Executive Summary

At the 2017 11th Plenary meeting of the OECD Forum on Tax Administration (FTA) in Oslo, FTA members agreed to work collaboratively on a project to help ensure the effective taxation of those earning income from the sale of goods or services in the sharing and gig economy (also known as the collaborative economy) (OECD, 2017[1]).

In this report, the term sharing and gig economy platforms is used to encompass those platforms which mainly facilitate the buying and selling of goods and services between individuals, including the self-employed, but which also facilitate some transactions between businesses and consumers (and in some cases businesses to business transactions). The report also focuses on income taxes and not on Value Added Tax (VAT). While some of the issues are similar between income taxes and VAT, the risks as well as policy and administrative responses are not necessarily the same. The FTA project was also described in the March 2018 OECD interim report to the G20 on Tax Challenges Arising from Digitalisation (OECD, 2018[2]).

The rationale for multilateral collaboration in this area is three-fold. First, effective taxation of platform sellers, i.e. persons selling goods or services through a sharing and gig economy platform, is a common concern for many tax administrations in the light of the continuing rapid growth of online platforms. Learning from approaches taken by others can help lead to better outcomes.

Second, many sharing and gig economy platforms operate across borders without a physical presence in each market in which their service is used. Where this is the case, there can be difficulties for some jurisdictions in obtaining information from those platforms and in enforcing any legislative requirements without enhanced international cooperation.

Third, there could potentially be benefits in jurisdictions taking standardised multilateral approaches, for example to the education of platform sellers and to reporting and due diligence requirements for platforms. This might help to minimise burdens on both platform sellers and sharing and gig economy platforms, which might otherwise arise were jurisdictions to apply multiple different requirements. Standardised reporting requirements could also facilitate exchange of information between jurisdictions including on an automatic basis in appropriate circumstances.

The FTA project has therefore considered the different ways that tax administrations can best engage with platform sellers, sharing and gig economy platforms and each other to enable more effective tax compliance without creating excessive burdens. The project has endeavoured to set out the pros and cons of different approaches. This has included:

• looking at ways to increase understanding among platform sellers as to what their tax liabilities are and thus to help improve self-reporting of income;

• the sharing of approaches taken to identify platform sellers which allow tax compliance to be checked or assessed. This includes through the use of public information sources as well as reporting and withholding requirements placed on sharing and gig economy platforms; and

• considering possible solutions to enable the effective collection and exchange of information on platform sellers who operate through platforms located in another jurisdiction to their jurisdiction of residence.

This report is divided into four chapters:

• Chapter 1 sets out the background to the sharing and gig economy and the role of online platforms. This includes estimates as to the size and predicted growth of these new forms of intermediation as well as the resulting challenges and opportunities for tax administrations, both individually and collectively.

• Chapter 2 provides some examples of current approaches that are being taken. This is based on survey responses from FTA tax administrations that participated in this work. Among other things, this looks at the provision of guidance to platform sellers as to their tax obligations as well as reporting and withholding arrangements required of sharing and gig economy platforms.

• Chapter 3 of the report sets out a range of options that tax administrations may wish to consider to help enable greater compliance with tax obligations. These cover

  • joint educational initiatives, including in cooperation with platforms, to make platform sellers more aware of their tax obligations

  • the standardisation of reporting requirements placed on platforms

  • enhanced international cooperation between tax authorities to ensure compliance with reporting obligations

  • international exchange of information between tax administrations on platform sellers resident in one jurisdiction but operating through a platform located in another jurisdiction.

• Chapter 4 sets out recommendations and considerations for possible further work.

While the aim of the project is to help ensure the effective taxation of platform sellers in the sharing and gig economy, the intention is that this should be done in a way that does not place unnecessary burdens on platform sellers, the platforms or tax administrations. Based on these principles the report therefore identifies three recommendations and areas for further consideration by FTA administrations. These are for:

• Joint work between tax administrations and platforms on providing information and support to platform sellers on their tax obligations while minimising compliance burdens. This includes further consideration of a possible model Code of Conduct.

• Improving the evidence base to enhance understanding of the tax at risk in relation to platforms, by sector, and the range of options for enabling compliance. This includes consideration of enhanced international cooperation as well as continued exchange of information on successful practices and legislative approaches.

• Assisting in the possible development of a legislative model for standardised reporting by sharing and gig economy platforms of the content, formatting and verification of information in relation to platform sellers. This would help avoid requirements being placed on platforms to report in multiple formats to different tax administrations.