The Organisation for Economic Co-Operation and Development (OECD0, the rich country think-tank, has updated the key issues it is examining to help build a coherent and efficient global VAT regime. This involves of 80 countries of the 150+ which have introduced a Value Added Tax consumption tax.
Some of the issues that are under review include:
VAT on International Trade
How to apply VAT to international trade, and ensuring that tax is charged at the point of consumption or destination. In many countries, including the EU VAT, consumption of goods is still on the country of origin basis. The supply of services in the EU moved to the point of destination basis in 2010.
How to ensure VAT remains a neutral tax from the prospective of the companies which administer it. This includes managing non-taxable and mixed services which can give rise to VAT leakage. Key to achieving this goal will be the harmonisation of international regimes and improved VAT recovery mechanisms.
Widening the VAT tax base
The drive to widen the tax base of VAT onto more goods and services, potentially including sensitive areas such as food and household energy. This includes the use reduced VAT rates which can distort the marketplace.
Improving VAT compliance
Simplifying VAT compliance and VAT returns across national borders to help reduce the administrative burden for companies. This includes balancing the increasing demands for information from individual countries to help prevent VAT fraud.