Understanding global tax compliance

Global sales tax compliance refers to meeting tax obligations across multiple international jurisdictions where your business has economic or physical presence. This primarily involves two key types of taxes: VAT and GST.

Value Added Tax (VAT) is levied in more than 170 countries worldwide as an indirect consumption tax, meaning the tax burden ultimately falls on the consumer rather than the business making the sale. Of these countries, approximately 110 currently have specific rules that apply to non-resident SaaS and digital service providers. VAT rates typically range from 15-25%, with Hungary having the world's highest rate at 27%.

Goods and Services Tax (GST) functions similarly to VAT and is used in countries like Canada, Australia, and New Zealand. Like VAT, GST is a consumption tax applied to most goods and services.

The complexity arises in the different rules governing cross-border versus local sales. For international transactions, many jurisdictions employ a "reverse charge mechanism" for B2B sales, where the buying business accounts for the tax rather than the seller. This is different from B2C sales, where the selling business typically must register, collect, and remit the tax.

5 common challenges of global compliance

Modern businesses face several interconnected challenges when managing international tax obligations:

1. Vendor management complexity

Many businesses find themselves coordinating between their tax automation platform, third-party VAT filing services, accounting firms, and local tax advisors—creating a fragmented experience that's both costly and difficult to manage.

2. Rapidly evolving regulations 

Tax laws, rates, thresholds, and product classifications shift frequently across jurisdictions. For example, in 2024 alone, Vermont and Louisiana became the latest U.S. states to tax SaaS, while the EU continued expanding its ViDA package requirements for cross-border businesses.

3. Multi-business model support 

Whether you're subscription-based, usage-driven, or operate a hybrid model, your tax platform needs to adapt to your pricing structure and handle multi-currency transactions without requiring you to change how you work.

4. Nexus monitoring at scale

Businesses must continuously monitor when they cross economic or physical presence thresholds across 100+ countries that could trigger new tax obligations. With distributed workforces, even hiring employees in new locations can create unexpected compliance requirements.

5. Validation and exemption management

To apply correct tax treatment—such as the B2B reverse charge mechanism—businesses must verify that customer VAT identification numbers are valid and current, while also managing exemption certificates and maintaining audit-ready records.

Why should you prioritize global compliance?

Several factors typically drive businesses to address international tax compliance:

Growth enablement

Rather than letting tax complexity slow expansion, forward-thinking companies view proper compliance infrastructure as enabling faster, more confident market entry.

Risk mitigation

The average cost of non-compliance for a SaaS company is 4.3% of revenue, including uncollected taxes, penalties, and interest. For a hypothetical SaaS company with $10 million in revenue, this results in $400K in potential liability and a 3-4 months of delay on international expansion. This financial risk often motivates proactive compliance efforts.

Operational efficiency

“With Anrok, we have better control over our global tax compliance. Anrok saves us countless hours each month, and helps us achieve critical accuracy." —David Erickson, CFO at Vanta

On average, companies with less than $1M in revenue tend to have an average of two filings per year. At $50M in revenue, filings jump to 94—creating exponential exposure points where manual processes can fail. 

M&A readiness

Due diligence processes frequently uncover international tax exposures, making compliance a prerequisite for successful transactions.

How to select a global sales tax automation solution

When evaluating sales tax automation platforms for international compliance, businesses should prioritize several key capabilities:

Look for a unified approach

Avoid third-party redundancies: The most effective solutions provide end-to-end coverage through a single platform rather than requiring coordination between multiple providers. This eliminates fractured experiences and reduces both cost and complexity.

Comprehensive monitoring: The platform should automatically monitor both economic and physical nexus across 100+ countries, providing real-time alerts when registration thresholds are approached or crossed.

All-in-one functionality: Look for platforms that combine monitoring, calculation, registration, filing, and remittance in a single solution rather than requiring separate tools for each function.

Look for features fit for a digital economy

Built for your business model: Whether you're subscription-based, usage-driven, or have a hybrid model, the platform should scale with you and adapt to your pricing structure without requiring changes to how you work.

Extensive integrations: Seamless embedding into your current workflow through 30+ no-code integrations with popular finance tools eliminates implementation friction.

Expert support: Given the complexity of international tax law, access to knowledgeable tax professionals who understand both the regulations and your business model is crucial.

Anrok: Global compliance without the complexity

“Anrok helped us through the complicated VAT registration process in the EU, Canada, and the UK, making it significantly easier to begin filing versus using expensive third-party firms. I found they made the process as easy as it could’ve been.” —Zach Shakked, Co-founder at Chargeback

Anrok addresses these challenges through a comprehensive approach designed specifically for modern digital businesses:

End-to-end service: Our Global Compliance offering handles registration, filing, and remittance entirely in-house for key jurisdictions including the EU (via OSS in Ireland), UK, and Canada—with free registrations and filings. 

Global scale: Monitor your exposure across 100+ countries with automatic threshold tracking and real-time notifications. Our platform covers the jurisdictions that matter most to software companies while continuing to expand coverage.

Modern business focus: Built specifically for subscription-based, usage-driven, and hybrid business models, Anrok handles multi-currency transactions and complex pricing structures that legacy platforms struggle with.

No-code implementation: Our 30+ integrations embed seamlessly into your existing workflow. As Vlad Golubev notes: "Onboarding onto Anrok was a low-effort, no-code experience, allowing us to quickly realize benefits." 

Intelligent automation: From VAT ID validation that can reduce a $1 million risk to $10,000 through proper reverse charge treatment, to automated exemption certificate management, Anrok puts compliance processes on autopilot.

The path forward

As digital commerce continues to expand globally, international tax compliance will only get more complex. The businesses that thrive will be those that view compliance as a growth enabler rather than a growth barrier—adopting modern, comprehensive solutions that eliminate the need to juggle vendors or compromise on expansion plans.

Cross-border compliance without the complexity means having a single platform that grows with you, handles the tax intricacies for you, and gives you the confidence to reach new markets efficiently.