By Bas Bogerd, Forbes Councils Member
This explosive growth of online platforms has triggered a structural shift in regulation. Governments are increasing transparency requirements and tightening reporting obligations. What may initially seem like an administrative burden is quickly becoming a strategic issue. Below, I will discuss how compliance not only presents significant challenges but also offers substantial opportunities.
A Structural Shift In Regulation
There's a fundamental shift underway. Governments want to level the playing field between offline and online businesses, while increasing transparency and making it easier for tax authorities to exchange data securely, conduct joint audits and combat fraud and tax evasion.
This shift has resulted in a global wave of new regulations introduced at unprecedented speed. In the United States, the 1099-K reporting obligation has increased platform responsibilities. In the United Kingdom, Australia and New Zealand, Digital Platform Reporting regimes have been implemented. Within the European Union, DAC7 is already in force, while additional crypto-related frameworks such as DAC8 and CARF are on the horizon. The direction is clear: compliance requirements for platforms are becoming broader, stricter and more standardized across borders.
Lack Of Awareness And Heavy Reliance On External Advisors
While the policy objectives may be understandable, the operational impact on platforms is significant. Large platforms often have dedicated compliance teams and external advisors to monitor regulatory developments and ensure correct reporting. Smaller and mid-sized platforms, however, frequently lack these resources. In practice, we see that many platforms don’t even realize certain regulations apply to them, let alone that they understand which reporting format they need to use, or how and where to file.
Any platform facilitating the sale, rental or provision of goods or services by third parties, whether individuals or businesses—almost certainly falls within scope. This includes online marketplaces, rental platforms and gig-economy platforms where individuals provide services for compensation. There is no distinction based on company size or stage of growth. Even startups must comply. Lack of awareness remains the number one challenge.
Manual Compliance Creates Reactive Behavior
Once platforms understand their obligations, a second challenge emerges: execution. Despite the widespread adoption of automation in other business processes, many platforms still manage compliance manually. Regulation is scaling faster than organizations’ abilities to manage it by hand, and product development teams simply can’t keep up.
The numbers illustrate the urgency. The average compliance cycle—from screening to validation to reporting—can take up to 50 days. Data is often stored across fragmented, siloed systems owned by finance, operations, product and legal teams. But surprisingly, gathering the data is not the most time-consuming step; correcting errors is.
Based on our experience, approximately one-third of tax identification numbers and VAT numbers contain errors, and on rental platforms, nearly 40% of listings lack a registered address. Correcting these issues can require up to 120 working hours per reporting cycle. Manual compliance not only consumes time; it creates stress as deadlines approach, increases the risk of fines and exposes platforms to reputational damage.
From Cost Center To Ecosystem Enabler
A reactive approach turns compliance into a cost center. This is a missed opportunity. I believe that data should be an enabler of growth, not a barrier. We use automation in our personal lives every day. Why wouldn’t we leverage it for better business outcomes?
The PwC Global Compliance Survey 2025 shows that 71% of respondents believe artificial intelligence will have a net positive impact on compliance. Yet only 36% actively use it. One of the main reasons is fear of errors. People often believe manual control reduces mistakes. In reality, research from Deloitte and PwC shows automation is 60-90% less error-prone than manual work.
Processes such as data collection, validation, enrichment and reporting can be automated effectively. The impact is substantial. Operational costs per reporting cycle decrease, error and resubmission rates are reduced, regulatory changes can be implemented faster and compliance workflows become predictable and repeatable. In many cases, processing time is reduced to a fraction of manual effort, while labor savings can reach up to 70%. Automation doesn’t replace accountability. It strengthens it by making compliance structured, traceable and scalable.
The 20-Seller Threshold: When Automation Pays Off
Perceived investment costs also discourage platforms from adopting compliance technology. However, the underlying economics suggest otherwise. The average time spent per seller on compliance checks, including cross-checking tax identification numbers and addresses, is approximately five to seven minutes. With twenty sellers, this translates into roughly two hours of work. With one hundred sellers, it becomes a full working day—and that is only for data entry, excluding validation and corrections.
According to our internal benchmarks, once a platform exceeds approximately twenty sellers, automation typically becomes more cost-effective than manual processing while significantly reducing the risk of penalties. Even one empty field, an incorrect tax number or a late submission can result in substantial fines. At the same time, this stresses the importance of carefully evaluating solutions, particularly regarding data security, implementation timelines and usability, to really address all common reasons platforms are hesitant to adopt new technology. If privacy safeguards aren’t clear, or a system requires heavy external IT support, much of the efficiency gain may be lost.
Compliance As Infrastructure
Platforms that treat compliance as infrastructure rather than an afterthought will ultimately move faster in regulated markets, not slower. A scalable compliance foundation enables better decision-making, smoother financial and tax processes and faster expansion into new jurisdictions. With additional regulations emerging, the crypto sector being next, the regulatory wave is far from over. Compliance is becoming the global default. It will not disappear. The only question is whether platforms treat it as a constraint—or turn it into a competitive advantage.
"Originally published in Forbes Business Development Council "
