The Organization for Economic Cooperation and Development (OECD has released its latest set of draft Guidelines to address uncertainty and the risk of double taxation and unintended non-taxation that results from inconsistencies in nations application of value-added tax VAT to international trade, with a specific focus on trade in services and intangibles.
The Guidelines build on two core principles that were adopted by the OECD’s Committee on Fiscal Affairs in 2006:
- The “neutrality” principle, whereby VAT is a tax on final consumption that should be neutral for business;
- The “destination” principle, whereby internationally traded services and intangibles should be subject to VAT in their jurisdiction of consumption.
OECD International VAT/GST Guidelines – Draft Consolidated
4 interim drafts:
- a preface to the Guidelines;
- the core features of VAT-systems to which the Guidelines are intended to apply,
- place of taxation for cross-border supplies of services and intangibles to businesses that have establishments in more than one jurisdiction,
- implementation of specific rules for determining the place of taxation for cross border business-to business supplies of services and intangibles.
OECD International VAT/GST Guidelines – Draft Consolidated - INVITATION FOR COMMENTS FEBRUARY 2013