China, Brazil and Turkey ‘most complex jurisdictions’: report

The most challenging country on earth in which to be an accounting and tax compliance professional at the present time is China, a new survey has revealed, followed, in order of declining complexity, by Brazil, Turkey, Italy and Argentina.

The least “complex” jurisdiction, meanwhile, for the second year in a row is the Cayman Islands, followed – this time in order of increasing complexity – by the British Virgin Islands, Jersey and Hong Kong, according to the most recent TMF Group Financial Complexity Index.

TMF Group’s 30 Most
Complex Jurisdictions

The TMF Group’s Top 30 Most ComplexThe second inaugural Financial Complexity Index, or FCI, comes as the international financial services landscape is “dominated by the impact of the global move towards transparency and conformity”, according to a summary of the findings, contained in the 32-page report.

“Many countries are working out their reaction to the OECD’s Base Erosion and Profit-Shifting (BEPS) project, meaning transparency in ultimate beneficial owners and transfer pricing are the subject of regulation impacting on business operations.

“The Common Reporting Standard (CRS) – designed to allow automatic exchange of information between jurisdictions by financial institutions – has also begun to make an impact.

“We see many countries passing reforms to simplify their economies not only to attract investment, but to ensure the country ticks the compliance box for these global movements.

“Given that countries are as unique as ever, each one is tackling these global issues in a different way, and we have seen movement at the top end of our index.”

Among these moves, the TMF report’s author’s go on to explain, is Turkey’s fall to third place from first, following “moves to simplify its economy”, while France entered the Top 10, and “the UAE’s introduction of value-added tax alters its tax-free haven status, and adds a new layer of complexity for businesses”.

LatAm as world’s complexity capital

When it comes to complexity as a region, the TMF authors say, Latin America is in a class of its own.

“As previously, Latin America makes up half of the top 10 most complex countries, with Brazil again ranked second.

“Howeer, change is afoot; several Latin countries have begun to digitise their filing processes, causing a short-term complexity spike. [But] if things go according to plan, the digital transformation should reduce complexity in the long term.”

Other findings in the report:

• The United States has moved down the list to number 75, three positions away from last year’s ranking of 72, meaning it has ticked down in its level of complexity. (The new position predates recent legislation that will trigger changes to the corporate tax code, and newly filed tariffs, which are precisely the type of factors that impact potential cost of doing business in the region, the TMF report notes.)

The looming renegotiation of the North American Free Trade Agreement may end up significantly altering the ranking for the US, Canada and Mexico “for years to come”, pending any major policy changes.

• While the Americas was the most complex region in this year’s report, with five locations (Brazil, Argentina, Bolivia, Colombia and Mexico) in the global Top 10, the Europe, Middle East and Africa (EMEA) region had four, and the Asia Pacific and Australia (APAC) region contained only one on the Top 10 ranking(China).

The TMF Group researchers compiled their data from a 74-question survey which was administered by the company’s in-house accounting and tax experts, located across more than 80 jurisdictions. Their areas of research included four distinct service areas: compliance (cross-border transactions, data governance), tax (registration, compliance and type), reporting (processes, legal regulations) and bookkeeping (accounting, government policy and technology.)

TMF is based in the Netherlands. As reported, it agreed last year to be acquired by CVC Capital Partners, the private equity firm, for €1.75bn, which put an end to its plans to list on the London Stock Exchange. Its TMF International Pensions arm became a wholly-owned TMF Group subsidiary in 2016.

The company employs more than 7,000 expert accountants, legal, HR and payroll professionals in more than 80 jurisdictions around the world.

To read and download the 2018 edition of the TMF Group’s Financial Complexity Index, click here.

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