TMF Group index ranks compliance burden across 84 countries; UAE most complex, Ireland least complex

NEW YORK (July 17, 2018) – In an environment of increasing transparency, countries have imposed new administrative burdens that make international compliance more complex, according to a new report by TMF Group, a leading provider of high-value business services to clients operating and investing globally. The United Arab Emirates landed on top of the 2018 Compliance Complexity Index (CCI), a ranking of 84 countries based on a survey of legal and compliance experts in areas such as corporate governance, company formation and directorship services.

The CCI report closely follows TMF Group’s annual Financial Complexity Index (FCI), which ranks countries on the difficulty of complying with their accounting and tax regulations. Together, the two indexes provide the most comprehensive picture of compliance challenges for businesses operating in multiple countries.

Major findings from the 2018 Compliance Complexity Index include:

  • The UAE is the most complex country for businesses to operate in for several reasons, including the recent introduction of value-added tax and the establishment of legislation to comply with international regulatory programs involving client verification and tax matters. The FCI showed UAE rising in complexity, as the country attempts to move away from its reputation as a tax-free paradise.
  • North American countries have implemented a digital compliance infrastructure that supports a high degree of transparency but also increase the regulatory burden for businesses. As a result, the United States (#55) and Canada (#63) were ranked in the middle of the list, similar to their placement in this year’s FCI.
  • Ireland was the least complex country in the index, thanks to its stable regulatory system focused on reducing business red tape and streamlining communication between businesses and government.
  • The adoption of the new global information reporting regime known as Common Reporting Standard (CRS) has led to a short-time spike in complexity in several countries, including Uruguay, Malaysia, China and Brazil. The goal of CRS is to reduce offshore tax evasion by exchanging a greater level of financial information.
  • Corporate compliance departments are dealing with the increased complexity of regulations in Europe, the Middle East and Africa. Half of the top 20 most complex countries for corporate compliance are located in EMEA.
  • Three South American countries – Argentina, Brazil and Uruguay – are in the top 10 of the most complex jurisdictions, partly because they have not invested in digital infrastructure, making their processes more bureaucratic.

“In recent years, international compliance has pushed hard for more transparency and become much more complicated,” said Jason Gerlis, Managing Director, TMF Group USA. “A large number of new international regulations has been implemented across the globe, but none of them are the same when you look closely from country to country, making it a challenging compliance environment.”

To view the entire 2018 CCI Report, please click here.

The constantly changing regulatory environment increases the vulnerability of most organizations when it comes to risk exposure. Failure to comply with statutory obligations can have potentially severe legal consequences for the company, its shareholders and directors.

“We have seen top firms creating a global framework, focusing on raising the bar to make their compliance infrastructures conform to the new order,” Gerlis said.

Methodology

The survey contained 52 questions, covering topics such as the complexity of opening an entity in a specific country, local language requirements and the difficulty of adopting both local and global transparency reporting requirements.

TMF Group has previously released complexity reports covering corporate and secretarial compliance, but the 2018 report is more comprehensive and includes regulatory compliance information to reflect the broad range of factors affecting local and global businesses today. As a result, while general trends have been analyzed against prior reports, direct historical comparisons of data have not been made.

About TMF Group

TMF Group is a leading global provider of high value business services to clients operating and investing globally. It focuses on providing highly specialized and business-critical financial, legal and human resource administrative services that enable clients to operate their corporate structures, finance vehicles and investment funds in different geographical locations. TMF Group has operations in more than 80 countries across the Americas, Asia Pacific, Europe and the Middle East. To learn more, please visit www.tmf-group.com.


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