The Netherlands-headquartered TMF Group recently released its Financial Complexity Index for 2017. According to the firm, the Index “examines the varied complexities of maintaining accounting and tax compliance across 94 jurisdictions worldwide and explores some of the forthcoming trends that will affect multinational business in 2017 and beyond.”
For this report, TMF Group looked at accounting and tax systems in 94 countries – 50 from Europe and the Middle East, 24 from the Americas, and 20 from Asia Pacific.
The table above shows the four weighted complexity parameters that the group considered. The following three were carefully considered:
- The accounting and tax rules and regulations in different jurisdictions
- How to incorporate relevant regulations into your business
- The risks associated with non-compliance
Summary of findings
The report grouped financial complexity of a country into the following three areas of challenges:
Regulation: This area was related to the pace of changes in regulation in a country, which would result in increased effort in meeting the changing requirements.
Knowledge: This area pertained to the requirement of building a local knowledge base in legislation, currency, and language, in order to comply across all areas of finance.
Technology: The third and final area was the increased use of technology by authorities in terms of automation and digitization of reporting requirements and information storage in order to improve operational transparency.
Turkey emerged as the most complex among the chosen 94 jurisdictions for accounting and tax compliance, followed by Brazil and Italy.
On the other hand, the Cayman Islands were the least complex, preceded by the British Virgin Islands and the United Arab Emirates.
Among the four complexity parameters shown in the graph above, Greece was the most complex in terms of ‘compliance’ with a score of 78% while the Cayman Islands were the least complex with a score of 32%.
In ‘reporting,’ Argentina was the most complex with a score of 88%, while Curacao was the least complex with a score of just 8%. Mexico was the most complicated under the ‘bookkeeping’ parameter with 84%, while the Cayman Islands again emerged as the easiest with a 27% score.
Finally, Italy was the most complicated under the ‘tax’ parameter, scoring 68%, while the United Arab Emirates was the least complex, scoring only 7%.
Let’s now look into the details of the report, beginning with the top 10 most complex tax and accounting systems in the world.
