Overcoming the Stumbling Blocks of Sales Tax


When expanding your business abroad, sales tax is an area you may overlook, as it seems rather intuitive. After all, you simply apply the tax to your product, the customer pays it, and you hand the money over to the authorities. Technically, sales tax shouldn’t cost your business anything.

However, there are many ways that sales tax can become a complicated, costly process. Here, we explore the most common mistakes business owners make regarding sales tax during international market expansion, and how you can avoid them.

Charging the wrong rates

Sales tax, also known as VAT or GST, is a tax borne by the end consumer. Your business acts as the collecting agent. But when you charge the wrong rates and your customer underpays, you end up having to make up the difference out of your own pocket. Most countries have systems in place to identify any shortfalls swiftly.

 If your business frequently makes sales tax errors, you’re more likely to be audited regularly, which can be a time consuming and costly process. To avoid charging the wrong tax when sending invoices to overseas customers, set up an automatic billing system with links to current VAT rates. Keeping up-to-date will save you time and money in the long run. 


Missing filing deadlines, failing to organise your records and providing the wrong information to authorities can all result in fines and investigations. It’s essential that you keep track of your sales tax filings meticulously, as the taxes vary from product to product and from location to location. Using a template form to track your data will help keep things orderly and reduce errors. If you trade in different countries with different sales tax policies, you should also keep separate balance sheets so you know exactly how much tax is due in each of the countries in which you operate. 

Taking a DIY approach

Of course, you’re more likely to make the two mistakes discussed above it you attempt to handle sales taxes without seeking the help of a professional. The right specialist will be constantly up-to-date with the requirements of sales tax in your target market and will ensure that all of your documentation is properly filed. If you do not have an in-house sales tax specialist, it is advisable to outsource to an accounting firm or specialist tax firm. Furthermore, you should ensure that your sales taxes are, at the very least, reviewed by an expert in your target market’s local law.

When you handle sales tax correctly, you improve your customer pricing and profitability, reduce the time and cost of tax filing and develop a reputation as an aboveboard, upstanding business. It’s all too easy for sales taxes to go from a consumer-borne cost to a burden on your company – but with the right preparation, guidance and attention to detail, you can ensure that you’re adhering to local law while making the process of sales tax management as seamless as possible. Avoid these sales tax stumbling blocks, and you’ll be one step closer to achieving your international market expansion goals.

Related Posts



No comments made yet. Be the first to submit a comment
Already Registered? Login Here
Thursday, 17 October 2019
If you'd like to register, please fill in the username, password and name fields.

Member Login

Business Insights & Tips


Jill Holtz
2224 Points
Tena Glaser
1394 Points
Michael Lane
802 Points
Ron Immink
732 Points
Fionan Murray
721 Points
View Leaderboard