By Davide Anghileri, University of Lausanne
During the fifth Global Forum on VAT meeting in Melbourne, on 20-22 March, more than 100 jurisdictions, including regional and international organisations, endorsed an OECD report on the role of digital platforms in the collection of VAT/GST on online sales
The report provides practical guidance to tax authorities on the design and implementation of a variety of solutions for enlisting the platforms economy, including e-commerce marketplaces and other digital platforms, in the effective and efficient collection of VAT/GST on digital sales.
It also recalls the range of other measures beyond possible VAT/GST obligations for digital platforms that tax authorities can implement to further enhance the effectiveness of VAT/GST collection on online trade.
The OECD’s aim is to provide governments with the tools needed to ensure that online platforms play their part in the collection of VAT/GST and to create a level the playing field for sellers who have had to compete against online competitors enjoying a tax advantage. In fact, data shows that two-thirds of all cross-border e-commerce sales of goods are made via online marketplaces.
The proposed new measures making e-commerce marketplaces liable for the VAT/GST on sales made by online traders through their platforms ensure that VAT/GST is easier to collect. Moreover, the proposed tax will allow tax authorities to focus their compliance efforts on the relatively small number of marketplaces rather than on the millions of small traders operating through them.
The OECD, to achieve a broad consensus taking into account of the widest possible range of perspectives, issued the report through an inclusive process including OECD members and number of countries outside the current OECD-membership, as well as regional and international organisations and members from the business community and academia.
The report does not try to define the term “digital platforms”, as, in the OECD’s opinion, this is a concept that is likely to evolve over time. However, the report indicates the relevant elements to delineate digital platforms as the actors in online sales that carry out the functions that can be considered essential for their involvement by tax authorities in the collection of VAT/GST on online sales.
In particular, digital platforms can generally be described as platforms that enable, by electronic means, direct interactions between two or more customers or participant groups (typically buyers and sellers).
The OECD also pointed out that the report does not aim at detailed prescriptions for national legislation.
In fact, the report seeks to present a range of possible approaches and discusses associated policy considerations and its purpose is to serve as a reference point.
Davide Anghileri
Davide Anghileri is a PhD candidate at the University of Lausanne, where he is writing his thesis on the attribution of profits to PEs. He researches transfer pricing issues and lectures for the Master of Advanced Studies in International Taxation and Executive Program on Transfer Pricing.
Anghileri, a Contributing Editor at MNE Tax, previously worked as a policy advisor to the Swiss government on BEPS issues.
Davide can be reached at [email protected].
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