The TMF Group, a prominent provider of compliance and administrative services, has launched the 11th edition of its Global Business Complexity Index (GBCI).

This comprehensive report analyses 79 jurisdictions, accounting for 93% of world GDP and 88% of net global FDI flows. The GBCI compares 292 annually tracked indicators, offering data on key aspects of doing business, including incorporation timelines, payroll and benefits, rules, regulations, and tax rates.

Business Complexity and Wealth Correlation

The indicators used in the GBCI are significant for firms investing in a country and local firms and entrepreneurs building businesses. There is a correlation between low business complexity and wealth per capita, influenced by the bureaucratic burden placed on businesses. Countries with simpler business environments tend to foster greater economic growth and prosperity.

The Netherlands, Denmark, the UK, Hong Kong, and the Cayman Islands are among the ten least complex jurisdictions to operate in, due to factors such as a simple, stable tax system, adherence to international financial standards, and a stable regulatory environment.

In the UK, the regulatory environment is considered relatively easy to navigate. The country exhibits low complexity in its accountancy and tax, and entity management systems due to its straightforward tax regime and compliance with international financial standards. However, challenges from Brexit and COVID-19 are impacting the Human Resources sector, with workers demanding competitive benefits packages and better work-life balance. Additionally, some businesses have relocated their headquarters out of the UK post-Brexit due to high costs and complex hiring requirements.

Greece Tops List of Most Complex Jurisdictions

For the second consecutive year, the United States has fallen outside the ten least complex jurisdictions. The introduction of the Corporate Transparency Act, with its ambiguous application and unclear responsibilities for service providers, has contributed to this ranking. The US also lacks substantial UBO legislation. Upcoming presidential elections and new foreign tariffs add to the uncertainty for foreign investors. Despite these challenges, the US remains an attractive jurisdiction due to its skilled workforce and global influence.

Greece has been named the most complex jurisdiction in this year’s GBCI, rising from 6th place in 2022 and 2nd in 2023. Greece’s complexity is attributed to its accounting and tax regulations, and the increasing complexity of its HR and payroll rules in 2024. Digitalisation has also presented additional challenges.

TMF Group CEO Mark Weil commented: “There have been several studies pointing to more complex pathways that firms are now establishing to de-risk their supply chains and routes to market. Some of those pathways take firms through complex countries to do business. So, our clients will be dealing with a double dose of complexity from needing to be present in more countries, many of which will be more difficult to do business in. That is a problem that TMF Group is here to solve as a single, trusted partner helping our clients invest and operate safely across all such locations.”

Impact of Global Regulatory Compliance on Foreign Investments

The GBCI 2024 highlights that most jurisdictions express confidence in legislative stability over the next five years, continuing an upward trend from previous years. In 2020, only 35% of jurisdictions predicted legislative stability, which has increased to 58% in 2024. The report suggests that the speed of regulatory changes, rather than the amount or complexity of legislation, poses the true challenge.

Geopolitical instability is impacting trade and investment globally. High energy prices, supply chain disruptions, and trade barriers are significant challenges. As a result, many companies are reassessing their growth plans and expansion goals. However, some jurisdictions, known as ‘bridge countries,’ benefit from their neutrality on global issues, becoming key players in global supply chains for multinational businesses seeking to manage risk during international instability.

Technology and Staff Retention Strategies for Success

Jurisdictions have identified various growth-impacting factors, with IT and technology topping the list. Technology provides growth opportunities by enhancing productivity and enabling countries with technological manufacturing expertise to increase market share. Companies in jurisdictions like New Zealand and Hong Kong are automating back-office, entry-level, and part-time jobs using generative AI to focus on higher-value tasks.

Simultaneously, attracting and retaining talent remains a significant challenge, with 78% of jurisdictions facing difficulties, especially in the EMEA (90%) and APAC (79%) regions. The ability to respond to demand is influenced by local labour laws and the availability of regional talent. Jurisdictions with strict labour laws and strong union presence, or those with talent shortages, struggle to adapt staffing levels responsively.