The Toughest Latin American Markets for New Businesses

Starting a business in Latin America can be very challenging. TMF Group’s annual report highlights this issue.

Five Latin American countries rank among the ten most complex markets for setting up businesses. The latest Global Business Complexity Index (GBCI) reveals why.

The report shows 22% of experts believe regulation hinders global investment. In South America, this figure jumps to 40%.

The GBCI covers 79 jurisdictions worldwide, representing 93% of global GDP and 88% of net foreign direct investment inflows.

It uses 292 indicators related to corporate complexity and business challenges.

Colombia ranks 3rd globally, Mexico 4th, Bolivia 5th, Brazil 7th, and Peru 9th. Colombia’s ranking comes from its complex accounting and tax systems and frequent fiscal reforms.

In the past seven years, Colombia introduced 19 fiscal reforms. Mexico faces barriers to opening bank accounts and obtaining work visas.

Bolivia struggles with an outdated tax system that requires physical presence and local language knowledge.

Brazil’s complex tax laws and varied regional regulations add to its ranking. Differing labor regimes and union strength also complicate business in Brazil.

Peru’s complicated licensing processes for international companies make business establishment difficult. Political instability since 2016 exacerbates Peru’s challenges.

The Toughest Latin American Markets for New Businesses

The report identifies regulatory issues as the most challenging for organizations. Political, operational, and economic risks follow closely.

Labor regulations (38%), tax regulations (26%), and compliance requirements (12%) are the main regulatory complexities.

TMF Group experts predict stable legislation in most jurisdictions over the next five years. They expect 58% stability, up from 57% in 2023 and 51% in 2022.

In South America, 60% of jurisdictions see political risk as a significant challenge. Recent government changes or upcoming elections heighten this risk.

TMF Group experts note political risk is harder to mitigate for international businesses.