Financial Complexity And Non-Compliance The Key Worries In APAC

In a region housing some of the most financially-complex countries in the world, is it any wonder that non-compliance with local regulation was named the most concerning compliance trend in Asia Pacific?

This is, of course, according to TMF Group's inaugural Financial Complexity Index. The ranking of 94 jurisdictions across the world resulted in three top-10 spots for Asia Pacific: Vietnam ranked 5th most complex for compliance, followed by China at 7 and India at 10.

The Index also saw Hong Kong come in at 91 as the easiest place in APAC for compliance from an accounting and tax perspective; only the Cayman Islands, BVI and UAE were ranked less complex for business across the world.

In determining the rankings with its in-house accounting and tax experts, TMF Group used four weighted complexity parameters, considering the accounting and tax rules and regulations in different jurisdictions, and risks associated with non-compliance.

But it's not all about the top 10 and the numbers; the survey also asked in-house experts for the local view on emerging compliance trends, and how these are seen in Asia. These results show the traditional worries of regulatory and tax compliance are still top of mind for accounting professionals around APAC: non-compliance with local regulation, the possibility of tax audits, and accounting complexity cause the most worry for Asia Pacific's accounting and tax professionals.

The issues affecting Europe - namely, BEPS and transfer pricing - are less feared in APAC, as is the impact of technology and cyber security on the profession.

So why are these specific issues so weighty in the region?

Complex regulation can confuse the uninitiated

It's the myriad differences both in-country and between-countries that adds to the complexity. For example, businesses need to understand and navigate India not as one single market, but as a web of inter-related state markets where legislation and compliance requirements differ vastly. From set-up, companies need to interact with multiple authorities for registrations and ongoing compliance. The web of regulations stretch from payroll-related compliance like the Provident Fund (i.e. social security) or labour welfare fund (state-regulated), to withholding tax submissions which range from quarterly to annual. Even the Goods and Service tax, hailed as the biggest tax reform in India and applicable from 1 July, requires the company to register separately in each state of operation...