Following the COVID-19 pandemic, TMF Group Research says we are likely to see a continued impetus towards a global business environment, with international bodies stepping up measures to coordinate and regulate trade across borders; an emphasis on technology and modernisation may act as drivers to place the global economy back on its feet.
According to TMF Group Research latest insights in its Global Business Complexity Index (GBCI) report, from tax relief to accounting deadline extensions and payment deferrals, APAC regulations are increasingly evolving to support businesses affected by the pandemic.
While the consequences of the pandemic for global business rules still remain unclear, APAC governments are increasingly altering regulations and announcing new measures to support businesses, stressing an urgency for companies to stay on top of emergency legislation as it is announced.
The GBCI 2020 ranks 77 jurisdictions across the world in order of ease of doing business, and APAC countries are notably split at both ends of the spectrum.
According to TMF Group Head of APAC Paolo Tavolato, among the most complex jurisdictions in the world are Indonesia (1stin complexity), China (6thmost complex), Malaysia (9th), Taiwan (16th), South Korea (17th) and India (18th), while countries like Singapore and Hong Kong count amongst the easiest, positioned at 18thand 12thsimplest respectively.
“Understanding the rules of engagement with regulators is crucial, and businesses looking to operate in APAC need to constantly stay abreast of diverse and rapidly evolving legislation, integrating it fast into their policies,” says Tavolato.
While APAC regulatory frameworks were already evolving at a quicker pace to become more robust for businesses, this has been accelerated by the outbreak of the pandemic. The GBCI 2020 reveals where APAC regulations are rapidly shifting that businesses need to prepare for, especially in the following areas:
Rules, Regulations and Penalties
The GBCI 2020 highlights how APAC’s paper and seal culture may pose challenges for businesses looking to operate efficiently during these times.
64% of jurisdictions still maintain traditional requirements that add to business complexity, such as the requirement of an official stamp to ensure legal probity. This exceeds the global average of 43%. With remote working becoming a norm however, countries have been compelled to relook their regulations on stamps and seals.
The GBCI 2020 has found that both Hong Kong and Malaysia are becoming more modernised by removing the requirement for official chops or seals. Additionally, Singapore is considering expanding the acceptability of e-signatures for trust, property and financial instruments.
Accounting and Tax
APAC jurisdictions are making a shift away from their well-known stringent auditing processes to provide relief to businesses affected by the pandemic.
According to GBCI 2020, APAC has the largest global proportion of jurisdictions (29%) making audits compulsory for all companies and is only second to South America in the proportion of jurisdictions that offer no notice period for tax audits. However, new government schemes have allowed a variety of industries to delay compliance and reporting. For example, in Singapore, the Inland Revenue Authority of Singapore (IRAS) granted a series of automatic extensions to tax filing deadlines as well as a three month deadline extension for Corporate Tax Payments.
The GBCI 2020 also reveals that APAC ranks as the region with the 2nd highest proportion (36% versus the global average of 24%) of jurisdictions implementing online submissions of tax invoices via an authority portal. As businesses undergo digital transformation with remote working and safe distancing measures in place, technology adoption for taxation processes in APAC will continue to accelerate.
In Singapore, ACRA continues to encourage digital solutions and e-filing, such as the filing of annual returns via one common online form. Additionally, given how COVID-19 has battered business prospects in the short-term, governments are also recognising the importance of creating an easier environment for foreign direct investment.
GBCI 2020 data shows that the number of jurisdictions in APAC that require mandatory audits has decreased in the past year, especially in countries such as India and Malaysia.
Human Resources and Payroll
The coronavirus is bringing many challenges to businesses around the globe but providing support to employees is a high priority. APAC jurisdictions lead the way in many aspects of payroll and benefits, and this includes mandating workplace pensions, with 86% of jurisdictions legally requiring them for permanent workers.
Australia and New Zealand are strong advocates of private pensions, while Southeast Asian jurisdictions, including Hong Kong and Singapore, have strong state-funded schemes. Additionally, the region is tied with EMEA in offering the most notice period (one month) when it comes to firing practices, although it lags behind in mandatory pay increase requirements.
APAC governments are also moving swiftly to introduce new measures to support the economy and their populations, as well as making it easier for employers to maintain their workforce. In Singapore, over 140,000 employers have started to receive pay-outs under the government’s Jobs Support Scheme. Totalling over SGD 7 billion, the pay-outs will help to cover the wages of over 1.9 million local employees.
Following the COVID-19 pandemic, we are likely to see a continued impetus towards a global business environment, with international bodies stepping up measures to coordinate and regulate trade across borders to benefit all stakeholders. An emphasis on technology and modernisation will act as the drivers to place the post-pandemic global economy back on its feet. APAC businesses need to be aware of and act in response to complexity in their markets.