Sovos 2025 State of Tax Compliance: 82% of Companies Face Higher Risk as Governments Shift to Real-Time Data Collection

New Sovos report reveals how rapid digitization of tax enforcement is transforming compliance costs and risk management

ATLANTA--(BUSINESS WIRE)--Governments around the world are rapidly mandating real-time tax reporting, forcing businesses to rethink how they manage compliance. Sovos, the always-on tax compliance company, today released its 2025 State of Tax Compliance Report, an interactive digital experience and report built on data from 16 billion annual transactions of more than 100,000 businesses worldwide and monitoring of more than 19,000 global jurisdictions. The report offers finance and compliance leaders a region-by-region view of the challenges, risks, and regulatory shifts redefining tax management worldwide.

The findings reveal that 82% of companies believe they are more exposed to tax-related compliance risk than five years ago, while 90% expect compliance costs to continue rising as governments abandon traditional declarative reporting in favor of real-time data collection.

Regional Insights into Compliance Complexity
The 2025 State of Tax Compliance Report provides a comprehensive look at the global tax landscape, allowing users to explore compliance challenges and opportunities across major regions.

• United States: With more than 12,999 jurisdictions and 643 sales tax rate changes in 2024, the U.S. remains the most fragmented tax environment in the world. The report highlights the top 10 reasons for state sales tax audits and identifies which states are most likely to initiate them.
• EMEA: The report details which countries lead in the frequency of VAT rate changes and which industries face the highest levels of VAT complexity. It also identifies the four most common reasons e-invoices are rejected and the top VAT penalties issued by EU tax authorities.
• Latin America: As the global leader in e-invoicing maturity, Latin America now requires real-time reporting for 100% of VAT transactions. Sovos processed 3.5 billion electronic documents across the region in 2024, with the report spotlighting countries that have achieved the highest levels of automation and audit readiness. Brazil, in particular, stands out for its uniquely complex system where every business must use automated processes and penalties for unpaid taxes can reach up to 225%.

"There's no such thing as after-the-fact reporting anymore," said Chris Lynch, Chief Marketing Officer at Sovos. "Governments are embedding themselves directly into business systems, from accounts receivable and accounts payable to logistics and general ledgers. This new level of visibility changes how every organization must approach compliance. I’m really excited about the launch of our annual State of Tax Compliance report, which will deliver insights into regional and country-specific trends for finance and tax professionals."

Finance Leaders Respond with Technology Investment
Additional findings are based on a survey by CFO Dive’s Studio ID and Sovos, in which finance leaders shared how their organizations are prioritizing automation and real-time capabilities:

• 95% say ensuring accurate real-time data reporting is critical
• 94% are investing in technology to automate tax and compliance processes
• 91% prioritize lowering or maintaining compliance costs
• 86% are focused on preparing for future e-invoicing mandates
• 76% report positive ROI on centralized indirect tax platforms

Explore the Interactive Experience
The 2025 State of Tax Compliance Report offers finance and compliance professionals an engaging, data-rich look at the evolving global tax environment. Users can navigate by region, explore specific compliance challenges, and access actionable insights tailored to their operational footprint. The entire report is available on the website and can also be downloaded as a PDF for future reference.

Explore the full experience at stateoftax.com.

About Sovos
Sovos transforms tax compliance from a business requirement into a growth driver. The Sovos Compliance Cloud platform helps businesses identify, determine, and report on tax obligations globally, processing 16+ billion transactions annually across almost 200 countries.

More than 100,000 customers, including half the Fortune 500, trust Sovos’ expertise and integration capabilities. Learn more at sovos.com.