Regulatory complexity, a stumbling block for investment growth

It was recently announced that Colombia has once again stood out in an international ranking, but not precisely for reasons that encourage the arrival of foreign investment. On the contrary, it occupied fifth place in the Global Corporate Complexity Index 2025 (GBCI), prepared by the firm TMF Group, becoming the second most complex jurisdiction in Latin America to do business and the third most complicated worldwide, behind nations such as Greece and France.

For the experts responsible for the study, this data reflects an increasingly demanding, uncertain, and bureaucratic environment for companies, especially those seeking to expand or invest from abroad, and is becoming a stumbling block for long-term economic growth.

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The report, which analyzes 79 jurisdictions in terms of regulatory, tax, labor, and compliance complexity, warns that Latin America continues to be the most complex region on the planet. However, within this overall panorama, Colombia stands out as a critical case, where the combination of high regulatory burden, inconsistent enforcement, and frequent legal changes is becoming a real obstacle to business dynamism.

“Resilient trade corridors, supply chain management, and proper adherence to labor trends will be the primary focuses of short-term development, ensuring that complexity itself is not the enemy, but rather uncertainty, which has returned to markets abruptly and dramatically,” they noted.

Regulatory fears

To better explain why this is happening, they explained that among the factors behind this growing complexity are, first, frequent regulatory changes, as companies in Colombia must constantly adapt to changes in tax, labor, accounting, and corporate laws, which generates uncertainty, hampers financial planning, and increases the costs of legal compliance.

“Furthermore, although a structured regulatory framework exists, its interpretation and application are not always consistent. It is common for different authorities—national or local—to adopt disparate approaches to similar situations, forcing companies to invest additional resources to protect themselves legally,” said TMF Group.

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In this regard, Cristhian Fresen, Country Head for Colombia at TMF Group , added that "Colombian regulations are not only dense, but also ambiguous in many aspects. This makes compliance management slower, more costly, and prone to errors, even for reputable companies."

Another critical issue is the presence of multiple local operating requirements, even when companies have met the general national requirements. For companies, the existence of duplicate procedures, additional licenses, and regional requirements causes delays in starting operations, affects the territorial expansion of established businesses, and limits the entry of new investments.

“Colombia, despite having signed international treaties and seeking to attract foreign investment, maintains operational barriers that have not been dismantled in practice. Some of these have even intensified due to the incomplete digitalization of administrative processes,” Fresen said.

They also emphasized that "digital platforms have improved the presentation of information, but they haven't eliminated bureaucracy. In some cases, they have even made monitoring more complex by overlapping systems that don't communicate with each other," thus setting a new focus for work moving forward.

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Hidden costs

The report's authors emphasized that this regulatory and administrative environment demands a higher level of preparation and management from companies, leading many to opt to outsource key processes, such as accounting, payroll, tax compliance, and corporate management, to avoid penalties or unintentional errors.

However, they made it clear that this implies higher operating costs, especially for small and medium-sized businesses that lack robust legal structures, and emphasized that this situation discourages potential foreign investors, who seek environments with clear regulations, reasonable operating times, and predictable costs, since in the Colombian case, high complexity acts as a "stumbling block" for the growth of international capital.

“It's not enough to have attractive markets or good trade agreements. Investor confidence also depends on institutional efficiency and regulatory stability. Colombia, at this time, is not transmitting these signals with the clarity it needs,” concluded Cristhian Fresen of TMF Group.

It's worth noting that Colombia isn't alone on the podium for regional complexity, as Mexico (3rd), Brazil (6th), and Peru (13th) also appear at the top of the global ranking. It's also worth noting that while it's not the only Latin American country in the global top 5, its position at the top of the list underscores its image as a particularly difficult country in which to do business.

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In contrast, economies such as Chile and Uruguay have managed to stabilize their regulatory frameworks and improve the interoperability of their administrative systems, reducing their position in the index and improving their reputation with investors. The countries considered easiest to operate in are Denmark, the Cayman Islands, and Curaçao, where advanced digitalization, regulatory clarity, and low state intervention have generated favorable ecosystems for entrepreneurship and foreign investment.

Despite this critical assessment, the TMF Group report suggests that Colombia could reverse its position if it decides to move forward with structural reforms aimed at simplifying regulations, improving legal certainty, and greater harmonization between levels of government. Cristhian Fersen stated that these changes require political will, inter-institutional collaboration, and a realistic approach to strengthening the rule of law.

“Complexity is not an inevitable destiny. It is the result of accumulated decisions, often well-intentioned but poorly integrated. Colombia can improve its competitiveness if it places ease of doing business as a strategic pillar of its economic policy,” the report notes.

This expert concluded by emphasizing that beyond the ranking, what's at stake is the country's ability to regain its economic dynamism and attract productive investment in key sectors such as infrastructure, technology, manufacturing, and services. This is especially true in an increasingly competitive global environment, where capital seeks efficiency, security, and speed, where complexity is a luxury few countries can afford.