As the economy continues to digitalise problems arise when it comes to the effective and consistent collection of VAT/GST on cross-border sales. That is why recent guidance from the Organisation for Economic Cooperation and Development (OECD) on the matter is most welcome.
The OECD guidance revealed in late October 2017 identifies two approaches, contractual and deemed supplier, as the most effective collection mechanisms of VAT/GST from foreign-based suppliers. The information in the OECD report is most welcome and provides tax jurisdictions with significant clarity.
The Organisation for Economic Co-Operation and Development (OECD) has revealed its guidance for the effective and consistent collection of VAT/GST on cross-border digital sales. In doing so they have provided a blueprint for tax authorities planning to amend laws to tax the cross-border supply of digital services.
The issue of how to tax cross-border supplies from non-resident businesses is a pressing one in international taxation. Specifically, the digital economy has created headaches for tax jurisdictions as they grapple with how best to tax these cross-border supplies.
-- A seminal moment in global digital taxation is upon us.
The Organisation for Economic Co-Operation and Development (OECD) has introduced new guidelines endorsing place of consumption rules.
In publishing the ‘International Value Added Tax (VAT)/Goods and Services Tax (GST) Guidelines’ the OECD are further building on work that started in Ottawa, Canada, back in 1998. Eighteen months ago, in November 2015, the initial guidelines were included as part of Action 1 of the Base Erosion and Profit Shifting (BEPS) report released by the OECD in relation to the tax challenges of the digital economy.
On Monday, October 5, the Organisation for Economic Cooperation and Development (OECD) released their final BEPS report including a section on ‘Addressing the Tax Challenges of the Digital Economy’.
The report – according to KPMG in the UK – is seen as the biggest rewrite of the international tax landscape since the League of Nations proposed the first bilateral tax treaty in 1928. The OECD approach has indeed been exhaustive featuring 23 discussion drafts; 12,000 pages of commentary, and 11 public consultations.