Annex C. Main features of a simplified registration and compliance regime for non-resident suppliers

Registration procedure

  • The information requested could be limited to necessary details, which could include:

    • Name of business, including the trading name

    • Name of contact person responsible for dealing with tax administrations

    • Postal and/or registered address of the business and its contact person

    • Telephone number of contact person

    • Electronic address of contact person

    • Website URL of non-resident suppliers through which business is conducted in the taxing jurisdiction

    • National tax identification number, if such a number is issued to the supplier in the supplier’s jurisdiction to conduct business in that jurisdiction.

  • The simplest way to engage with tax administrations from a remote location is by electronic processes. An on-line registration application could be made accessible on the homepage of the tax administration’s website, preferably available in the language of the jurisdiction’s major trading partners.

Input tax recovery refunds

  • Taxing jurisdictions could limit the scope of a simplified registration and compliance regime to the collection of VAT on B2C supplies of services and intangibles by non-resident suppliers without making the recovery of input tax available under the simplified regime;

  • Input tax recovery could remain available for non-resident suppliers under the normal VAT refund or registration and compliance procedure.

Return procedure

  • As requirements differ widely among jurisdictions, satisfying obligations to file tax returns in multiple jurisdictions is a complex process that often results in considerable compliance burdens for non-resident suppliers;

  • Tax administrations could consider authorising non-resident businesses to file simplified returns, which would be less detailed than returns required for local businesses that are entitled to input tax credits. In establishing the requirements for information under such a simplified approach, it is desirable to strike a balance between the businesses’ need for simplicity and the tax administrations’ need to verify whether tax obligations have been correctly fulfilled. This information could be confined to:

    • Supplier’s registration identification number

    • Tax period

    • Currency and, where relevant, exchange rate used

    • Taxable amount at the standard rate

    • Taxable amount at reduced rate(s), if any

    • Total tax amount payable.

  • The option to file electronically in a simple and commonly used format is essential to facilitating compliance.

Payments

  • Use of electronic payment methods is recommended, allowing non-resident suppliers to remit the tax due electronically;

  • Jurisdictions could consider accepting payments in the currencies of their main trading partners.

Record keeping

  • Jurisdictions are encouraged to allow the use of electronic record keeping systems;

  • Jurisdictions could limit the data to be recorded to what is required to satisfy themselves that the tax for each supply has been charged and accounted for correctly and relying as much as possible on information that is available to suppliers in the course of their normal business activity;

  • This could include the type of supply, the date of the supply, the VAT payable and the information used to determine the place where the customer has its usual residence;

  • Taxing jurisdictions could require these records to be made available on request within a reasonable delay.

Invoicing

  • Jurisdictions could consider eliminating invoicing requirements for business-to-consumer supplies that are covered by the simplified registration and compliance regime, in light of the fact that the customers involved generally will not be entitled to deduct the input VAT paid on these supplies;

  • If invoices are required, jurisdictions could consider allowing invoices to be issued in accordance with the rules of the supplier’s jurisdiction or accepting commercial documentation that is issued for purposes other than VAT (e.g. electronic receipts);

  • It is recommended that information on the invoice remain limited to the data required to administer the VAT regime (such as the identification of the customer, type and date of the supply(ies), the taxable amount and VAT amount per VAT rate and the total taxable amount). Jurisdictions could consider allowing this invoice to be submitted in the language of their main trading partners.

Availability of information

  • Jurisdictions are encouraged to make available on-line all information necessary to register and comply with the simplified registration and compliance regime, preferably in the languages of their major trading partners;

  • Jurisdictions are also encouraged to make accessible via the Internet the relevant and up-to-date information that non-resident businesses are likely to need in making their tax determinations. In particular, this would include information on tax rates and product classification.

Use of third-party service providers

  • Compliance for non-resident suppliers could be further facilitated by allowing such suppliers to appoint a third-party service provider to act on their behalf in carrying out certain procedures, such as submitting returns;

  • This could be especially helpful for small and medium enterprises and businesses that are faced with multi-jurisdictional obligations.

Source : Addressing the Tax Challenges of the Digital Economy, Action 1 – 2015 Final Report (OECD, 2015[1])

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