25 Malaysia
26 Canada
27 Vietnam
28 India
29 Serbia
30 South Africa
31 Costa Rica
32 Slovenia
33 Ireland
34 Norway
35 Honduras
36 Luxembourg
37 Jamaica
38 Uruguay
39 Mexico
40 Chile
41 Ecuador
42 Singapore
43 United Kingdom
44 Russia
45 Austria
46 Taiwan
47 Finland
48 Czech Republic
49 Malta
50 Venezuela
51 Panama
52 Guatemala
53 Romania
54 Cyprus
55 Sweden
56 Hong Kong
57 Hungary
58 Bulgaria
59 Japan
60 Guernsey
61 Korea
62 Mauritius
63 Dominican Republic
64 New Zealand
65 Australia
66 United States
67 Netherlands
68 British Virgin Islands
69 Denmark
70 Switzerland
71 Israel
72 Paraguay
73 Thailand
74 Jersey
75 Curacao
76 Cayman Islands
• The full Global Business Complexity Index can be found here