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Monday, 5th December 2016
The latest World Bank Doing Business report shows an increased rate of regulatory reform throughout Latin America, with countries in the region having implemented a total 32 reforms over the past 12 months – a 50% increase on last year
Now in its 14th year, the World Bank Doing Business report assesses regulations affecting domestic firms in 190 economies, ranking each on the basis of 11 criteria impacting the ease of doing business in any jurisdiction. Russell Bedford member firms in Latin America have again assisted in the compilation of the report’s Paying Taxes survey, contributing information on tax regulation, recent reforms and the comparative compliance burdens on entrepreneurs and businesses worldwide.
The new report – Doing Business 2017: Equal Opportunities for All – points, in particular, to improvements in the ease of establishing a business. Starting a business in Latin America and the Caribbean now takes an average of 32 days, compared with 55 days five years ago. Colombia, in particular, has shown an outstanding performance this year, with the country moving up 19 places on rankings for ease of starting a business, from 80th to 61st.
As in previous years, on the other hand, Latin America shows considerable under-performance in terms of excessive tax compliance requirements, with businesses having to spend an average 343 hours (43 working days) on their tax returns, compared to a global average of 251 hours (31 working days), and only 163.4 hours (20 working days) in OECD high-income economies. However, of the 32 reforms implemented across the region last year, the majority are concentrated on tax compliance, with nine countries taking steps to improve tax regulation.
Luis Carlos Robayo, managing partner, Russell Bedford Colombia, commented: “The pro-active implementation of reforms to lighten the compliance burden on entrepreneurs is, of course, welcome. But this year’s report again highlights how far overly complex – and frequently changing – tax regulation continues to impact the region’s tax competitiveness globally.”
Alexandra Arbeláez, tax partner, Russell Bedford Colombia, points out that Colombia is one Latin American country taking active steps to improve tax compliance for entrepreneurs. “While Colombia does not show any improvement in this year’s Paying Taxes rankings, it’s important to remember the country’s very significant improvement last year – the result of benefits arising from extensive tax reforms in 2014–2015. Further reforms proposed by the Government of Colombia, directed at improving the country’s international competitiveness and including, specifically, plans to reduce the corporate tax burden through the consolidation of two existing taxes, should see a marked improvement in the country’s standing next year.”