UAE ranked as fourth most complex business environment on global list

18 June 2019 4 min. read

The UAE has landed in at fourth worldwide for business complexity according to a study by international professional services firm TMF Group.

With nearly 8,000 in-house experts operating in 80-plus jurisdictions worldwide, the TMF Group provides localised on-the-ground compliance and administration services in areas such as fiduciary, company secretarial, accounting, tax and payroll to clients operating and investing internationally. Well placed then to assess such matters, a recent TMF report has ranked the UAE as the fourth-most complex for business out of 76 jurisdictions worldwide.

Measuring ‘complexity’ in terms of how “complicated and unpredictable a business environment is – and how difficult it is to understand and operate in”, the Global Business Complexity Index takes into account specialist interviews and an in-depth business survey examining local rules, regulations and penalties, the accounting and tax landscape, and human resource issues around the hiring, firing and paying of employees – before arriving at a statistically weighted ranking.Most and least complex business environments worldwideAccording to the analysis, Greece was considered the most complex current business landscape worldwide – thanks to rapidly changing legislation and complex labour laws – followed by Indonesia and Brazil. Adjudged 4th, the UAE, due in part to the suite of recently introduced reforms aimed at reducing complexity. Over the long term, TMF says, the new legislation should make it operationally easier for businesses in the UAE – but add complexity in the short-term.

“In over a third of countries analysed, local rules, regulations and penalty systems present major challenges for companies. In many of cases, frequent and significant changes, often designed to attract investors, actually add to complexity,” said TMF Group CEO Mark Weil, who added; “Complexity is no reason to avoid investing. It is a dimension which must be managed. With the right local knowledge and preparation, good companies can thrive anywhere.”

The Emirates, of course, also includes multiple jurisdictions – “each with its own set of regulations and requirements governing company establishment, compliance and filing.” The report notes that while the UAE’s relatively business-friendly jurisdictions are moving ahead with process automation and digitisation, in-depth local knowledge is required when operating in other jurisdictions – including, potentially, the translation of official documents into Arabic.

“Businesses investing in a detailed understanding of their jurisdictions will reap rewards,” states the report, with Stephanie Williams, TMF’s Middle East Managing Director adding; “Once you are in the UAE, and you understand the market, or have good advisors that will work through the complexity, it’s fine and doing business is much more straightforward.” Among the report’s recommended advisors; accountancy professionals with local tax and payroll knowledge.

Complexity of establishing a running business in new jurisdiction

In contrast to the UAE, Israel was deemed the sixth-least complex market for business, behind Paraguay, Thailand and noted or borderline tax havens Jersey, Curacao and the Cayman Islands in the top three spots. According to the report, Israel scores well for simplicity due to relatively straightforward regulations and tax system and a mind-set toward encouraging foreign investment. Locally operating firms can also be entirely foreign-owned.

Elsewhere in the Middle East, Qatar ranked as the seventeenth-most complex worldwide (although Bahrain wasn’t included, it’s now commonly noted for its healthy business environment), while at the global level the report found that some of the world’s largest economies – China (2nd largest), Germany (5th), France (6th) and Brazil (8th) – are also some of the most complex to operate in, all landing in the top dozen positions. 

“The findings confirm that the business landscape has become more challenging. Any business looking to expand into new territories faces a formidable array of potential hurdles,” concluded Weil, a former CEO at Marsh in the UK. “Trade disputes, tariffs, rising nationalism and political unrest point to a shift from globalisation to economic fragmentation. This has made some of the world’s most commercially attractive countries among the most complex to operate in.”