PR96966

LONDON, July 13, 2022 /PRNewswire=KYODO JBN/ --

TMF Group, a leading provider of compliance and administrative services, has

launched the ninth edition of its Global Business Complexity Index (GBCI)

The comprehensive report analyses 77 jurisdictions, locations which account for

92% of the world's total GDP and 95% of net global FDI flows. It compares 292

annually tracked indicators, offering data on key aspects of doing business,

including rules, regulations, tax rates, incorporation timelines, payroll and

benefits, penalties and other compliance factors.

According to the 2022's research, Hong Kong is one of the easiest jurisdictions

to set up a business globally. Indonesia and China are near to the top of the

rankings due to a high level of complexity, but both have improved their

previous year's positions, with Indonesia dropping out of the top 10.  

Hong Kong, despite China taking more control legally and economically over the

past few years, remains a simple jurisdiction for foreign companies. The direct

impact on foreign investment and activity may be limited for now, as business

adopts a 'wait and see' approach to what lies ahead.

Specifically, the Hong Kong government has set its sights on developing a

leading funds industry, by setting up a new fund structure to replicate the

Cayman fund model and provide tax exemption for asset managers, meaning they

will only need to provide one set of compliance reports to the authorities.

This should help attract more asset managers to domicile their Cayman funds in

Hong Kong.

This is the first time that APAC countries are not listed in the ten most

complex jurisdictions to set up a business. It means that countries such as

China and Indonesia, which have been at the top of the rankings in terms of

complexity, are simplifying ways of doing business to attract foreign

investment.

China is ranked as the 14th (vs 6th in 2020 and 12th in 2021) most difficult

country to operate in, as legislation and practices tend to deviate from

international standards. However, it is a jurisdiction where technology plays a

role in reducing complexity and it is making some efforts to attract foreign

direct investment. The jurisdiction is likely to become more appealing for

foreign companies and is likely to introduce greater laws and regulations

relating to economic substance requirements. The country is expected to remain

stable politically, economically, socially, technologically, environmentally

and  legislatively.

TMF Group Head of APAC Shagun Kumar said: "The ninth edition of our Global

Business Complexity Index shows how varied the APAC region is. Jurisdictions

such as Hong Kong and Australia have been maintaining their positions among the

easiest places to invest in, while China and Indonesia are still hampered by

complex and changing procedures which differ from international standards. That

being said, we have been observing a trend to ease their processes and make

local requirements less stringent for international businesses, in a move to

increase their international competitiveness".

In addition to analysing 77 locations, the report identifies key themes shaping

the global business landscape and regulatory environment.

Emerging from Covid-19

The study reveals that some of the measures put in place such as tax

exemptions, increasing employee rights and the acceleration of digital

reporting are in the process of being reversed to pre-pandemic status.

Property tax payments on business premises reduced in frequency during the peak

of the crisis. However, in 2022, 14% of jurisdictions require some or all

companies to pay the tax at least every three months, compared to 9% of

jurisdictions in 2021.

On the HR (human resources) and payroll side, the trend for remote working has

increased, to the point where it's legal or standard in most industries in 31%

of jurisdictions, compared to 10% of 2020.

Compliance and the flow of FDI

The report highlights a simultaneous growth in both complexity and the flow of

FDI. Experts in a larger percentage of jurisdictions (34% in 2022 vs 28% in

2021) are predicting an increase in FDI over the next five years, reflecting

post-pandemic optimism at investment opportunities.

Technology continues to play a role in both increasing and curtailing

complexity. Digital literacy is an important factor, with 16% of jurisdictions

automatically notifying all the relevant authorities following incorporation.

ESG on the rise

ESG is becoming more of a focus for business globally. However, despite the

increase in interest, legal enforcement of ESG practices is only in place for

around 50% of the jurisdictions. This is especially the case outside the EU,

demonstrating a lack of international alignment. The impact of ESG is therefore

difficult to measure.

ESG is on the rise globally, with jurisdictions such as France leading the way

for many years. However, many governments are at an early stage of their

engagement by starting to look at adopting environmental initiatives and

guidelines.

Top and bottom ten (1= most complex, 77= least complex)

1  Brazil             68 United Kingdom

2  France           69 Norway

3  Peru              70 New Zealand

4  Mexico          71 United States

5  Colombia      72 Jersey

6  Greece         73 British Virgin Islands

7  Turkey          74 Hong Kong

8  Italy              75 Denmark

9  Bolivia          76 Curaçao

10 Poland         77 Cayman Islands

SOURCE: TMF Group