The Role of Digital Platforms in the Collection of VAT/GST on Online Sales

image of The Role of Digital Platforms in the Collection of VAT/GST on Online Sales

This report provides practical guidance to tax authorities on the design and implementation of a variety of solutions for digital platforms, including e-commerce marketplaces, in the effective and efficient collection of VAT/GST on the digital trade of goods, services and intangibles. In particular, it includes new measures to make digital platforms liable for the VAT/GST on sales made by online traders through these platforms, along with other measures including data sharing and enhanced co-operation between tax authorities and digital platforms. It builds on the solutions for the effective collection of VAT/GST on digital sales included in the International VAT/GST Guidelines and the 2015 BEPS Action 1 Final Report “Addressing the Tax Challenges of the Digital Economy.” It is of particular relevance recognising the growing importance of the platform economy and notably the potential of digital platforms to significantly enhance the effectiveness of VAT/GST collection given their important role in generating, facilitating and/or executing online sales.

English Also available in: French

The digital platform as the person liable for the VAT/GST on online sales (platform VAT/GST liability regimes)

This chapter considers regimes that impose a liability on digital platforms for the VAT/GST due on the online sales in which these digital platforms play a role. Section 2.2 of the chapter considers the full VAT/GST liability regime, which makes the digital platform fully and solely liable for assessing, collecting and remitting the VAT/GST due on online sales it facilitates. It includes an analysis of the key aspects and design considerations associated with the scope and operation of the full VAT/GST liability regime both from the perspective of tax administrations and digital platforms and focuses further on a range of considerations associated in particular with the operation of such a regime for online sales connected with the importation of low-value goods (i.e. goods below the customs exemption threshold). This regime has been implemented or is under consideration by a growing number of jurisdictions. Its overarching key policy objective is to reduce the costs and risks for tax authorities of administering, policing and collecting VAT/GST on the ever increasing volumes of online sales, by drawing on the relatively limited number of platforms that facilitate large shares of online sales and that are capable of complying with the VAT/GST obligations in respect of these sales. Section 2.3 of this chapter recognises that tax authorities may wish to consider introducing variations of a liability regime that do not impose a full VAT/GST liability on the digital platforms for the tax due on online sales they facilitate. It briefly considers some alternative approaches in this context.

English Also available in: French

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