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|Ireland tops the world’s ranking as the least complex place for business compliance|
|Tuesday, 16 February 2016|
Ireland has been ranked the least complex country for multinational enterprises to comply with corporate regulation and legislation during 2015, according to TMF Group’s Global Benchmark Complexity Index, improving its position by three places from 2014.
In contrast, Argentina has topped the rankings as the most complex country for business compliance for the third year running and is one of five Latin American countries in the Index’s top 10. Overall, seven countries have remained in the top 10 two years running. The highest European entry in the complexity rankings is Hungary (13th), followed by Poland (17th) which has dropped out of the top 10 for the first time.
The far-reaching annual study by TMF Group, a leading global provider of high value business services to clients operating and investing internationally, has ranked 95 jurisdictions across Europe, the Middle East, Africa, Asia-Pacific and the Americas according to how complex they are to do business in from a regulatory and compliance perspective.
According to the findings, Latin America remains the most complex region for multinationals with regard to regulation and compliance. Brazil, the second most complex country in 2014 has fallen eight places to 10th in the 2015 rankings, whereas Colombia has climbed 18 places to 3rd position. Mexico (6th) and Bolivia (7th) are the other countries from the region in the top 10.
Although Latin America retained a strong presence at the top of the Index, Asia’s representation amongst the most complex jurisdictions has increased from 2014. Despite the promise of reform and reduction of bureaucracy, Indonesia climbed seven places in the rankings to 2nd and is expected to continue to feature prominently in future complexity indices as the development of its legal systems and associated infrastructure continues to fall behind its regional peers. China (5th) and Thailand (9th) are the other Asian countries to make the top 10.
According to experts at TMF Group, many of most complex jurisdictions share certain characteristics not linked to a specific region. With the exception of China and the UAE (4th in the rankings) all jurisdictions in the top ten have a civil rather than common law-based legal system. In general terms, the development of these systems have been plagued by limited investment and the lack of necessary legal infrastructure to support a robust corporate governance environment.
Furthermore, whilst difficult to attribute overall complexity to politics, the majority of countries in the top 10 do face considerable political instability which does impact the creation and maintenance of stable corporate governance environments.
At the other end of the Index, Ireland has topped the rankings as the least complex country to do business from a regulatory and compliance perspective, improving its position by three places to 95th, ahead of the British Virgin Islands (94th), new entrants Latvia (93rd) and Trinidad & Tobago (92nd) and regular high performer New Zealand (91st).
Ireland’s success is thanks largely to its pro-business attitude, stable political environment and strong legal framework. Of particular note was the introduction in 2015 of a new Companies Act designed to simplify its business environment even further. This, alongside other recent initiatives such as the Knowledge Development Box, which has enhanced Ireland’s onshore intellectual property regime, has ensured the country remains one of the most popular destinations for international business, and once again outperforms the United Kingdom in the rankings.
In terms of trending compliance topics over the course of 2015, whistleblowing again tops the list. Whistleblowing programs are increasingly being implemented by multinationals as they seek to raise their global corporate governance standards, identify weaknesses across their global operations and address them effectively in order to protect shareholder value. Bribery and FCPA compliance have risen up the list of priorities, replacing cyber security, as multinationals place increased focus on managing this significant business and reputational risk.
Commenting on the findings, Matthew Eckford, Director – International Entity Management at TMF Group, said: “Multinationals have to deal with an ever increasing regulatory and compliance burden, as they manage their presence in multiple territories or expand into new regions. Boards of directors face mounting pressure from many governments, who are creating additional layers of compliance as they continue to demand that companies provide them with more information about their activities and corporate structures. This can cause major headaches for in-house teams who do not have sufficient knowledge of local regimes and their potential pitfalls.
“We are seeing far greater international collaboration between governments as they look to share information to combat issues such as money laundering and close tax loopholes, therefore maintaining accurate and consistent information across a business’ international operations is a major priority for leadership teams.”
· Argentina (1st), Indonesia (2nd) and Colombia (3rd) are ranked as the most complex
· Ireland (95th), British Virgin Islands (94th) and Latvia (93rd) are the least complex
· Three European countries fall into the top 20 most complex destinations for doing business in, namely Hungary (13th), Poland (17th) and Switzerland (19th).
· Also in the top 10 were the United Arab Emirates (4th) Mexico (6th), Bolivia (7th), Lebanon (8th) and Brazil (10th)
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