The increase in the number of people shopping online in the past few years has fueled a significant growth in global ecommerce. In today’s market, with an annual growth rate of 9.49% set to drive a market volume of $6,478 billion by 2029 , expanding beyond borders has transformed from an opportunity into a critical driver of growth.
However, for ecommerce businesses like Shopify merchants, dealing with complex tax regulations across different countries and regions can be challenging. You need to stay on top of constantly changing regulations to avoid costly errors and ensure tax compliance. The Complexities of Global Tax Compliance Cross-border tax compliance can quickly become overwhelming for several reasons.
Here are some of them: 1. Variability in Tax Laws Many businesses already consider tax compliance tedious and challenging. When you expand globally, this becomes more daunting with how much international tax regulations vary.
Each country has its own set of tax rules, rates, and reporting requirements that can differ significantly. For example, in the United States, there are different sales tax rates and requirements for every state, county, and even city. As the merchant, it is up to you to figure out what you need to collect and where.
On the other hand, the European Union operates under a value-added tax (VAT) system , which requires sellers to charge VAT based on the buyer’s location and remit it accordingly. This complexity grows further for merchants involve.
