Burned by Bureaucracy: Countries Doing Damage to Their Own Economies

Four Latin American countries — Mexico, Colombia, Brazil and Bolivia — rank among the 10 most complex places in the world to do business, according to TMF Group’s Global Business Complexity Report 2025.

Layered bureaucracy, steep taxes, lack of transparency, and crumbling infrastructure only deepen the complexity. In many of these countries, tax burdens are among the heaviest.

Mexico may be riding a nearshoring boom, but it’s the toughest in the region for setting up shop. Rigid labor laws and frequent, arbitrary regulatory changes make compliance a minefield for corporates, according to the report.

Latin America presents solid business potential, but only for those willing to navigate the compliance minefield, says William O London, Partner at Kimura London & White LLP, a firm that advises multinationals entering markets like Brazil. He suggests LatAm governments work more closely with legal and regulatory experts who understand local laws and cultural intricacies.

Mexico

TMF Group says business regulations in Mexico are “strict” and frequently altered, making it especially difficult for companies to stay compliant. That challenge is magnified this year by Mexico’s ongoing judicial overhaul and potential retaliatory tariffs from a returning Donald Trump administration.

While Mexico has recently improved policy clarity with digital tax systems and labor law reforms, enforcement is still patchy. Local bureaucracies often slow down implementation, says William O London.

The country’s wide-ranging trade agreements offer big advantages — but uncertainty around how policy shifts will play out has kept investors cautious.

Colombia

Colombia has introduced a wave of tax, labor, and pension reforms in the past two years. Yet, uncertainty still looms large.

The real issue, says the report, is political instability. Power frequently swings between left and right, and with every new government, the rules seem to shift — deepening investor hesitation.

Bureaucratic hurdles persist. In an era of digital tools, Colombia still demands wet ink signatures. The labor code remains confusing and in need of overhaul.

Dispelling confusions in labor laws is very crucial for Colombia, says the report. To attract skilled workers in Bogotá, Medellín, or Barranquilla, businesses must offer hybrid or remote roles. “If you tell people to come to the office, they’ll walk away from any offer, no matter the pay,” the report states.

Brazil

Brazil has long been a headache for companies trying to align tax filings with international accounting standards like IFRS or US GAAP. Ongoing tax reform talks only complicate things further.

The country’s tax maze — split across federal, state, and municipal levels — is especially tough on foreign firms.

While digital tax filing has improved oversight, it has also added more layers of risk and compliance complexity.

There’s some relief: Brazil has loosened labor rules, and hybrid work is gaining traction in São Paulo’s services sector.

But the legal environment remains combative. William O London, who advised multiple global firms navigating these rules in Brazil, says labor laws are still “litigious,” creating intense compliance demands.

Bolivia

Bolivia has taken steps to simplify compliance over the past year. Still, tax codes and labor laws remain major pain points.

Macroeconomic instability, currency controls, and political strife continue to scare off investors.

The foreign exchange regime is a serious roadblock, with tough rules for converting dollars into Bolivianos and vice versa.

On the ground, bureaucracy is stuck in the past. Physical paperwork is still mandatory for even basic filings, such as nominating workers — a long-standing tradition that shows no signs of modernizing.

Meanwhile, political in-fighting is driving up inflation. TMF notes that Bolivia’s natural resource potential — lithium and gas in particular — remains untapped because of these regulatory and economic roadblocks.

Still, there’s cautious optimism. The report says Bolivia could become more attractive after the 2026 elections.