The Global Corporate Complexity Index reveals accounting and tax peculiarities in several countries around the world
As countries around the world are turning to technology to improve efficiency and transparency, it is interesting to note that 67% of America's territories already require invoices to be issued in electronic format, ahead of APAC (Asia-Pacific – 43%) and EMEA (Europe, Middle East and Africa – 32%). In the Americas, Brazil and Argentina are clearly leading the way in issuing electronic invoices.
These numbers are presented in the new edition of the Global Corporate Complexity Index – Accounting and Tax Report (GBCI A&T), produced by TMF Group. The study shows that digitization is one of the top four trends influencing jurisdictions around the world to improve their reputation on the world stage and their ease of operation. The other trends, strongly linked to these main accounting and tax objectives, are Harmonization; Change in relations between authorities and companies; and Evolution of fiscal policies.
The big picture revealed by TMF Group's GBCI A&T shows that all jurisdictions are competing to attract multinational investment. Smaller jurisdictions are making great efforts to attract potential investors, while large, established economies are trying to keep companies from being lured by rivals.
The report also points to new trends in the way territories change their tax policies. Many jurisdictions are adjusting taxation to create additional revenue or to align with international standards. In Brazil, where different types of taxes are managed by different levels of government, there is a greater challenge when it comes to introducing and implementing new tax legislation.
In addition to the national taxes issued by the Federal Revenue Service of Brazil, more commonly called the Federal Revenue (RFB), there are regional taxes applied by 27 states and 5570 different municipalities, each of which has its individual rates. Several different reform proposals are being discussed in Congress, but there is consensus that the number of taxes needs to be drastically reduced.
Around the world, we see small steps towards the standardization of tax and accounting principles. However, based on past experience of supranational legislation, whatever the extent of convergence, the reality for companies is that they will still have to deal with different regulations in different countries. Understanding local business environments should be a top priority for any multinational,” comments Emine Constantin, Global Head of Accounting and Tax at TMF Group.
Constantin also believes that the depth of cross-border variations not only affects the cost of business operations, but also determines which systems and processes to implement and the types of professional skills required. “Despite the current trend towards harmonization, the goal of global compliance will not be achieved quickly. Until then, local tax and accounting practices will continue to influence business decisions and their operating models,” he said.
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