Tax reform makes Colombia world’s third-most complex country for business compliance

Annual index by TMF Group ranks 95 countries according to regulatory and compliance regimes

  • Colombia named third-most complex country for multinational companies to stay compliant with corporate regulation and legislation, declining from 21st place in 2014
  • Tax changes increase compliance burden for multinational corporations
  • Five Latin American countries rank in the top 10, making the region the most complex to do business in from a regulatory and compliance perspective, followed by Asia

Bogotá, Colombia, 16 February 2016 – Colombia is the third-most complex nation in the world companies to stay compliant with corporate regulation and legislation, according to TMF Group’s Global Benchmark Complexity Index 2015, declining from 21st place in 2014 as a raft of tax reforms risks further complicating regulatory requirements.

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.

Daniela Diaz Quijano, Managing Director for Colombia at TMF Group, explains: “Colombia presents a complex regulatory system in both tax and labor. It is a country that has made the most tax reforms since 2005. However, the wording of the rules allows for different interpretations which increase their complexity.”

Colombian policymakers have implemented gradual changes in tax policy over the last year and are currently debating a broad structural modification to the tax system. According to experts at TMF Group, the Parafiscal and Pension Management Unit (UGPP) has carried out extensive audits on companies and is imposing severe penalties for non-compliance.

Changes make navigating local regulations an increasingly difficult task for multinational corporations and add to the complexity of doing business, though many continue to see the Andean nation as a prime target for investment.

“Colombia remains one of the most promising markets in comparison with neighboring South America countries, and offers great business opportunities in the areas of infrastructure, software and telecommunications,” added Ms. Diaz Quijano.

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, Mexico (6th) and Bolivia (7th) and Brazil (10th) are the other countries in the top 10.

Countries in the region which 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).

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.

For further information, please contact:

JeffreyGroup

Selene Vega
Tel: +52 (55) 5281-1121 Ext. 128
svega@jeffreygroup.com

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.

www.tmf-group.com

 
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