Managing cross-border risk: why tax compliance is now a strategic imperative
In a changing tax landscape, reinvention is the key to staying ahead of the competition. Future-ready companies are rethinking tax compliance models in pursuit of greater agility, accuracy and efficiency. Once sidelined, tax compliance is now considered a critical enabler of sustainable growth – but most organisations are slow to integrate it into their expansion planning. The result? Costly penalties, operational disruption and potential reputational damage. Moving from a reactive to a proactive tax approach requires a mindset shift, and a willingness to implement forward-thinking strategies that unlock long-term value.
From back office to centre stage, tax compliance is now a strategic imperative for organisations seeking rapid expansion. New regulations mean that tax teams must engage earlier in expansion planning to align global strategies with local tax requirements. Failure to do so can hinder growth and derail compliance efforts. The pressing need for a formal risk mitigation strategy is clear, but efficient implementation is just as critical. What you do is as important as how you do it – a lack of efficiency could exponentially increase the cost of doing business across multiple jurisdictions.
The tax labyrinth: navigating e-invoicing and Pillar Two regulations
Mandatory e-invoicing and the OECD’s Pillar Two framework are rapidly rising to the top of the corporate agenda. Together, they exemplify the complexities of a shifting tax landscape rewired by digital transformation and global tax reform. Both demand a clear strategy and an emphatic response from finance leaders, but many organisations are struggling to adapt effectively.
The implications for business expansion are significant: according to our Global Business Complexity Index (GBCI) 2025 report, e-invoicing is gaining traction in over half of jurisdictions surveyed, but many organisations remain unprepared for cross-border implementation. The operational risks of getting it wrong range from supply chain disruption to cash flow impediments, so it’s crucial that organisations leverage technology and a data-driven approach to drive compliance.
Similarly, navigating the complexities of Pillar Two – a global minimum corporate tax rate of 15% for multinationals earning over €750 million – can be time-consuming and costly in the absence of careful planning and robust processes.
Prioritising these considerations in the initial stages of your expansion journey will help ease the administrative burden and pave the way for smoother market entry.
Triggers of cross-border tax risk: common compliance pitfalls
International expansion can help you access new markets, increase profitability and drive competitive advantage – but it also brings with it a host of tax compliance challenges. Understanding the common pitfalls that trigger tax risk is a critical first step to ensuring cross-border compliance.
These are some of the key challenges organisations face on the road to global growth:
- Fragmentation of tax processes – Differing tax systems and requirements across multiple jurisdictions often result in fragmented processes, lack of compliance and limited visibility
- Lack of centralisation – While many organisations have centralised their finance systems, centralising tax is proving a slower, more challenging endeavour due to country-specific rules and evolving regulations
- Limited standardisation – Standardisation equals visibility, but without the right technology and access to key data points, tax teams are often relegated to a reactive role which amplifies risk
- Lack of visibility across jurisdictions – Without clear oversight of multi-jurisdictional tax obligations, organisations can easily overlook compliance risks
The consequences of non-compliance can be far-reaching, impacting finances, operational continuity and reputation. Companies can face penalties and fines, supply chain disruption, delays in market entry and damage to brand credibility. The cost of taking a reactive approach is high – organisations need to ensure they stay ahead by making tax compliance a pillar of their expansion strategies.
Seven actionable strategies for tax teams to mitigate risk
Against this backdrop of rising complexity, tax teams must shift from a firefighting to a forward-thinking approach. Here are seven actionable strategies organisations can employ to mitigate cross-border tax risk:
- Plan purposefully – Proactive tax planning is fundamental to the success of your expansion initiative – timely cross-functional collaboration will ensure that all scenarios and tax implications are considered before problems arise.
- Align effectively – Prioritising tax compliance and integrating it into finance transformation helps create alignment across global operations. Early integration gives tax teams a clear line of sight into looming compliance gaps that could potentially undermine expansion efforts.
- Leverage technology early – Technological advancements are reshaping the tax landscape, with a growing number of companies embracing digital tools to drive data accuracy, support real-time visibility and automate repetitive tasks. Leveraging technology early allows companies to streamline compliance processes and accelerate expansion plans.
- Use AI to navigate local complexities – AI has disrupted nearly every major industry, and tax is no exception. In the realm of business expansion, AI tools can drive greater operational efficiency by helping businesses analyse unstructured data, navigate country-specific regulations and manage translations.
- Mitigate the digital skills gap – Multinationals are grappling with a lack of skilled tax professionals who are proficient in both tax and technology. Companies are responding by upskilling staff, leveraging digital tools and outsourcing as required.
- Establish digital reporting frameworks – As stated in GBCI 2025, the push for digitalised tax reporting is impacting jurisdictions all over the world. Governments are demanding greater visibility and real-time data, prompting businesses to overhaul their reporting systems. Companies need to ensure that they have structured and accessible data, which will require data-proficient tax teams and an investment in technology.
- Partner with an expert – Outsourcing tax compliance to a trusted service provider allows organisations to tap into deep local expertise, stay up to date with regulatory changes and free up time and resources for value-added activities such as strategic planning and market expansion.
Companies seeking rapid growth and superior business performance can no longer afford to treat tax compliance as a back-office function. Instead, it must be embedded early in the expansion planning process to drive strategic decision-making and minimise risk. Taking a proactive tax compliance approach unlocks critical insights that will fuel your organisation’s expansion ambitions, driving greater levels of performance and productivity. Tax teams now have the opportunity to lead rather than react – propelling businesses forward with greater clarity and confidence.
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At TMF Group, we turn complexity into opportunity, making business expansion simple and seamless.
Contact our experts to learn more about how our tailored tax compliance services can help you maximise efficiency and minimise risk on the path to global growth.
