The world of international business has become increasingly challenging in the past eighteen months with socio-political and economical moves that swing between globalisation and economic fragmentation.The knock-on effect for businesses looking to expand into new jurisdictions and set foot in new territories is the necessity to localise their presence. Processes such as registering an entity, setting staff on local payrolls, filing accounts, paying taxes and more differ between countries. In some instances, procedures can even vary between regions or districts within one jurisdiction.
Furthermore, the evolving regulatory landscape present in each country can add an extra headache with its particularities while businesses strive to comply with all and avoid being subject to fines and unnecessary exposure.Complexity can be found in higher or lesser degree in every country. The good news is that once it is identified and understood, the path to overcoming it unfolds, and with the right partners in each location international businesses flourish and excel in their expansion.
TMF Group’s Global Business Complexity Index is a new report that compares key administrative and compliance demands across 76 jurisdictions.
With complicated and fast evolving legislation, the report found Greece is the most complex country at present, with close runner ups like the UAE, China and Brazil.
From a regulatory angle, the Global Data Protection Regulation (GDPR) and Ultimate Beneficial Owner (UBO) registries have had a considerable impact on international businesses when it comes to investing time, people and funding, strengthening the corporate resilience.
Enforcement of penalties on the rise
While we see how businesses try to keep ahead of these developments to avoid risk and reputational damage we also witnessed increasing activity from regulators, being more alert and assertive, properly prepared due to the use of better technology and starting to enforce compliance with high penalties and their associated negative exposure.The good news is, enterprises that take the time to invest in understanding the regulatory and governance requirements of the environment they operate in will find operating anywhere in the world, a smooth process.
Technology transition takes its toll
The implementation of new regulatory driven technology, aimed at reducing business complexity and increasing transparency and reporting time takes at times a funny toll despite the final objective.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 pushing them away from the top most complex countries.However, not every international business will have the time to manage such a transition, opting to partner with local regulatory governance and corporate secretarial specialists well versed in the new legislative environment. Until then, we will continue to witness operational disruption requiring extra attention to regulatory compliance and enhanced governance.
The sooner complexity is embraced and understood, with all the commitment it implies from investment to competent personnel, the faster companies can blossom — even in the most complex countries