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27 July 2023
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Business complexity in accounting and tax

TMF Group’s Global Business Complexity Index 2023 explores 292 different indicators relating to business complexity. Our analysis covers three core areas of business administration, and ultimately assigns an overall complexity score to each of the jurisdictions assessed.

This article focuses on the second of those three key areas of business: accounting and tax. Here we take a closer look at some of the findings from this year’s Global Business Complexity Index (GBCI), along with commentary from our subject matter experts.

Complexity is on the rise

Accounting and tax are key pillars of business operations worldwide. They can contribute to the overall complexity of doing business, owing to the burden of their administration and the associated reporting requirements. They can also carry the threat of consequences as serious as forced termination of operations or even imprisonment, in the case of misdemeanours or malpractice. Getting these areas right is a crucial part of driving any global business forward.

However, these two areas are becoming more complex year on year. In 2020, 40% of TMF Group accounting and tax experts worldwide stated that they anticipated compliance would become more complex over the next five years. This has steadily risen since to 45% in 2023, demonstrating that many organisations are facing a greater operational burden than they were three years ago – and one that may become more onerous in the coming years.

Rules are becoming more stringent


Year on year, accounting and tax rules are becoming more stringent. For example, it’s now less common to be able to do business without being registered with relevant tax authorities: this is only possible in 13% of jurisdictions globally in 2023. This includes those jurisdictions like the Cayman Islands and the US where doing business is typically simpler and governments actively work to make all stages of business incorporation and operation as straightforward as possible.

No corporation tax is levied in the Cayman Islands, for instance, so tax administration for businesses established there is less complicated. This being said, additional auditing requirements related to funds have recently been introduced in the Cayman Islands, meaning that there are other areas of business administration with a greater burden.

The audit requirement for some entities, such as private funds which was introduced in the last few years, can be an extra unforeseen complication for some clients.

TMF Group expert | Cayman Islands

It is also now more common that jurisdictions mandate the need to obtain a business licence prior to becoming operational, and the need for tax audits. In 2023, businesses will need to be audited in 95% of jurisdictions worldwide, demonstrating that in the vast majority of markets, adhering to accounting and tax standards is unavoidable.

Some localised aspects of accounting and tax are on the rise

Specific aspects of accounting and tax administration are becoming more localised within jurisdictions, requiring those who hold certain positions or fulfil certain functions within a business to be present in the country in question, or be a local citizen. This can be complex for multinational organisations who have sought to find efficiencies or cost savings through accounting and tax centralisation, or for whom directors and senior accounting and tax advisors may be located elsewhere.

Since 2020, more jurisdictions mandate that the tax or legal representative of an entity needs to be a local citizen. This may leave organisations with an unexpected requirement to appoint an additional staff member with the requisite knowledge or qualifications in these jurisdictions, or consider the relocation of senior staff which typically incurs cost.

It is also less common in 2023 for jurisdictions to allow the maintenance of accounting records abroad, such as in a shared service centre. This can drive complexity for international businesses as they are unable to store accounting records for multiple jurisdictions within the same central location. For instance, in Bolivia, accounting must be kept in country, under Bolivian accounting standards and in local currency. Accountants must be appointed based on the recommendations of the National Tax Service. Therefore, it’s not simple to adapt and replicate accounting or tax processes used elsewhere. Localised complexity can create quirks that can be cumbersome for international businesses.

Digitalisation can make things simpler or more difficult

In recent years, more and more jurisdictions have adopted a digital-first approach for accounting and tax. On the one hand, this can simplify processes or possibly open doors to automation or improved scalability. However, adopting new processes or adapting to new software, portals or ways of working can also represent a form of complexity for businesses, as they seek to meet increasingly technological needs.

Since 2020, it has become more and more common for governments to mandate the issuing and uploading of tax invoices digitally. For instance, in 2020 just 38% of jurisdictions required at least some organisations to issue tax invoices electronically, rising to 53% in 2023. Similarly, in 2020, only 24% of jurisdictions mandated that all organisations must upload tax invoices to a government platform, rising to 37% in 2023.

This move towards digitalisation is a trend that is increasing each year and set to continue. Governments worldwide see digital as the way forward, and most tend to be turning away from paper-based ways of working.

However, certain jurisdictions do still implement this more traditional approach to accounting and tax processes, such as in Egypt where filing in hard copy is still required. Therefore, physical visits are still needed to the authorities to complete some processes, creating complexity for international organisations as they need to have an in-person presence within jurisdictions in order to operate.

On the other hand, digitalisation can also bring its own complexity. For instance, it’s becoming more difficult to customise accounting software for local requirements, with our experts in 43% of jurisdictions indicating that it’s not easy, versus 35% in 2020. This demonstrates that as digitalisation becomes more embedded globally, organisations can face challenges aligning their accounting and tax software locally.

Complexity can also stem from the transitional period as jurisdictions move towards digital processes. For instance, in Romania, new digital legislation and compliance requirements such as SAF-T, e-invoicing and e-transport have been introduced without adequate planning and preparation. Businesses can struggle to adapt to new and sometimes unclear ways of working.

France, the most complex jurisdiction in the GBCI 2023, introduced the ‘Guichet Unique’ in 2022 that aims to create a ‘one stop shop’ for businesses incorporating and operating in France. Although in the long term this online service will work to simplify the process of doing business in France, teething issues have been reported, demonstrating that progressive changes can result in additional work. From 2024, the French government aims to begin to introduce the process of electronic billing, which may also bring about some initial complexity.

I would say that electronic billing is going to be very difficult the first two years but in the future, it will be so much better. It will be easier - it’s a dream for accountants. But implementation at the start will be a nightmare, for sure.

TMF France expert

Governments can offer support to ease complexity

Due to the rise in accounting and tax complexity being observed across numerous jurisdictions, governments are taking a supportive stance to help organisations meet demands, such as opening helplines and online guidance so that business can remain compliant.

In 2023, only 5% of jurisdictions worldwide do not offer guidance for businesses to remain compliant. For instance, Greece, one of the most complex jurisdictions in 2023 for accounting and tax, doesn’t offer such support. Authorities can take months to respond to queries, making compliance more challenging for businesses.

Despite some local challenges, the supportive approach most governments are now taking worldwide works to combat the rising complexity of the accounting and tax space. With the continuing tightening of legislation, rise of digitalisation and ever-present tension of local and international approaches, it will be interesting to observe how the sector develops in the coming years.

The Global Business Complexity Index 2023

This article is an extract from TMF Group’s latest report: The Global Business Complexity Index 2023.

Explore the GBCI rankings, analysis and global trends, to help you cut through the layers of corporate compliance complexity – download the report in full here.

To find out more about the drivers of business complexity in the jurisdictions that matter to you, why not explore our Complexity Insights Dashboard?

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