As sellers explore new digital pathways into international markets, the need to monitor regulatory influences becomes more pressing than ever before.
Governments are taking actions to shape the emerging global online retail marketplace, which creates new challenges that sellers must address. I see these three factors as among the most pressing.
(1) Consumer Privacy Regulations:
This is a top priority for many jurisdictions. The EU’s General Data Protection Regulation (GDPR), for example, establishes rigorous standards for the treatment of customer data; specifies processes that must be followed if a data breach occurs; and imposes stiff penalties for companies that fail to follow the rules. Other tax authorities that have implemented consumer privacy legislation include Canada and many U.S. states.
(2) New Rules for Electronic Exchanges:
These range from real-time tax reporting to electronic invoicing. In the United States, the Supreme Court’s 2018 decision in South Dakota v. Wayfair enables states to require remote sellers to collect and remit sales tax, even if the company has no physical presence within the state. The ruling significantly increases the complexity of remote sellers’ data collection and management tasks.
(3) Fiscal Compliance Mandates:
Several tax authorities, including Italy and Brazil, have imposed stringent reporting requirements to tackle issues such as tax evasion and money laundering. For example, retailers are required to manage tax data in real time.