Turkey, Brazil, Greece, Argentina and China among the top 10 most complex jurisdictions in the world for accounting and tax compliance. Cayman Islands, Hong Kong, BVI, UAE rank among the easiest.

Turkey is the most complex place in the world for Accounting and Tax compliance, followed by Brazil, Italy, Greece and Vietnam - according to TMF Group's inaugural Financial Complexity Index 2017.

The leading provider of global business and compliance services ranked 94 jurisdictions across Europe, the Middle East, Africa, Asia Pacific and the Americas; 1 being most complex through to 94 the least complex. The Cayman Islands came in at 94 as the least complex place for compliance from an accounting and tax perspective.

In determining the rankings with its in-house accounting and tax experts, TMF Group used four weighted complexity parameters, considering the accounting and tax rules and regulations in different jurisdictions, and risks associated with non-compliance.

TOP 10 MOST COMPLEX JURISDICTIONS FOR ACCOUNTING AND TAX COMPLIANCE

JURISDICTION GLOBAL RANKING
Turkey 1
Brazil 2
Italy 3
Greece 4
Vietnam 5
Colombia 6
China 7
Belgium 8
Argentina 9
India 10

MOST COMPLEX BY EACH COMPLEXITY PARAMETER

Most complex Global average Least complex
Compliance Greece 78% 60% Cayman Islands 32%
Reporting Argentina 88% 55% Curacao 8%
Bookkeeping
 Mexico 84% 51% Cayman Islands 27%
Tax
 Italy 68% 48% UAE 7%

Results summary:

  • Turkey is the most complex jurisdiction overall in which to stay financially compliant largely due to the requirement to report in both Turkish language and currency, and the extremely high number of tax articles, although this is reducing.
  • In Southern Europe both Italy (3) and Greece (4) have very localised complexities. In Italy taxes are levied at a national, regional and municipal level, while in Greece taxes are divided into three categories: income, property and consumption tax.
  • South and Central America has five jurisdictions in the top 15 most complex: Brazil (2), Colombia (6), Argentina (9), Bolivia (12) and Mexico (15). This is largely due to the common practice of levying three layers of taxation, at federal, state and municipal level. Argentina scored the highest of all 94 jurisdictions, in the area of 'Reporting' complexity (88%) and Mexico the highest in 'Bookkeeping' (84%).
  • Asia Pacific has three jurisdictions in the top 10: Vietnam (5), China (7) and India (10). Complexity around invoicing, filing and the conducting of audits is high with very specific documentation and processes applied.

Unsurprisingly, the five least complex jurisdictions have simplified reporting requirements and beneficial tax rates to encourage investment: Jersey (90), Hong Kong (91), the UAE (92), BVI (93) and the Cayman Islands (94).

Commenting on the rankings, TMF Group's Global Leader of Service Lines Deborah Williams said:

"Our findings show that financial complexity can be grouped within three key areas of challenge: regulation, knowledge and technology.

"Multiple layers of taxation and the rate of legislative change in some jurisdictions requires increased effort to meet compliance requirements. And applied local knowledge, not just of legislation but also currency and language, can prove vital in meeting your accounting and tax reporting obligations.

"When operating in a diverse global market, knowing and understanding local requirements for financial compliance can prove the difference between cross-border business success or failure.

"As more and more jurisdictions automate and digitise their information storage and reporting requirements, it's important for organisations to increase their compliance, transparency and flexibility so they can be operationally efficient and reach their full business potential."

To download the full report please visit: tmf-group.com/FCI2017

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.