Sovos, the agentic tax compliance company, today announced the availability of its 2026 State of Tax Report, The Acceleration of Mandates and Data-Driven Decision Making. The report combines the observations of Sovos’ regulatory experts with data mined from the more than 70 billion transactions Sovos conducts globally each year.

The report finds that tax authorities increasingly hold more data about a business’s transactions than the business does, and finance leaders are turning to real-time automation and AI to stay ahead of enforcement. With 91% of finance leaders prioritizing lowering or maintaining compliance costs in the year ahead, the demand for accurate, real-time tax automation has never been more prominent.

“Businesses are being asked to keep pace with regulatory change that never stops, and they need information they can trust,” said Chris Lynch, Chief Marketing Officer at Sovos. “Sovos is dedicated to giving the market the most accurate, up to date insights we can, drawing on our regulatory expertise, vast experience and technology prowess. The 2026 State of Tax Report puts that knowledge in the hands of the people who need it.”

Where the World Is Paying Attention

More than 60 countries are expected to add, update or modify tax compliance mandates in the coming year. Penalties are also growing in speed and severity, and in some jurisdictions, non-compliance can now mean losing the ability to operate. Key developments include:

  • France: Large and mid-sized companies must issue and receive e-invoices through a government-approved platform from September 1, 2026

  • Germany: Businesses with turnover above EUR 800,000 must issue e-invoices from January 2027

  • UAE: Large businesses (AED 50 million+ in revenue) must comply from January 1, 2027, with penalties of AED 5,000 per month from day one

  • Norway: Accelerated its Peppol-based mandate by a full year, to January 1, 2027

  • Poland: Paper and PDF invoices are no longer valid for B2B transactions under the KSeF platform

  • Spain: Mandatory B2B e-invoicing is estimated to go live in October 2027

Attitudes Toward AI

Independent research cited in the report shows strong interest in AI-enabled compliance, with organizations prioritizing precision over speed:

  • Accuracy first: Over half of respondents named accuracy of data and insights as the most important AI capability

  • Regulatory tracking: Approximately one-third pointed to the ability to track changing regulations

  • Strategic influence: More than half said tax and compliance systems influence decisions about adopting or scaling AI

  • Investment surge: Automating tax processes has become an investment priority for 94% of organizations

The U.S. Is on FIRE to IRIS Watch

The IRS will decommission the Filing Information Returns Electronically (FIRE) system in January 2027, ending its run as the backbone of electronic information reporting since the 1980s. The report calls the move to the Information Returns Intake System (IRIS) the most significant structural change to U.S. information reporting in four decades. Key differences include:

  • Format: IRIS uses XML, replacing FIRE’s 1220 flat file

  • Validation: Real-time, before acceptance, rather than after filing

  • Corrections: Targeted corrections instead of full replacement files

  • Submission: Web portal or API, with year-round testing visibility

A Regulatory Landscape in Constant Motion

The global tax landscape shifts daily across more than 1,700 jurisdictions.

  • United States: Sovos tracked over 700 sales tax rate changes in 2026, up from 600 in 2025, and one in five of the nearly 60 million tax identification numbers it checked were incorrect

  • Europe: Greece, Poland and Romania have made the most frequent VAT rate changes, and rates can shift unexpectedly in any country

  • Brazil: The standard penalty for unpaid taxes is 75%, rising to as much as 225% if fraud or lack of cooperation is found

  • Latin America: The region leads the world in e-invoicing, with Chile, Colombia, Mexico and Peru the most mature markets. Colombia began as early as 1995

The onslaught of global mandates, compliance complexity, and demand for real-time data has changed the equation and elevated the issue of tax compliance to a board-level concern. Multinational businesses are moving decisively toward real-time automation as compliance risk escalates year-over-year. Read the entire 2026 State of Tax Report, available for download now.

About Sovos

Sovos is transforming tax compliance from a business requirement to a force for growth. Its flagship product, the Sovos Agentic Tax Compliance Platform, enables businesses to identify, determine, and report on every tax obligation across the globe. Sovos processes more than 70 billion transactions per year, helping companies scale their compliance strategy in 150+ countries. More than 100,000 customers, including half the Fortune 500, trust Sovos’ tax and regulatory expertise and unparalleled integration with their business applications. Learn more at sovos.com.

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