This report on “The impact of the growth of the sharing and gig economy on VAT/GST policy and administration” (hereafter the Report) is published as a further addition to the series of OECD reports and guidance on the design of VAT/GST policy to address the challenges of the digitalisation of the economy (most notably the 2019 Report on the Role of Digital platforms in the Collection of VAT/GST on Online Sales).

The emergence and rapid expansion of the so-called sharing/gig economy in recent years have been remarkable. It has been powered by the rise of digital platforms acting as intermediaries for millions of new economic actors and consumers worldwide. These have facilitated a socio-economic shift towards an on- demand-driven monetisation of (sometimes) underutilised human or physical resources and/or assets by making them accessible for temporary (“shared”) use by consumers for a consideration.

A 2019 study (Mastercard and Kaiser Associates) covering the global major markets indicates that the sharing/gig economy has generated a gross value of USD 204 Billion in 2018 and is projected to reach a gross value of USD 455 billion by 2023 as digitalisation accelerates, and consumers are becoming even more receptive to the idea of sharing (Mastercard and Kaiser Associates, 2019[1]).

This exponential growth of sharing/gig economy activity has created a new commercial reality in a number of industries, particularly in the sectors of transportation (with the emergence of “ride-sourcing”) and accommodation (particularly in short-term rentals). This new reality involves large groups of new economic actors carrying out commercial activities in new ways that may not yet be captured by existing VAT/GST rules and administrative practice. This may impact VAT/GST revenue and the competitive position of traditional business activity. Against this background, VAT/GST authorities from OECD as well as non-OECD countries, notably at the fifth meeting of the OECD Global Forum on VAT in 2019, made a strong call for work by the OECD to support an efficient and coordinated VAT/GST policy response to this new reality.

This Report presents the outcome of this work. Chapter 1 presents the key features and the main business models in the sharing/gig economy that are likely to be relevant from a VAT/GST perspective, and the possible VAT/GST challenges and opportunities associated with its growth. Chapter 2 provides a framework for the development of a VAT/GST strategy in response to the growth and development of the sharing/gig economy. Chapter 3 presents a range of VAT/GST measures to support an efficient and effective policy response to the challenges and opportunities of sharing/gig economy growth, in particular through the simplification of compliance processes, the collection and effective use of data and (alternative) VAT/GST collection approaches. This is complemented with detailed guidance on the potential roles of digital platforms in facilitating and enhancing VAT/GST compliance in the sharing/gig economy. Chapter 4 presents a number of compliance risk management and enforcement strategies for tax authorities to consider as part of their overall policy response. An in-depth analysis of the business models in the currently dominant sharing/gig economy sectors of accommodation and transportation is included in Annex D.

The Report does not aim at detailed prescriptions for national legislation. It is presented as a source of reference to assist tax authorities in assessing the VAT/GST implications of the sharing/gig economy and in identifying appropriate VAT/GST policy responses in light of their specific circumstances and policy priorities.

It has been developed under the auspices of the OECD Committee on Fiscal Affairs (CFA) via its Working Party No.9 on Consumption Taxes (WP9) and a dedicated Expert Group. It is the result of an inclusive process, through intense consultation with representatives from OECD members and from a considerable number of non-OECD countries via the Global Forum on VAT as well as with the representatives of key sharing/gig economy actors and academia through the Technical Advisory Group to WP9.

This report was approved by the Committee on Fiscal Affairs on 6 April 2021 and prepared for publication by the OECD Secretariat.

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