Victory in the presidential election in Peru secured by a left-wing union leader, the third vote obtained by the opposition in electing Chile’s traditional voters, a communist presidential message in the primaries destined for La Moneda, and the reclassification. In Argentina among the emerging economies, it has made Latin American markets reeling in recent days. In this way, the stability of the region is carefully monitored by the rest of the world due to the investment options offered by countries, which are often hampered by the governmental system or ongoing legislative changes.
In this context, it is no coincidence that a group of countries in the region leads those countries that face the greatest number of obstacles when doing business. This was estimated by the latest report of the Global Corporate Complexity Index prepared by the consulting firm TMF Group, which analyzed 77 jurisdictions around the world that focus about 92% of global GDP, and ranked Brazil, France, Mexico, Colombia, Turkey, Indonesia, Argentina, Bolivia, Costa Rica and Poland as the ten countries that It has the largest number of barriers.
In the case of Brazil – which ranked second in 2020 – the study notes that although the country ranks thirteenth in the global economy, the complexity lies in the multi-tiered system of governance, whereby companies that are formed must be registered at all three levels Government: federal, state, and municipal. This means different tax rates from city to city and state to state due to the “decentralized structure” that governs the government model, thus assuming significant complexity for multinational corporations.
While in the case of France, which has fallen ten places compared to last year, the study attributes its complexity to “the accounting and taxation processes, where human resource systems focus on employees.” Added to this is not only accounting subject to local language requirements, but also a highly employee-focused competence. As the study notes, “the Board of Wisdom, which is a special labor dispute court, rules in the employee’s favor in three out of four cases.”
Mexico, for its part, faces technical difficulties when doing business, since it is necessary to “personally manage the procedures with the state and rely on printed documents to establish a company,” according to the TMF Group, which has extended the deadlines.
“For foreign companies to be incorporated, Mexico requires that the documents be submitted on paper and that they be legalized in their country of origin. This means, for example, that companies from the United States must send the required documents to the United States in order to be certified, before being sent back to Mexico. epidemic, this process took about a week. However, as a result of the crisis, it may now take more than a month,” the report states.
A panorama similar to that of Indonesia, which, despite its “commitment to openness to foreign direct investment,” has enormous complexity in terms of the application structure for company formation.
But not all barriers have a technical background, many of these countries have been pulled to the top of the rankings due to constant changes in laws, as in Poland and Bolivia; The need for companies to demonstrate high levels of transparency, as in Costa Rica; changes in tax reforms as in the case of Colombia and Turkey; Or managing key factors such as stable levels of the economy, which left Argentina in seventh place on the list due to “ongoing legislative changes, difficulty sending and receiving foreign currency, and high levels of inflation,” as indicated by the consultant.
For its part, Chile ranks 40th and is currently one of the countries with a clear jurisdiction calling for doing business, because unlike last year, it climbed 24 places and is ahead of Peru, Russia, Germany, Spain and Austria.
At the bottom of the list (the least complex jurisdictions) are Denmark, Hong Kong, the Cayman Islands, Ireland, Curaçao, the British Virgin Islands, the United States, the Netherlands, El Salvador, and Mauritius.