18/12/2014 – The Committee on Fiscal Affairs (CFA) is developing International VAT/GST Guidelines (Guidelines) to address issues of double taxation and unintended non-taxation resulting from inconsistencies in the application of VAT to international trade. The first three chapters of these Guidelines were approved by the CFA in January 2014 and were endorsed as a global standard at the second meeting of the OECD Global Forum on VAT on 17-18 April 2014 in Tokyo. Public comments are now invited on two new draft elements of these Guidelines. These discussion drafts relate to (i) the place of taxation of business-to-consumer supplies of services and intangibles (B2C Guidelines) and (ii) provisions to support the application of the Guidelines in practice (Supporting provisions). The discussion draft of the B2C Guidelines notably provides a response to the key 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). This Report concluded that
“The collection of VAT in business-to-consumer (B2C) transactions is a pressing issue that needs to be addressed urgently to protect tax revenue and to level the playing field between foreign suppliers relative to domestic suppliers. Work in this area by the Working Party No. 9 of the OECD CFA shall be completed by the end of 2015, with the Associates in the BEPS Project participating on an equal footing with the OECD member countries”.
The discussion draft of the B2C Guidelines presents a set of common principles for determining the place of taxation for B2C supplies of services and intangibles, in accordance with the destination principle. It also presents the recommended approach for collecting the VAT/GST on these supplies, focusing in particular on supplies by non-resident suppliers. The discussion draft recommends that non-resident suppliers be 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. It presents the possible key features of such a simplified regime. The draft Supporting provisions present approaches 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. Interested parties are invited to submit written comments by 20 February 2015 in Word format by e-mail to Piet Battiau, Head of Consumption Taxes Unit, Centre for Tax Policy and Administration at firstname.lastname@example.org. It is preferred that comments be provided in separate text containing references to paragraph numbers of the discussion drafts, rather than in the form of a mark-up of the text of the discussion draft themselves. Please note that all comments received regarding this consultation will be made publicly available. Comments submitted in the name of a collective “grouping” or “coalition”, or by any person submitting comments on behalf of another person or group of persons, should identify all enterprises or individuals who are members of that collective, or the person(s) on whose behalf the commentator(s) are acting. A public consultation on the discussion draft will be held on 25 February 2015 at the OECD Conference Centre in Paris. Registration details for the public consultation will be published on the OECD website in due time. Speakers and other participants at the public consultation will be selected from among those providing timely written comments on the discussion draft.