OECD Pushes Finalization of VAT Guidelines
A group of around 100 countries approved the initial chapters of new Organization for Economic Cooperation and Development (OECD) guidelines on value added tax and goods and services tax (VAT/GST), said the OECD on in conjunction with its Global Forum on VAT in Tokyo on April 17-18. The countries urged the OECD to complete and approval of the remaining chapters of OECD guidelines in order to mitigate double and under taxation.
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The guidelines target VAT neutrality, an objective that seeks to avoid consumer or business behavior changes through tax, said the OECD. The guidelines also aim to restrict to the recipient country business to business trade in services taxes. “VAT is a major source of revenue for governments but becomes problematic when the tax is applied to international trade, particularly in services, as different tax jurisdictions often use different rules to determine which of them has the right to tax a transaction,” said OECD in a press release. “This creates the risk of double taxation, which hurts trade, and under-taxation, which hurts governments.”
The guidelines are helping to cement coherence and consistency in the international trade VAT, said OECD Deputy Secretary-General Rintaro Tamaki in a speech to the forum (here). “These Guidelines will be finalized in 2015 in time for their presentation for endorsement at the next meeting of the Global Forum in November 2015,” said Tamaki. “The OECD will continue its inclusive process for the development of its VAT/GST Guidelines, involving all stakeholders worldwide.” Participant countries should start employing the guidelines immediately, said Tamaki.
The first three chapters of the guidelines include Core Features of Value Added Taxes Covered by the Guidelines, Neutrality of Value Added Taxes in the Context of Cross-Border Trade and Determining the place of taxation for Cross-Border Supplies of Services and Intangibles (here).