As APAC's Boom Continues, Are Businesses Ready For Expansion?

In the past decade, the Asia-Pacific region has been characterized by fast-growing, innovative economies that have presented substantial opportunity for U.S. companies.

Looking ahead, APAC is poised to remain the land of opportunity. According to the most recent Economic Outlook report published by the Organization for Economic Cooperation and Development, APAC is forecast to be the world's fastest-growing region through 2030.

With the good times continuing to roll, how can businesses branch out to APAC while mitigating the inherent risks in global expansion?

Compliance complexity

For as much economic possibility as APAC presents, it also has immense tax, compliance and accounting challenges. With a diverse range of languages, cultures and legal systems, the region features more time-consuming compliance requirements when compared to the rest of the world, as found in the 2018 Compliance Complexity Index, which ranks 84 countries based on how difficult the compliance burden is in areas like corporate governance, company formation and directorship services.

Across the region, each country has its own tax and compliance regulatory frameworks that require extensive local knowledge to reduce expansion risk and control costs. In Singapore, for instance, compliance is almost seamless because the wealthy country's regulatory framework and governance structure are fully digitalized.

However, in India and China, the economic giants in the region with expected annual growth rates of 7.5 and 6.4 percent, respectively, compliance is nowhere near as easy.

India

Taxation in India is complex, with different taxes levied by central and state governments. The country moved to standardize most taxes across the country's many states by introducing a new goods-and-services tax last year. It is a comprehensive indirect tax on the manufacture, sale and consumption of goods and services.

The GST is a massive reform, meant to increase government revenue while reducing compliance costs for businesses and easing the paying of taxes. But, of course, the transition has been anything but smooth in a vast country known for its parallel economy, complicated regulations and tax evasion.

Problems with the new tax system are partly the challenges of a large democracy with diverse business dynamics. The GST has five different tax rates, topping out at 28 percent for certain luxury and sin products, and companies are struggling to keep up with the rules. Even before the GST...