The Organisation for Economic Cooperation and Development (OECD) has released its latest set of draft guidelines to address uncertainty and the risk of double taxation and unintended non-taxation that results from inconsistencies in nations' application of VAT to international trade. There is a specific focus on trade in services and intangibles.

The guidelines, which are open for consultation, build on two core principles that were adopted by the OECD's Committee on Fiscal Affairs in 2006:

• The 'neutrality' principle, whereby VAT is a tax on final consumption that should be neutral for business;
• The 'destination' principle, whereby internationally traded services and intangibles should be subject to VAT in their jurisdiction of consumption.

This work builds on the assumption that parties involved act in good faith and that all supplies are legitimate and with economic substance. Issues connected with tax evasion and avoidance will be addressed as part of future work.

The guidelines are being developed in stages by the OECD Committee on Fiscal Affairs through its Working Party No 9 on Consumption Taxes. The final report is expected by the end of 2014.

The closing date for comments on the draft guidelines is 3 May 2013.