By Francesca Amaddeo, Researcher, Tax Law Competence Centre (SUPSI), Manno, Switzerland
On 3 July, the OECD released model rules for tax reporting by platform operators that assist sellers in the sharing and gig economy.
Following international efforts to address the tax challenges in the digital economy, this OECD guidance represents an important step towards transparency through the exchange of information.
Digitalization has shifted traditional employment contracts to independent work and has brought together sellers and customers. Consider, for instance, how to peer-to-peer online marketplaces and food delivery companies have blossomed during the pandemic.
Many business sectors now exploit digital platforms to provide services, especially accommodation, transport, and personal services.
Activities, previously part of the so-called shadow economy, are carried on through such intermediaries, whose transactions and payments are recorded in electronic form.
Thus, tax administrations have a great opportunity to correctly assess taxpayers (both individuals and entities) involved in the gig economy.
Reporting platforms operators and due diligence rules
As is the case for the common reporting standard and the mandatory disclosure rules, intermediaries are the keystone of this new mechanism.
The model outlines reporting obligation for platform operators, i.e., entities which contract with sellers interested in providing their services to users through a specific software product.
Under the model, reporting platform operators are subject to rules introduced where they are resident, incorporated, or managed, regardless of where sellers and users are located.
Such entities must comply with specific due diligence rules. First, they must identify sellers subject to reporting requirements. All relevant data, including name, address, TIN, date of birth, or business registration number, must be carefully collected and verified.
This information shall be automatically sent to competent authorities and involved jurisdictions identified from data collected.
Automatic exchange of information usually ensures high-quality, relevant information to tax authorities.
Moreover, the timely transmission of information allows tax administrations to be aware of revenue earned by platform sellers, sometimes omitted on their tax returns.
Adoption of the model rules would enhance compliance and reduce burdens for taxpayers.
An information statement, including income earned through platforms, as fees, commissions, and taxes paid or withheld by the operator, would be provided to taxpayers.
Challenging goals
With this release, the OECD again provides model rules aiming to achieve important goals.
Some states have already introduced unilateral domestic measures, leading to international gaps. The goal pursued by the OECD is to standardize reporting rules eventually adopted by jurisdictions on platform sellers.
Uniformity helps taxpayers comply with their requirements, especially when they carry on cross-border activities.
Uniformity also promotes international cooperation between different jurisdictions. International tax assistance is proving to be one of the most powerful instruments to tackle tax evasion and tax avoidance.
The digital economy is still on the top of the OECD list. Even the European Union is discussing the introduction of a new directive amending the 2011/16/EU on tax administrative cooperation extending the exchange of information to data from digital platform providers.
As often happens in discussing data disclosure, a question remains unsolved: what about taxpayers’ rights? Are these measures proportionate to their scope?
Francesca Amaddeo
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