Business beyond borders: The future of international tax compliance

One of the best parts of the digital sales revolution is the way it’s broken down barriers for businesses when it comes to growth and expansion.

Through an online presence, any business can tap into markets across the world without the need for physical storefronts or complex logistics. Ecommerce platforms and digital marketing tools enable businesses to scale rapidly and reach diverse customer bases. Meanwhile, advancements in payment systems and logistics have simplified transactions and shipping.

As a result, businesses of all sizes now have the opportunity to participate in global commerce that was once reserved for larger enterprises with the resources to manage international operations.

However, while the potential for growth is exciting, global ecommerce does carry its own set of practical considerations and precautions that must be weighed by business leaders. One of the top priorities is managing international tax compliance. This can feel like an area of daunting complexity — especially with the recent tariff policy changes — but fortunately, technology-driven innovation is greatly easing the burden.

Here’s a look at the present and future of staying compliant in an increasingly global retail environment.

International tax compliance refers to the process of adhering to the tax laws and regulations of various countries when conducting cross-border business activities. This can include collecting, reporting, and remitting taxes such as VAT, GST, customs duties, and sales tax.

Aligning to international tax rules and regulations is critical because noncompliance can result in fines, shipment delays, and reputational damage, not to mention strained customer relationships. As global commerce grows, businesses must navigate these nuanced and variable requirements to maintain smooth operations, avoid legal risks, and build trust with customers.

Looking back on 2024, international tax compliance was shaped by significant developments that underscored the growing role of technology in cross-border ecommerce.

Governments worldwide ramped up their adoption of e-invoicing mandates, with initiatives like the EU’s VAT in the Digital Age (ViDA) driving efficiency and transparency while combating VAT fraud. Customs processes also experienced a digital transformation, with the EU’s customs data hub and updated Import Control System (ICS2) streamlining cross-border trade and bolstering security measures. Sustainability goals further influenced compliance frameworks, as mechanisms like the EU’s Carbon Border Adjustment Mechanism (CBAM) began to factor carbon footprints into trade practices.

Get the full story on global tax changes in 2024 and 2025 in Avalara’s guide.

Businesses need to stay agile as they navigate ongoing regulatory changes. Looking forward, here’s what online sellers should be preparing for with an eye on the future.

If you want to stay proactive and keep your business in front of what’s to come, here are a few key international tax compliance priorities to have on your radar.

Stay aware of e-invoicing mandates as they grow in prevalence.

“As tax authorities worldwide move toward electronic systems, technology adoption isn’t optional — it’s essential for survival.” Blake Oliver —Founder and CEO, Earmark

One of the top trends of last year shows no signs of slowing down. Governments around the world continue to move toward e-invoicing mandates, requiring that companies and ecommerce merchants issue, transmit, and receive invoices in a standardized electronic format. These regulations are motivated by a desire for better VAT reporting and tax enforcement.

Different countries have different strategies and timelines for implementing mandatory e-invoicing. Spain and Denmark exemplify two unique ongoing approaches, as recently covered at Forbes:

• Denmark’s Bookkeeping Act mandates phased adoption of compliant digital bookkeeping systems with e-invoicing capabilities.
• Spain’s Crea y Crece law and VeriFactu regulation focus on standardized e-invoicing for B2B transactions and certified billing systems to enhance transparency and traceability.

While the EU has been leading the way, it’s fair to expect e-invoicing mandates to continue gaining traction globally in the years ahead.

The use of e-invoicing carries a number of benefits for sellers, including reductions in processing costs, risk of human error, and security vulnerabilities. But it does represent a change for those businesses that have yet to adopt digital invoicing systems. Be assured, it’s one worth embracing in preparation for the future of international tax compliance.

Learn how Avalara can help you streamline international e-invoicing and live reporting compliance.

Make sure you can trust your data.

A strong and healthy data foundation will only grow more vital to a confident tax compliance outlook. Mandatory e-invoicing and other evolving regulatory trends — including the OECD’s Pillar Two framework — are all driving toward greater transparency, which increases the need for accurate, up-to-date, high-quality data.

Deloitte’s 2024 Global Tax Policy Survey found that transparency and reporting rank as the top priorities for tax and finance executives. “For 2024, the biggest impact is the increasingly burdensome and complex tax reporting and data collection requirements taxpayers must meet,” said Amanda Tickel, Deloitte Global Leader, Tax & Legal Policy.

Take measures like these to ensure your tax-related data is robust, reliable, and integrated:

• Centralize data systems
• Use live reporting and real-time data
• Validate data accuracy through self-audits
• Automate tax calculations
• Stay updated on tax rules via tools and software
• Maintain detailed records and documentation

Expect the unexpected.

While businesses can certainly monitor developing trends and make educated bets on how the compliance landscape of tomorrow will take shape, the reality is: we don’t know. There are so many countries and jurisdictions factoring into an international tax compliance strategy, it’s virtually impossible to keep track of it all manually.

The recent tariff policy changes are a case in point.

Since January 31, 2025, President Donald J. Trump has announced and implemented new tariffs on Canada and Mexico, then paused them, then reinstated them, then paused some of them again. He imposed new tariffs on China then increased them. He also eliminated the de minimis exemption for China, Mexico, and Canada, but then put that policy on hold to allow U.S. Customs and Border Protection time to update its systems.

More tariff changes are likely, and they could arrive with little-to-no notice. To keep your finger on the pulse of tariff policy, bookmark our How to prepare for Trump tariffs blog post.

“Expanding to new geographies and third-party selling platforms adds complexity to tax compliance requirements, and the ‘rules’ can change at any time — from both governments and tech platforms,” explains Linda Bustos, owner of Ecom Ideas.

Bustos cites examples like Canada’s two-month “GST holiday,” which left some merchants scrambling to update their systems and accommodate tax-exempt products on very short notice. You can read more about Canada’s tax holiday here.

Increasingly complex challenges are being met by increasingly powerful solutions. “Look for automated tax compliance solutions that handle the majority of real-time updates,” Bustos advises, “but that also have flexible APIs to handle any non-standard requirements that may emerge across your sales landscape.”

Platforms like Avalara can help address the range of priorities for forward-looking sellers by automating and simplifying all that goes into international tax compliance.

If you’re a Shopify merchant and want to stay ahead of the compliance curve, find insights from Bustos and other experts in the guide, “Solving top tax compliance challenges for Shopify businesses.” Otherwise you can explore Avalara’s cross-border compliance solutions.