Lima, Peru, 16 February 2016 – Peru is one of the most complex countries for multinational companies to stay compliant with corporate regulation and legislation, according to TMF Group’s Global Benchmark Complexity Index 2015, remaining unchanged from 2014 in 16th place, as policymakers put simplifying legislation on the back-burner.
The far-reaching annual study by TMF Group, a leading global provider of high value business services to clients operating and investing internationally, 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. View full report.
Peru’s presidential race kicked off earlier this year, with candidates expected to focus on corruption and economic growth, two themes closely related to business compliance issues. While most of the candidates have highlighted reducing complexity as a priority, progress has been slow. Meanwhile, Peru’s economy is expected to outpace nearly all of its neighbours in 2016, making it a sweet spot for multinational corporations looking to expand in Latin America.
Walter Gutsch, Managing Director for Peru at TMF Group, explains: “Peru’s level of complexity is not in harmony with the growth that its economy has experienced in recent years. Reducing complexity is a promise that policymakers have not yet fully delivered on, but they have made an effort to show that the issue is still on the table. As it is an election year, it is expected that these initiatives will either be slow or postponed.”
Progress that has been made includes offering both national and foreign investors legal and tax stability agreements to stimulate private investment. These agreements stipulate that certain regulations in effect at the time of the investment contract will remain unchanged for that investment for ten years.
“There is still much to do reduce the level of complexity in Peru; for example, centralizing all the regulatory institutions into one, with an aim towards simplifying the compliance process,” added Mr. Gutsch.
Latin America as a whole remains the most complex region for multinationals to do business in regards to regulation and compliance. While Argentina tops the table, Colombia (3rd), Mexico (6th), Bolivia (7th) and Brazil (10th) are the other countries from the region in the top 10.
Neighboring countries that have fared better in the rankings include Uruguay (55th), Ecuador (40th), Chile (37th) and Paraguay (29th). The next most complex region to do business in is Asia, with three countries in the top 10, including Indonesia (2nd), China (5th) and Thailand (9th).
According to experts at TMF Group, many of the 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.
At the other end of the index, Ireland (95th) was ranked as the least complex place to do business from a regulatory and compliance perspective, largely due to its common law framework, stable political environment, strong regulatory framework and pro-business attitude.
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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 specialised 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.