New survey data is in from US, Canada, UK, and Germany. Why indirect tax pros globally feel the regulatory squeeze (and what to do about it).
The role of the indirect tax professional has never been more critical or more complex. From shifting international trade dynamics to the relentless march of digital transformation, keeping up with compliance is less about hitting a static target and more like navigating a constantly moving tightrope.
A recent survey by the Thomson Reuters Institute, involving indirect tax professionals across the United States, Canada, the United Kingdom, and Germany, vividly illustrates this global “squeeze.” While the specific pressures might vary by region, a common thread emerges. Regulatory compliance is a significant, if not primary, challenge everywhere. Let’s delve into the data to understand the unique burdens each market faces and what this means for you.
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Regulatory compliance as a top challenge
Germany: The pinnacle of precision (and pain)
Canada: Juggling provinces and pushing for automation
United Kingdom: Resources stretched on the regulatory front
United States: A mosaic of state-level headaches
Strategies for international indirect tax compliance success
Regulatory compliance as a top challenge
Globally, 43% of indirect tax professionals cite “Regulatory compliance” as a top challenge. This isn’t just an abstract concern; it translates into increased workload, pressure to stay updated, and the risk of penalties. But dive deeper into the regional numbers, and distinct pictures emerge.
Germany: The pinnacle of precision (and pain)
For German indirect tax professionals, the regulatory squeeze is exceptionally tight. A staggering 73% in Germany identified regulatory compliance as a top challenge – by far the highest percentage among all surveyed countries. This isn’t surprising given Germany’s reputation for highly detailed and rigorous legal frameworks. The data also reveals a strong desire for “Harmonization of tax regulations” (28%) and general “Regulatory changes” (36%), suggesting a craving for simplification amidst the complexity.
Interestingly, despite this heavy burden, German teams are the most advanced in their tech adoption (31% have established technology, lowest 8% behind the curve) and most eager for AI (73% desire AI/GenAI capabilities). This suggests that while compliance is a monumental task, they are proactively embracing technology to manage it, not just to catch up.
Canada: Juggling provinces and pushing for automation
Canadian professionals also feel a substantial regulatory squeeze, with 57% citing it as a top challenge. This reflects the complexities of managing a multi-layered tax system that includes federal GST/HST alongside provincial sales taxes and unique Quebec sales tax rules.
However, for Canada, the primary battle is with “Technology & automation,” identified as a top challenge by 60% of respondents – the highest in this category globally. While regulatory compliance is high, the tools to efficiently manage it are perceived as an even greater hurdle. Canadians showed a strong desire for “More automation/use of technology/AI” (43%) and “Regulatory changes” (36%), highlighting their drive to streamline compliance through digital means.
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United Kingdom: Resources stretched on the regulatory front
In the U.K., 50% of indirect tax professionals face “Regulatory compliance” as a top challenge. This comes as no surprise given the significant shifts post-Brexit, which have introduced new complexities in cross-border trade and compliance. The recent discussions around easing the “unnecessarily high” regulatory burden on City of London further underscore this point.
But what truly sets the U.K. apart is its most pressing concern: “Resource constraints,” cited by an overwhelming 68% of U.K. indirect tax teams (compared to a 43% global average). This paints a picture of professionals wrestling with a demanding regulatory environment without adequate staffing or capacity. They are looking to “Upskill the knowledge of our people” (66%) and improve existing tech solutions (53%), signaling a need to maximize internal capabilities amidst tight resources.
United States: A mosaic of state-level headaches
The U.S. indirect tax landscape is famous for its intricate web of state and local sales taxes, use taxes, and various other levies. It’s no wonder that 54% of U.S. professionals identify “Regulatory compliance” as a top challenge. The continuous evolution of sales tax nexus rules and marketplace facilitator laws keeps teams on their toes.
Like Canada, the U.S. also faces significant challenges with “Technology & automation” (58%). While U.S. professionals desire more automation (20%), this is notably lower than in other regions, perhaps indicating a diverse adoption landscape or different priorities. “Resource constraints” (43%) also remain a challenge, reflecting the scale and dispersed nature of U.S. operations.
Strategies for international indirect tax compliance success
The data makes it clear: the regulatory tightrope is real, and it’s stretching professionals worldwide. But understanding the specific nuances of your market’s challenges is the first step toward effective solutions.
Here’s what indirect tax pros can do to ease the squeeze:
Embrace and accelerate technology adoption: For many, particularly in Canada and the U.S., investing in and leveraging technology isn’t just an option – it’s a necessity. Automation of routine tasks, robust data management systems, and exploring AI/GenAI capabilities can free up valuable time and minimize errors, directly addressing compliance burdens. Even if your organization is “behind the curve,” the desire for “more automation” (as seen in Canada and Germany) should fuel internal advocacy for investment.
Strategic upskilling and team development: In the UK, resource constraints highlight the need to do more with less. Upskilling existing teams (a priority for 66% of UK pros) in areas like advanced analytics, new tax regulations, and technology proficiency is crucial. This also aligns with the broader trend of indirect tax roles evolving from operational processing to more strategic, advisory functions.
Advocate for harmonization and simplification: Especially for those in Germany and Canada, where the desire for “regulatory changes” and “harmonization” is high, a collective voice can make a difference. Engaging with professional bodies and advocating for clearer, more consistent tax regulations can contribute to a less burdensome future. Internally, ensuring clear communication and strategic alignment between tax and business functions can also reduce friction.
Prioritize data integrity: Regardless of the regulatory environment, accurate and well-managed data is the bedrock of compliance. Challenges like “Data management” (cited by 38% globally) underpin all other compliance issues. Investing in data quality and accessibility is fundamental.
Learning to balance regulatory compliance
Indirect tax professionals worldwide are indeed feeling the squeeze — caught between rising regulatory complexity and the urgent need to modernize technology and skills. But this tightrope walk also presents an opportunity: those who embrace digital transformation and strategic collaboration will not only survive but thrive in the evolving tax landscape.
As the Thomson Reuters 2025 survey reveals, the future of indirect tax is tech-enabled, strategic, and integrated. The question is not whether to change, but how fast and how well organizations can adapt to stay balanced on the regulatory tightrope.
Read more in the indirect tax survey report 2025 – Managing change in indirect tax & compliance.
