Doing business in Latin America is hampered more by institutions than by possible digital gaps, a study by fund administrator and corporate services provider Vistra and Euromonitor International found.
In a nutshell, the study concludes that regulatory predictability, not paperwork, is the main challenge for companies expanding in the region.
Across the eight Latin American markets covered by the Vistra Friction Index: Americas 2026, entity management and regulatory friction averages 61 out of 100, compared with 26 for accounting and tax.
The index assesses 10 markets (the US, Canada, Brazil, Mexico, Argentina, Colombia, Chile, Peru, Ecuador and the Dominican Republic) across 14 metrics.
The study also identifies five structural themes shaping where companies locate in the Americas: nearshoring and supply-chain realignment, digital infrastructure, the energy transition and critical minerals, logistics and trade integration, and urbanization and demographic change.
Seven of the eight Latin American markets receive the lowest possible friction score on tax technology readiness–with Peru the only exception. In the country, says the study, electronic invoicing is universal, but some requirements are still being phased in in 2026.
The regional result places the region ahead of the US and Canada, neither of which operates a nationwide B2B electronic invoicing mandate, according to the paper.
Mexico’s CFDI invoices are certified at issuance, Colombia’s are validated by the tax authority before reaching the customer, and Chile’s and Brazil’s feed electronic tax records automatically. Peru and the Dominican Republic are completing the extension of their mandates in 2026.
According to the report, digital tax administration reduces paperwork and the room for informal interpretation, but it also gives tax authorities near real-time visibility, leaves little tolerance for data errors and makes companies dependent on the reliability of their own systems.
Mexico illustrates the gap most clearly. It records the lowest accounting and tax friction score in the panel (4.4) but the third-highest entity management and regulatory friction (69.3). Its entity-management technology readiness score is the second weakest, reflecting uneven digitalization of registration and permitting across federal, state and municipal authorities, says Vistra.
Brazil’s digital government and cybersecurity capabilities are among the strongest in the panel, with an ITU Global Cybersecurity Index score of 96.5. Argentina has the lowest cybersecurity score (50.5), while the Dominican Republic records the lowest entity-management technology readiness.
Data protection
Nine of the 10 markets now have a comprehensive national data protection law in force, as per Vistra’s mapping. The US relies instead on sector-specific federal rules and a growing patchwork of state laws.
Meanwhile, approaches to international transfers differ markedly. Brazil, Argentina, Colombia, Peru and Ecuador operate adequacy or safeguards regimes that require contractual clauses or equivalent mechanisms for transfers to non-adequate jurisdictions. Peru also requires transfers to be registered with the data protection authority, and the Dominican Republic requires the data subject’s express consent.
Chile’s Law 21.719, which rewrites the country’s 1999 privacy statute along GDPR lines, creates a Personal Data Protection Agency and introduces fines of up to 20,000 monthly tax units (UTM). It is due to take full effect on December 1, although a bill submitted by the government on August 31 would postpone entry into force to December 1, 2027. Chile will then move from a consent-based approach to a full adequacy regime.
Brazil’s data protection law (LGPD) operates an adequacy and safeguards regime, strengthened by a 2024 regulation on standard contractual clauses and mutual adequacy decisions with the European Union in 2026.
For companies operating shared service centers, regional CRM platforms or centralized HR systems, the choice of hub location and data architecture has direct compliance implications, the study said.
Fintech and digital services
Latin America’s digital payments and fintech ecosystems are labeled as among the most dynamic globally, with Brazil the region’s leading startup ecosystem and Colombia its fastest-growing, according to the report.
Frictions for the sector concentrate in licensing, capital requirements, data localization and cross-border transfer rules, cybersecurity obligations and, increasingly, indirect tax.
Under Brazil’s tax reform, non-resident suppliers of digital services will need to register for and collect the new consumption taxes on Brazilian sales. In Argentina, corporate exchange rules and additional compliance requirements for payment service providers continue to shape entry models.
The study recommends companies treat compliance technology as core infrastructure. Artificial intelligence and analytics can support regulatory change monitoring, invoice validation and payroll anomaly detection, but deployments must respect local data protection and transfer rules.
Data centers
The report identifies data centers as the fastest-growing segment of digital infrastructure in the Americas. Latin America absorbed 328MW of capacity in Q1 2026 alone, nearly double its full-year 2025 total of 167MW, according to industry data cited in the report.
Power availability, grid connection and permitting timelines, rather than capital, are the known binding constraints, alongside community acceptance and data protection and transfer rules that determine which workloads can be hosted where. In Mexico, the nearshoring boom has exposed bottlenecks in power, water and permitting, the report notes.
The study recalls that Brazil, Mexico and Chile are the leading Latin American destinations, and says that Brazil’s mutual adequacy arrangement with the EU and Chile’s forthcoming adequacy regime will increasingly shape where regional data platforms are located.
In the overall ranking, which weighs each market’s attractiveness against its operational friction, scored from 0 to 100, the US, Canada and Chile are the only markets combining high attractiveness with low friction. Peru sits in a middle group with Mexico, Colombia, Brazil, Argentina and the Dominican Republic, while Ecuador records the highest friction score in the panel (59.3).
The full report can be seen here.
(The original version of this content was written in English)