Among the world’s largest economies, the United States is the most business-friendly based on its stable regulatory landscape, streamlined tax and accounting administration and ease of hiring and firing employees, according to a study by TMF Group, a leading provider of international business administration services.
“As businesses define what success looks like after COVID-19, they may decide to move into new geographies or expand in current locations to strengthen their operating models”
The Global Business Complexity Index, which compares key administrative and compliance demands across 77 jurisdictions, found that the U.S. has the second-least complex business environment for multinational firms. The most complex aspect of doing business in the U.S. is complying with 50 different state regulations pertaining to licenses, tax registrations and employment rules, TMF Group’s analysis found.
The U.S. ranking is in sharp contrast to the four next largest economies: China (6th most complex); Japan (46th); Germany (40th); and India (18th). TMF Group’s research typically has found that many of the most commercially attractive countries tend to be the most complex to operate in.
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“As businesses define what success looks like after COVID-19, they may decide to move into new geographies or expand in current locations to strengthen their operating models,” said Larry Harding, head of TMF Group North America. “Our study provides insights to business leaders considering new foreign investment or how to re-allocate existing resources.”
The complexity index, which was based on a combination of statistically weighted data and qualitative research among local market experts, focuses on three areas: rules, regulations and penalties; accounting and tax; and human resource and payroll administration.
In the U.S., rules and regulations are clearly stated, publicly available and not prone to sudden change. By and large, the U.S. economy operates on a basis where companies are assumed to be complying, without stringent check-ups. China and many other large economies, by comparison, still place a heavy administrative burden on multinationals relative to verifying compliance. For example, many countries require an annual statutory audit to be completed and publicly filed, while in the U.S. audits are only legally required relative to publicly traded companies.
