Plans to modernise international VAT guidelines to reduce incidences of double taxation on business-to-consumer (B2C) sales have been put out to consultation by the OECD
The two discussion drafts covering new elements of the OECD international VAT/GST guidelines are out for comment until 20 February 2015.
The consultation documents set out two new draft elements of the International VAT/GST guidelines which are being developed by the OECD’s Committee on Fiscal Affairs (CFA) to address issues of double taxation and unintended non-taxation resulting from inconsistencies in the application of VAT to international trade.
They relate to the place of taxation of B2C supplies of services and intangibles (B2C guidelines) and provisions to support the application of the guidelines in practice (supporting provisions).
The discussion draft provides a response to the main conclusion on VAT/GST formulated in the Report on Tax Challenges of the Digital Economy, which was prepared in the context of the work on Action 1 of the BEPS Action Plan (digital economy).
It recommends that non-resident suppliers are required to register and remit the VAT/GST in the jurisdiction of taxation and suggests that countries implement a simplified registration and compliance regime to facilitate compliance for non-resident suppliers and presents the possible key features of such a simplified regime.
The draft supports a ‘provisions present’ approach for facilitating the proper and consistent implementation of the principles of the guidelines in national legislation, as well as their consistent interpretation by tax administrations.
This reflects moves by the EU to introduce similar jurisdiction-based rules for B2C sales of digital products across the EU, which comes into effect on 1 January 2015.
The closing date for response to the OECD consultations is 20 February 2015.
The discussion drafts are available at http://www.oecd.org/ctp/consumption/discussion-draft-oecd-international-vat-gst-guidelines.pdf