The OECD has set out plans to issue an official VAT and general sales tax act, incorporated into OECD guidance to help harmonise global compliance and collection to improve levels of VAT and general sales tax collection, and reduce evasion
The International VAT/GST Recommendations is the first OECD Act to focus on VAT and when it is introduced it will be available for use by non-OECD members. It incorporates the International VAT/GST guidelines, which were developed with the active involvement of a range of countries beyond the OECD and the global business community.
The new implementation package outlines a set of good practice approaches for effective operation of the VAT guideline and for their consistent application across jurisdictions, particularly to improve fraud detection and effective countermeasures.
Delegates including senior tax officials and representatives from business, urged the OECD to complete the implementation as soon as possible to address failings in VAT compliance across jurisdictions. They welcomed the development of ‘implementation packages’ to support the implementation of the VAT/GST Recommendation, and they discussed a first package on the implementation of mechanisms for the collection of VAT on internet sales.
The three-day OECD VAT conference in Paris also addressed issues of non-compliance exacerbated by the boom in ecommerce where often no VAT is collected. This has already been identified as part of the final package of the OECD/G20 project on Base Erosion and Profit Shifting (BEPS project).
The new Recommendations will also cover ecommerce issues and the OECD confirmed that ‘a considerable number of countries have already successfully implemented them or consider doing so’.
An estimated 165 countries operated a VAT tax regime when the International VAT/GST Guidelines were first published in 2016, more than twice as many as 25 years before.
Over 300 participants, representing over 100 delegations from countries, jurisdictions and international organisations, as well as representatives from the business community and academia, gathered in Paris for the fourth meeting of the OECD Global Forum on VAT on 12-14 April 2017.
The OECD International VAT/GST Guidelines, published on 12 April 2017, are available here
Details on OECD’s legal directorate, decisions and recommendations is here