Narayan AmmachchiLatin America’s largest economies are becoming increasingly difficult jurisdictions for foreign businesses to navigate and comply with, according to TMF Group’s Global Business Complexity Index.
Mexico ranked as the world’s second most complex country for doing business in this year’s index, moving up from third place in 2025. Brazil, Latin America’s largest economy, climbed from sixth to third place.
Six of the world’s 10 most difficult countries for foreign businesses are in Latin America. Most of them are among the region’s biggest economies.
The index tracks complexity across 81 jurisdictions. It examines how taxing it is for companies to comply with local regulations, including setting up operations, reporting information to authorities, and following national laws and procedures.
Colombia, which ranked fifth last year, slipped slightly to sixth this year. Bolivia, Argentina and Peru also appeared among the world’s 10 most difficult destinations for foreign firms.
The report points to unpredictable policymaking and constantly changing regulations as the main reasons behind the region’s growing compliance challenges.
The index is based on 292 indicators covering legislation, regulatory compliance, accounting and tax systems, as well as human resources and payroll requirements.
One of the biggest structural problems in many Latin American countries is the sharp political swing that often follows a change in government, leaving little room for stable, longer-term economic policies. That uncertainty has become a major concern for foreign firms, according to Babak Hafezi, adjunct professorial lecturer at American University.
“Companies can work in right- or left-leaning countries, but they need visibility into policy and cannot spend tens of millions only to see it all nationalized or taken over by the next administration,” he told Nearshore Americas.
In 2021, Mexico’s then president, Andrés Manuel López Obrador, reversed the energy sector reforms introduced by his predecessor. The decision alarmed several U.S. and Canadian companies that had invested nearly $5 billion in the country’s energy sector.
“Moving to a pro-market model under one administration and then having it reversed under the next creates major economic instability, and companies may decide it is just not worth the effort,” Hafezi said.
The report said frequent regulatory changes remain Mexico’s biggest challenge. Even routine procedures, such as opening bank accounts or dealing with tax authorities, often create delays and uncertainty, making long-term planning difficult.
Brazil’s Complex Tax Regime
In Brazil, the country’s multi-layered tax system and overlapping federal, state and municipal regulations make compliance particularly challenging for foreign companies. Strict reporting requirements and constant regulatory updates across sectors further increase the operational burden. The report advises investors to carry out detailed analysis and strong risk mitigation before entering the Brazilian market.
“Over the past year, lawmakers rolled out tax reforms that directly affected foreign businesses. More changes in accounting and tax, capital markets, and investment funds are expected over the next 12 months,” the report said.
Hafezi said many foreign firms in Brazil prefer partnering with local companies rather than operating independently because of the country’s complicated regulatory structure.
“The irony is that Brazil is one of the best consumer markets in Latin America and has one of the deepest industrial bases. It should be a natural winner in the changes brought by globalization. But domestic forces have led to increasing barriers to competitive trade,” he said.
Tough South America Environment
As for Colombia, the report describes the country as presenting a very complex regulatory landscape. Colombian regulators frequently update tax legislation, including VAT rules and policies targeting high net worth individuals. The report also highlights the country’s complex labor laws, which add to compliance burdens.
Hafezi said Colombia had previously adopted stronger macroeconomic policies to attract trade and investment, but rising political polarization has created fresh uncertainty. “There has been greater uncertainty about mining and energy policy, increased social protests, and threats to fiscal sustainability and stability.”
In Peru, the report said ongoing digitization across service lines has paradoxically become one of the main factors driving complexity.
A Simpler Path in the Caribbean
By contrast, some Caribbean jurisdictions rank among the world’s least complex places for doing business. These include the Cayman Islands, the British Virgin Islands and Curacao.
According to the report, the Cayman Islands have simplified processes significantly through digitalization of government services. Close cooperation between the government and private sector to promote the country globally has also made investors more comfortable doing business there.
In Curacao, setting up operations is described as straightforward, with officials continuing to amend regulations to keep the jurisdiction competitive and appealing to foreign investors.
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