Our Director of Global Business Development talks to The American Chamber of Commerce in Australia about the 2014 Global Benchmark Complexity Index and how to stay compliant in an increasingly complex business world.
The burden of managing various international entities continues to be a major headache for multinational companies and their boards of directors. It is a difficult task, soaking up hundreds of hours to monitor deadlines, interpret legislation and prepare foreign documents.
Growing internal and external stakeholder pressure, changing regulation and the continued expansion by multinationals into new territories have all added to the compliance responsibilities shouldered by their in-house teams. But it’s not just stakeholders; the compliance burden is a reputational risk too. Regulators are getting tougher; fines are getting bigger; prosecutions are increasing.
The 2014 TMF Group Global Benchmark Complexity Index saw significant changes in the global business environment and an increase in compliance requirements shouldered by organisations, such as FATCA compliance, anti-bribery and corruption and changes in international company law.
As part of this, certain jurisdictions have changed significantly their complexity ranking from the previous year as new rules come into force, meaning that there are an increasing number of potential pitfalls waiting for those firms expanding into new territories without sufficient knowledge of the local landscapes.
The strategic threat of non-compliance is more pronounced. Understanding and managing the local legal, accounting, tax, and HR and payroll compliance requirements in numerous territories can therefore be complex and time-consuming, and can often distract companies from their global ambition.
As a result, businesses are increasingly considering an external solution to improve efficiency, whilst effectively managing their budget. Working with third parties would help in easing the burden of the back office, particularly in the early stages of international expansion.
Third party services providers with strong local knowledge can help to constitute new subsidiaries and keep them compliant with domestic legal and working requirements. Also, it might be beneficial to select a partner that operates across more than one jurisdiction. This will help to ensure a smooth future expansion and accelerate the time to revenue.
This is an extract from a podcast published by The American Chamber of Commerce in Australia.