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The Impact of the Growth of the Sharing and Gig Economy on VAT/GST Policy and Administration

image of The Impact of the Growth of the Sharing and Gig Economy on VAT/GST Policy and Administration

This report aims at assisting tax authorities in designing and implementing an effective Value Added Tax/Goods and Services Tax (VAT/GST) policy response to the growth of the sharing and gig economy. The rise of this phenomenon, powered by digital platforms, has transformed a number of industries within just a few short years. It involves large numbers of new economic operators (often private individuals), who monetise (often) underutilised goods and services by offering these, via digital platforms, for temporary (“shared”) use by primarily private consumers. Questions have been raised whether existing VAT/GST policy and administration frameworks are sufficiently capable of dealing with this new economic reality notably with a view to protecting VAT/GST revenue and minimising economic distortions. This report sets out the core components of a comprehensive VAT/GST policy strategy for tax authorities to consider in response. It analyses the key features of the sharing and gig economy and its main business models; identifies the associated VAT/GST challenges and opportunities; and presents a wide range of possible measures and approaches to support an effective policy response. This includes detailed guidance on the possible role of digital platforms in facilitating and enhancing VAT/GST compliance in the sharing and gig economy.

English Also available in: French

Overview of business models of the accommodation and transportation sectors

This Annex provides a description of the main business models of the (currently) two largest sectors of the sharing/gig economy: accommodation and transportation sectors. These two sectors serve as pilot cases for the relevant analysis in this report. This approach resonates with the assumption that these two sectors are likely to create the most urgent pressure on VAT/GST policy in jurisdictions worldwide and are thus likely to be the first to require policy and/or administrative action from a VAT/GST perspective.In this context, this Annex presents an overview of the key features of the main business models operated in these two sectors that are likely to be relevant from a VAT/GST perspective. This includes a general description of each sector, main business models including payment modalities, platform governance and trust mechanisms, economic importance of each sector and available information elements.These descriptions are based on the features of the major platforms that currently account for the majority of market share in these sectors. These are inevitably snapshots of the current state of play that is likely to change rapidly as the sharing/gig economy continues to evolve.

English Also available in: French

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