Navigating Increased Business Complexity

TMF Group, a leading provider of compliance and administrative services, has released the 11th edition of its annual Global Business Complexity Index (GBCI). The report analyzes 79 jurisdictions, representing 93% of global GDP and 88% of net global FDI flows, comparing 292 indicators related to business operations such as incorporation timelines, payroll, benefits, regulations, and tax rates.

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Simplest and Most Complex Jurisdictions

The Netherlands, Denmark, the UK, Hong Kong SAR, and the Cayman Islands remain among the ten least complex jurisdictions due to their stable tax systems, adherence to international financial standards, and regulatory environments. Conversely, Greece has been ranked as the most complex jurisdiction, particularly in accounting, tax, and employment rules.

US and China Trade Tensions

The US falls outside the top ten least complex jurisdictions for the second consecutive year, mainly due to the ambiguous Corporate Transparency Act and uncertainties surrounding UBO legislation, presidential elections, and foreign tariffs. Despite this, the US remains attractive for investment due to its skilled workforce and global reach.

Emergence of Bridge Economies

Trade tensions between the US and Mainland China, coupled with supply chain disruptions from the COVID-19 pandemic and Russia-related sanctions, have led firms to seek more resilient supply chains. This shift has increased investment in ‘bridge economies’ such as Indonesia, Mexico, Poland, and Vietnam, despite their inherent business complexities.

TMF Group’s Insights

TMF Group CEO Mark Weil emphasizes the correlation between low business complexity and higher wealth per capita, noting that bureaucratic burdens significantly impact business operations. Weil highlights the growing complexity faced by firms as they navigate new pathways through bridge economies, which are often difficult to operate in. TMF Group aims to support clients by simplifying investments and operations across these challenging locations.

Top and Bottom Ten Jurisdictions in Business Complexity

Most Complex:

1. Greece
2. France
3. Colombia
4. Mexico
5. Bolivia
6. Turkey
7. Brazil
8. Italy
9. Peru
10. Kazakhstan

Least Complex:

70. Jamaica
71. British Virgin Islands
72. Jersey
73. United Kingdom
74. The Netherlands
75. New Zealand
76. Hong Kong, SAR
77. Denmark
78. Curacao
79. Cayman Islands

TMF Group’s GBCI 2024 underscores the intricate landscape of global business operations and the evolving strategies firms must adopt to navigate increased complexity in a post-pandemic, geopolitically tense world.