OECD: VAT/GST discussion drafts, BEPS Action 1 | KPMG | GLOBAL

OECD: VAT/GST discussion drafts, relating to BEPS Action 1

OECD: VAT/GST discussion drafts, BEPS Action 1

The Organisation for Economic Cooperation and Development (OECD) today released discussion drafts of two new elements of the OECD International VAT/GST Guidelines.


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As noted in today’s OECD release, the International VAT/GST Guidelines are being developed to address issues of double taxation and unintended non-taxation resulting from inconsistencies in the application of VAT to international trade.

Public comments are requested on two new draft elements of these guidelines contained in the discussion drafts [PDF 185 KB] relating to:

  • The place of taxation of business-to-consumer (B2C) supplies of services and intangibles
  • Provisions to support the application of the guidelines in practice (supporting provisions)

BEPS Action 1

The discussion draft of the B2C guidelines provides a response to the key conclusion on VAT/GST formulated in a report on the tax challenges of the digital economy, prepared in the context of the work under the OECD base erosion and profit shifting (BEPS) project’s Action 1 (digital economy). That report concluded:


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 . . . [is to] 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
  • Presents the recommended approach for collecting the VAT/GST on these supplies, focusing in particular on supplies by non-resident suppliers
  • 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
  • Presents the possible key features of such a simplified regime

Comments are due by 20 February 2015.

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