Greece most difficult country to operate a business

Greece is the most challenging country to do business with a fragmented tax system and complex compliance requirements, but the world’s largest economies are the most complex and unpredictable places for multinational firms to operate in

China, Germany and Brazil – countries with the second, fifth and eighth largest GDP in the world – are among the 10 most demanding countries for multinationals to conduct business with complex tax and labour laws, while the UK is ranked 43rd despite risks from Brexit uncertainty, according to the TMF Group global business complexity survey, which compares administrative and compliance demands across 76 jurisdictions. 

The easiest places to operate are the Cayman Islands, Curaçao and Jersey, which benefit from political stability, pro-business policies and favourable tax advantages.

Greece’s complexity is attributed to frequently changing legislation, differing regional tax rates and inconsistent treatment of companies by the authorities. Indonesia was second on the list, followed by Brazil, the United Arab Emirates (UAE), Bolivia and Slovakia.

The report stated: ‘Greece’s existing legislation can be complicated and new measures are continually being introduced. Sometimes, multiple laws conflict and it can be hard for businesses to know which one to comply with.

‘For example, in some cases, VAT refunds are subject to different treatment depending on the tax office dealt with. On occasion, individuals declaring identical dividends have been taxed at rates varying by more than 10%,’ the report stated.

To make it worse, some Greek islands operate as independent provinces for compliance and tax. This scenario is relatively unusual, said TMF Group, since compliance requirements vary between provinces in only 22% of jurisdictions and tax requirements in only 33% of countries surveyed.

The EU is home to two of the most complex countries for business, with Slovakia and Germany both in the top 10. Conversely Europe as a whole is also one of the best places to do business, with the Netherlands, Denmark, Switzerland and Jersey all highlighted for ease of operation.

The UK was ranked 43rd and it remains a safe and relatively easy place to do business, with strict governance standards, although a complex tax system and anticipated legislative changes following Brexit did add to complexity. It was ranked just below Russia but was still ranked significantly higher than France, where its president has been pushing for more pro-business policies.

While China was the ninth worst for businesses, with regional variations in legislation a major issue, there are signs of improvement on last year’s performance with a move down six spots from number three as a result of legislative changes which are set to improve the business environment in the long term.

On a global scale, the impact of technology and automated filing has helped improve compliance, with 39% of jurisdictions requiring tax invoices to be issued in an electronic format, while companies have to submit electronic accounting records in 51% of countries. However, one in four countries have not implemented country by country reporting obligations, despite the OECD requirement for multinationals to report on this basis to increase tax transparency.

Mark Weil, CEO of TMF Group, said: ‘The business landscape has become more challenging. Any business looking to expand into new territories faces a formidable array of potential hurdles.

‘Trade disputes, tariffs, rising nationalism and political unrest point to a shift from globalisation to economic fragmentation. This has made some of the world’s most commercially attractive countries among the most complex to operate in. More than ever, businesses with global ambitions must have a good understanding of the rules and regulations that prevail locally, and how to manage them.’ 

Global Complexity Index 2019 (2018 ranking)

1 (18) Greece
2 (43) Indonesia
3 (7) Brazil
4 (1) United Arab Emirates
5 (74) Bolivia
6 (58) Slovakia
7 (42) Germany
8 (60) Turkey
9 (3) China
10 (14) Peru
Note: 2019 rankings include hiring and employment factors, in additional to tax, compliance and regulatory factors

Pat Sweet, Sara White

TMF Group Global Business Complexity report 2019  - research based on statistically weighted data and qualitative research among local market experts, and focuses on rules, regulations and penalties; accounting and tax; and hiring, firing and paying employees.

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