Corporate compliance complexity: A look at LatAm

Argentina and Brazil are working to cut red tape but their efforts are not yet bearing plump fruit, according to multinational business services provider TMF Group.

The countries are among the 10 lowest ranked jurisdictions globally in TMF's Compliance Complexity Index 2018.

To put together the index, TMF surveyed its compliance experts in 84 jurisdictions, with questions covering areas such as complexity of opening an entity, local language requirements and the difficulty of adopting local and global transparency requirements.

Argentina is ranked the fourth most complex globally while Brazil holds the seventh spot.

The two nations are implementing measures to simplify their compliance structures that should, in the medium to long-term, reduce complexity, Raimundo Díaz, head of Americas for TMF Group, said.

"It's the paradox we constantly see here: Governments trying to cut red tape often end up increasing it in the short-term, as businesses migrate to new systems and put in place new processes. In the long-term, however, the implementation of initiatives like digital platforms for both businesses and individuals to file their paperwork online - measures that we are now seeing in some of the region's most important economies like Argentina and Brazil - will make things easier for businesses," added Diaz.

Argentina has passed a tax reform bill and is implementing measures in various sectors to do away with paperwork and digitally transform the economy.

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Adding to the load in Argentina and Brazil - countries with historically large bureaucracies - are requirements linked to transparency initiatives. Both jurisdictions have ultimate beneficial ownership rules and registries and are signatories to the OECD's common reporting standard.

Plus, non-US firms that do business in both the US and Latin America have to comply with Washington's foreign account tax compliance act.

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While Argentina and Brazil, along with Uruguay, are among the 10 lowest ranked, Central American nations Nicaragua (80) and Honduras (81) sit at the other end of the league table.

Regarding the gap between the two sub-regions, Díaz said: "It can be explained in part by the entrenched bureaucracy found in many South American countries that can make the burden of annual corporate secretarial compliance particularly time-consuming or complex."

MOST COMPLEX TO LEAST COMPLEX IN LATAM

In the region, global compliance trends are shaping the requirements to which companies must adhere in every jurisdiction where they operate, said Díaz.

"The results show what we have long seen, which is that countries around the region are in notably different stages of adapting to global compliance trends and implementing compliance best practices," he said.

No. 1: Argentina (4 globally)

No. 2: Brazil (7 globally)

No. 3: Uruguay (10 globally)

No. 4 Peru (14 globally)

No. 5 Venezuela (21 globally)

No. 6 Colombia (25 globally)

No. 7 Barbados (26 globally)

No. 8 Chile (32 globally)

No. 9 Ecuador (36 globally)

No. 10 Costa Rica (37 globally)

No. 11 Guatemala (39 globally)

No. 12 Bermuda (47 globally)

No. 13 Dominican Republic (54 globally)

No. 14 Cayman Islands (58 globally)

No. 15 Trinidad and Tobago (64 globally)

No. 16 Panama (65 globally)

No. 17 British Virgin Islands (68 globally)

No. 18 El Salvador (69 globally)

No. 19 Mexico (70 globally)

No. 20 Bolivia (73 globally)

No. 21 Paraguay (75 globally)

No. 22 Nicaragua (80 globally)

No. 23 Honduras (81 globally)

No. 24 Curacao (82 globally)

UAE is ranked No. 1 and Ireland No. 84.