From Globe newswire

TMF Group’s Annual Financial Complexity Index Weighs Economic, Legal, Tax and Accounting Policies to Determine Most, Least Complex Regions for Businesses

NEW YORK, April 04, 2018 (GLOBE NEWSWIRE) — TMF Group, a leading provider of high value business services to clients operating and investing internationally, today announced the results from the 2018 Financial Complexity Index (FCI), TMF Group’s annual research report to rank geographic complexities across 94 countries and jurisdictions. This year’s findings list China as the most complex place in the world for accounting and tax compliance, followed by Brazil, Turkey, Italy and Argentina. The least complex jurisdictions for 2018 include the Cayman Islands, British Virgin Islands, Jersey and Hong Kong.

The detailed 2018 FCI Report can be found by visiting: www.tmf-group.com/FCI2018

“Right now, the stars seem to be aligning for worldwide business growth in 2018. Last January, the IMF signaled that more than 120 distinct global economies, which account for 75% of the global GDP, are currently in a period of economic growth, which may entice further business investments. Once you factor in changes to the U.S. corporate tax code that deliver a significant savings windfall, and encourage repatriation of foreign funds into domestic coffers, the timing seems ideal for organizations to expand their global footprint,” said Jason Gerlis, Managing Director, TMF Group USA. “Every year we deliver the FCI to help track major compliance and regulatory changes across the world, whether it be BEPS, GDPR, changes to VAT or subtler regulatory updates. Without proper guidance and due diligence, it’s quite easy to become mired in hidden obstacles taking the form of fines, penalties and wasted time or revenue, by failing to prepare for cross-border complexities.”

2018 Results

• 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.
• For the second year in a row, the Cayman Islands earned the title of least complex location from an accounting and tax perspective.
• Of the top 10 most complex by region, the Americas had five locations [Brazil, Argentina, Bolivia, Colombia and Mexico], with Europe, Middle East and Africa (EMEA) representing four [Turkey, Italy, France and Russia], and Asia Pacific and Australia (APAC) listing only one [China].

Complexities by Region

• APAC: The 2018 FCI lists APAC’s largest economy, China, as most complex. This is largely driven by the continued embedding of the Golden Tax System, which aims to introduce stricter monitoring with enhanced data sorting and transparency.
• EMEA: Turkey drops out of the top spot from the 2017 FCI, whereas the introduction of a value-added tax (VAT) for the United Arab Emirates (UAE) has signaled a slight rise in complexity for the nation. France and Italy are among this year’s complexity leaders, but new business-friendly simplification processes from the French government may change that status over the coming year.
• LATAM: South and Central America, which account for half of the world’s ten most complex jurisdictions, have seen several countries begin the process of introducing digitized filing for company accounts, which may account for a short-term complexity spike.
• NA: The United States and Canada have both decreased in complexity according to this year’s index, whereas Mexico has grown more complex. The looming renegotiation of the North American Free Trade Agreement (NAFTA) may end up significantly altering the ranking for each stakeholder nation for years to come, pending any major policy changes.

Rankings by Category
In addition to the index rank, the FCI survey also generates a percentage-based score that quantifies the level of difficulty in complying with local regulations, with 100% representing the greatest level of difficulty and 0% representing the least amount of difficulty.

• Compliance: South Africa and Germany rank as the most complex countries when it comes to the compliance category – based on the level of difficulties associated with cross-border transactional processes or data governance matters – with each registering an 80% score within the 2018 FCI survey. The global average for compliance registered at 61%, whereas the least complex regions for the year are the Cayman Islands and Afghanistan with a 22% score in the survey.
• Tax: The FCI’s tax category assesses responses that measure the level of complexity associated with adhering to local tax policies, in each region. This year Venezuela (71%) comes in as the complexity leader, whereas the global average landed at 49% with the autonomous British territory of the Cayman Islands (0%) scoring as the least complex within this year’s index.
• Reporting: The reporting category deciphers the level of complexity associated with legal regulations by region. The global average for 2018 is 57%. This year the reporting category was topped by China with a score of 89%, which signifies that APAC nation has the highest level of complexity from a legal standpoint.  By contrast, the United States earned the lowest score for the year at just 18%.
• Bookkeeping: Mexico tops the bookkeeping complexity list at 78%, with the Cayman Islands (16%) holding the lowest position. The global average for the bookkeeping category was 46%; the category measures factors associated with the various accounting practices, technologies and local government policies for each region.

Survey Parameters
The FCI is comprised of a 74-question survey to judge for regulatory compliance, tax, statutory reporting and bookkeeping complexity, and also considered other economic factors brought on by changing political policies. The report ranks each country based on overall financial complexity, with 1 representing the most complex and 94 equaling the least. The survey contains both objective and subjective questions, which are administered by TMF Group’s in-house accounting and tax experts located across more than 80 jurisdictions. The overarching parameters explore 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.)

About TMF Group
TMF Group helps its clients expand and operate internationally and ‘belong’ wherever they are in the world. Its staff of more than 7,000 expert accountants, legal, HR and payroll professionals work in over 80 jurisdictions to provide 15,000 clients with on-the-ground compliance and administration services so they can venture further. We keep operations running seamlessly, giving clients the peace of mind to focus on the bigger picture. To learn more, please visit www.tmf-group.com

For more information:
Damian Kerr
Director of Communications, TMF Group
[email protected]
+44 (0)20 7832 8954