third meeting of the oecd global forum on vat thir

5-6 NOVEMBER 2015 PARIS, FRANCE

THIRD MEETING OF THE OECD GLOBAL FORUM ON VAT


www.oecd.org

Session material

Third Meeting of the Global Forum on VAT

5-6 November 2015, Paris, France

Table of Contents

AGENDA

English version ..................................................................................................................................... 3

French version ..................................................................................................................................... 11

AN OVERVIEW OF VAT POLICY TRENDS AND DEVELOPMENTS FROM AROUND THE WORLD (SESSION 1) . 17

Slide Presentation ....................................................................................................................................... 19

A SELECTION OF EMERGING VAT POLICY ISSUES AND CHALLENGES (SESSION 2) ...................................... 39

Slide Presentation ........................................................................................................................................ 41

THE INTERNATIONAL VAT/GST GUIDELINES: STATUS UPDATE (SESSION 3) .......................................... 55

Slide Presentation ........................................................................................................................................ 57

PARALLEL SESSIONS A AND B: DETERMINING THE PLACE OF TAXATION FOR B2C SUPPLIES

OF SERVICES AND INTANGIBLES ........................................................................................................................ 83

Case Study Parallel Session A ............................................................................................................................ 85

Slide Presentation (Parallel session A) ..................................................................................................... 87

Case Study Parallel Session B ............................................................................................................................. 97

Slide Presentation (Parallel session B) .................................................................................................... 101

DETERMINING THE PLACE OF TAXATION FOR B2C SUPPLIES OF SERVICES

AND INTANGIBLES (SESSION 4) ..................................................................................................................... 111

PARALLEL SESSIONS C AND D: ENSURING EFFECTIVE VAT COLLECTION IN CASES WHERE

THE SUPPLIER IS NOT LOCATED IN THE JURISDICTION OF TAXATION ......................................................... 113

Slide Presentation (Parallel session C) ..................................................................................................... 115

Slide Presentation (Parallel session D)..................................................................................................... 127

ENDORSING THE COMPLETED SET OF GUIDELINES AND LOOKING AHEAD (SESSION 5) ........................... 143

COLLECTING VAT /GST ON IMPORTS OF LOW VALUE GOODS (SESSION 6) ................................................... 145

Slide Presentation ....................................................................................................................................... 147

PARALLEL SESSIONS E AND F: SUPPORTING THE GUIDELINES IN PRACTICE DISPUTE

MINIMISATION AND APPLICATION IN CASES OF EVASION AND AVOIDANCE ................................................ 165

Slide Presentation (Parallel session E) ..................................................................................................... 167

Slide Presentation (Parallel session F) ..................................................................................................... 183

SUPPORTING THE GUIDELINES IN PRACTICE DISPUTE MINIMISATION AND APPLICATION IN CASES

OF EVASION AND AVOIDANCE (SESSION 7) ........................................................................................................ 197

THE ECONOMIC IMPACT OF VAT RATE STRUCTURES AND CHANGES (SESSION 8) ............... .......................199

Slide Presentation ...................................................................................................................................... 201


PARIS, 5-6 NOVEMBER 2015

DRAFT ANNOTATED AGENDA

THURSDAY 5 NOVEMBER 2015

8.00 – 9.00 Registration

9.00 – 9.30 OPENING SESSION

The opening session will welcome participants to the Global Forum and highlight its central theme and objective.

Facilitator

Marie Pallot, New Zealand, Chair OECD Working Party No 9 on Consumption Taxes (WP9)

Welcome address

Rintaro Tamaki, Deputy Secretary General, OECD

Opening remarks from BIAC

Bernhard Welschke, Secretary General, Business Industry Advisory Committee (BIAC)

Central theme and objective of the third meeting of the Global Forum on VAT

Pascal Saint-Amans, Director, Centre for Tax Policy and Administration (CTPA), OECD

9.30 – 11.00

PLENARY SESSION 1

AN OVERVIEW OF VAT POLICY TRENDS AND DEVELOPMENTS FROM AROUND THE WORLD

VAT reform remains high on the global tax policy agenda. Many countries with long-standing VATs are considering reform to improve the structure and the implementation of the tax, and to deal with the new challenges posed by globalisation and the growth of digital trade. Meanwhile, still more countries are adopting a VAT or are considering doing so. This first plenary session will provide an overview of recent and ongoing VAT reforms from around the world and will allow participants to learn from each other’s analyses and experiences in designing and implementing VAT reform. The topics covered in this session will include:

Implementing a VAT: recent experiences and best practice implementation strategies

The comprehensive reform projects in China and India

Reform to increase the effectiveness of VATs in African countries

Chair: Lincoln Marais, African Tax Administration Forum (ATAF)

Speakers:

Christophe Waerzeggers, International Monetary Fund (IMF)

Chongjun Tan, People’s Republic of China

Dr. Abhishek Chandra Gupta, India

Dieudonné Lokadi Moga, Democratic Republic of the Congo

11.00 – 11.30 Coffee break



Page 3 of 226


11.30 – 13.00 PLENARY SESSION 2

A SELECTION OF EMERGING VAT POLICY ISSUES AND CHALLENGES

This second plenary session will look in further detail at a selection of emerging VAT policy issues and challenges faced by countries around the world. The topics covered in this session will include:

The challenges of applying VAT in the digital economy

The interaction between VAT and transfer pricing

The development of new thinking about the VAT treatment of financial services

Chair: Marcio F. Verdi, Inter American Center of Tax Administrations (CIAT)

Speakers:

Donato Raponi, European Commission

Alain Cornet, BIAC

Tor Lande, Norway

13.00 – 14.00 Lunch


THE INTERNATIONAL VAT/GST GUIDELINES: STATUS UPDATE

This third plenary session will provide a status update of the work on the International VAT/GST Guidelines that the OECD is developing as a global standard for the application of VAT in the context of international trade. This session will review the background, the objective and the fundamentals of the Guidelines and will introduce the new Guidelines that have been developed since the second meeting of the Global Forum, in April 2014 in Tokyo. This session will include the following elements:

Review of the core principles of the Guidelines that were endorsed as a global standard at the 2014 Global Forum: the Guidelines on neutrality and the Guidelines on B2B trade in services and intangibles

Introduction of the new elements of the Guidelines: the Guidelines on B2C trade in services and intangibles and the Provisions on mutual co-operation, dispute minimisation and evasion and avoidance

The relationship between the Guidelines and the OECD/G20 project on Base Erosion and Profit Shifting (BEPS)

Chair: Marie Pallot, New Zealand, Chair OECD Working Party No 9 on Consumption Taxes (WP9)

Speakers:

Gabriel Schutte, Netherlands

Liz Chien, OECD

Karl-Heinz Haydl, BIAC



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15.00 – 16.30 PARALLEL SESSIONS A AND B

DETERMINING THE PLACE OF TAXATION FOR B2C SUPPLIES OF SERVICES AND INTANGIBLES

The International VAT/GST Guidelines promote the principle of “taxation at destination” as the standard for applying VAT in an international context. The B2C Guidelines first present two “general rules” for allocating the taxing rights over the most common types of services and intangibles supplied by businesses to final consumers, in accordance with the destination principle. They recommend that the taxing rights over “on-the-spot supplies” be allocated to the jurisdiction in which the supply is physically performed; and that the taxing rights over other supplies and services (including supplies of digital products) be allocated to the jurisdiction in which the customer has its usual residence. They also provide guidance on the circumstances in which the implementation of a “specific rule”, which uses a proxy other than the place of physical performance or the customer’s usual place of residence, might be justified. These first two sessions will consider the possible approaches for implementing the B2C Guidelines in domestic legislation and they will examine their operation in practice based on concrete case discussions.

PARALLEL SESSION A

GENERAL RULES FOR DETERMINING THE PLACE OF TAXATION

OF B2C SERVICES AND INTANGIBLES

Designing separate rules for B2B and B2C supplies or not: what are the policy considerations for making or not making this distinction?

How does one differentiate between “on-the-spot supplies” and “other supplies”?

What is the jurisdiction of the usual residence of the customer? How do we determine this jurisdiction?

Moderator: Nii Ayi Aryeetey, Ghana

Speakers:

Lesley O’Connell Xego, South Africa

Jessica Dove, BIAC

Rapporteur: Massimo Morarelli, Italy

PARALLEL SESSION B

SPECIFIC RULES FOR DETERMINING THE PLACE OF TAXATION


For which types of supplies might a specific rule be appropriate?

Which proxies other than the place of physical performance or the customer’s usual place of residence could be applied?

Moderator: David Hollinrake, Southern African Development Community (SADC)

Scene Setting: Rebecca Millar, University of Sydney

Speakers:

Thomas Ecker, Austria Colin Ager, BIAC

Rapporteur: Walid Loussaief, Tunisia

16:30 – 17:00 Coffee break


DETERMINING THE PLACE OF TAXATION FOR B2C SUPPLIES OF SERVICES AND INTANGIBLES

This fourth plenary session will summarise the outcomes of the discussions in parallel Sessions A and B on determining the place of taxation for B2C supplies of services and intangibles, and will draw conclusions on the possible priorities for further work to support the effective and coherent implementation of the principles of the B2C Guidelines.

Chair: David Hollinrake, SADC

Speakers:

Massimo Morarelli, Italy

Walid Loussaief, Tunisia

18:00 Cocktail hosted by BIAC – “Salon du Parc”



Page 5 of 226

FRIDAY 6 NOVEMBER 2015

9:00 – 10:30

PARALLEL SESSIONS C AND D

ENSURING EFFECTIVE VAT COLLECTION IN CASES WHERE

THE SUPPLIER IS NOT LOCATED IN THE JURISDICTION OF TAXATION

The B2C Guidelines recommend that non-resident suppliers of services and intangibles to final consumers be required to register and remit the VAT in the jurisdiction of taxation and suggest that countries implement a simplified registration and compliance regime to facilitate compliance for non-resident suppliers. These Guidelines present the main features of such a simplified registration and compliance regime.

While simplification is a key means of enhancing compliance by non-resident suppliers, the Guidelines recognise that it is necessary to reinforce the enforcement capacity of tax authorities through enhanced international co-operation in tax administration in the field of indirect taxes.

Parallel session C will consider the possible measures that taxing jurisdictions could take to simplify the administrative and compliance process of registration-based collection regimes for B2C supplies of services and intangibles by non-resident suppliers. Parallel session D will focus on enforcement strategies, including international administrative co-operation, to support the proper collection of VAT on supplies of services and intangibles by non-resident suppliers.

PARALLEL SESSION C

COLLECTING THE VAT ON SUPPLIES MADE

BY NON-RESIDENT SUPPLIERS

Main features of a simplified registration and compliance regime for non-resident suppliers

Experiences with existing registration-based VAT collection regimes for supplies of services and intangibles by non-resident suppliers

The challenge for small and medium enterprises of having to collect and remit VAT abroad: do de

minimis thresholds provide an appropriate solution?

Moderator: Maria Soledad Salman Navarrete, Chile

Speakers:

Erik Maehlen Larsen, Norway

Hiroko Matsui, Japan

Eri Kataoka, Japan

Julien Brugere, BIAC

Rapporteur: Jo Drum, Australia

PARALLEL SESSION D

ENFORCING VAT IN CASES WHERE THE SUPPLIER IS NOT LOCATED

IN THE JURISDICTION OF TAXATION

Are the necessary legal instruments available for the international administrative co-operation to support VAT collection on supplies of services and intangibles by non-resident suppliers?

What types of international administrative co-operation are available and how might they support the effective collection of VAT in an international context?

What are countries’ practical experiences with enforcing VAT collection in cases where the supplier is not located in the jurisdiction of taxation? Which best practices can be identified?

Moderator: Steve Howlin, Australia

Scene setting: Walter Hellerstein, University of Georgia

Speakers:

John Farrell, Ireland

Stephan Teuber, Germany

Rapporteur: Hilde Bervoets, Belgium

10.30 – 11.00 Coffee Break



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11:00 – 11:45 PLENARY SESSION 5

ENDORSING THE COMPLETED SET OF GUIDELINES AND LOOKING AHEAD

This plenary session will summarise the outcomes of the discussions on the application of the completed Guidelines in services and intangibles as a global standard. Reports from parallel sessions C and D and overall conclusion of the discussions on the B2C Guidelines Endorsing the completed set of the Guidelines as a global standard Looking ahead

Chair: Pascal Saint-Amans, OECD

Speakers:

Jo Drum, Australia

Nii Ayi Aryeetey, Ghana



COLLECTING VAT/GST ON IMPORTS OF LOW VALUE GOODS

The BEPS Action 1 Report on Addressing the Tax Challenges of the Digital Economy, which was presented to G20 Finance Ministers in September 2014, notably identified a number of challenges for the application of VAT/GST in the digital economy. One of the main challenges relates to the growing volume of imports of low value parcels from online sales by final consumers that are treated as VAT-exempt in many jurisdictions. These low value import relief regimes are motivated mainly by the consideration that the costs of collecting the VAT/GST on imported low value items are likely to outweigh the revenue gained. However, the increase of low value imports from online sales on which no VAT is collected has resulted in growing tax revenue losses and the growing risk of unfair competitive pressures on domestic retailers. The BEPS Action 1 Report called for work on possible approaches to improve the efficiency of VAT collection on such imports, which may allow governments to lower or remove these low value exemption thresholds. This session will look at the outcomes of this work, including the following aspects: The available approaches for improving the efficiency of the VAT collection on imports of low value physical goods. These will

notably consider the interaction with customs procedures. Possible best practices that may allow governments to reduce or remove the exemption thresholds, should they decide to do so.

Chair: Ian Ayrton, Australia

Scene setting: Kshama Purohit, United Kingdom

Speakers:

Ana-Maria Caraman, European Commission

P.N. Pandey, World Customs Organisation

Steven Pope, BIAC

12.50 – 14.00 Lunch



Page 7 of 226


14:00 – 15:15

PARALLEL SESSIONS E AND F

SUPPORTING THE GUIDELINES IN PRACTICE

DISPUTE MINIMISATION AND APPLICATION IN CASES OF EVASION AND AVOIDANCE

Chapter 4 of the International VAT/GST Guidelines is intended to complement the Guidelines on VAT neutrality and the Guidelines on the place of taxation. It presents approaches for facilitating the consistent implementation of the principles of the Guidelines in national legislation and their consistent interpretation by tax administrations, in order to minimise risks of double taxation and unintended non-taxation as well as the potential for resulting disputes. It also indicates explicitly that the Guidelines on VAT neutrality and on place of taxation apply when parties involved act in good faith and all transactions are legitimate and with economic substance. Jurisdictions may take proportionate measures to protect against evasion and avoidance, revenue losses and distortion of competition. Chapter 4 does not provide a definition of the terms evasion and avoidance, recognising that specific definitions will often exist in a national context.

Against this background, parallel session E will look at the possible role of co-operative compliance with taxpayers in stimulating compliance and minimising disputes. Parallel session F will consider the design and use of anti-avoidance rules for tackling VAT avoidance.

PARALLEL SESSION E

CO-OPERATIVE COMPLIANCE

AN OVERVIEW OF MODELS AND EXPERIENCES

Common features of co-operative compliance models

Benefits and challenges

Country experience: problems, solutions, lessons learned

Moderator: Marijn Verhoeven, World Bank Group Speakers:

Michael Hewetson, OECD Marcio F. Verdi, CIAT Gabriel Schutte, Netherlands

Rapporteur: Sze Teen Wong, Singapore

PARALLEL SESSION F

THE DESIGN AND APPLICATION OF ANTI-AVOIDANCE RULES IN

A VAT CONTEXT

What is evasion, avoidance, abuse?

General anti-avoidance rules (GAARs) vs. specific anti-avoidance provisions

The operation of anti-avoidance rules in practice.

Moderator: Didier Cornillet, Centre de rencontre et d’étude des dirigeants des administrations fiscales (CREDAF)

Speakers:

Michael Walpole, University of New South Wales

Bastien Llorca, France

Marcos Alvarez, Spain


15:15 – 15.30 Coffee – Time for parallel session participants to join Plenary Session meeting room

15:30 – 16:00

PLENARY SESSION 7

SUPPORTING THE GUIDELINES IN PRACTICE

DISPUTE MINIMISATION AND APPLICATION IN CASES OF EVASION AND AVOIDANCE

This plenary session will summarise the outcomes of the discussions in parallel sessions E and F on dispute minimisation and the application of the Guidelines in cases of avoidance and evasions.

Chair: Carlos Achadinha, Canada

Speakers:

Sze Teen Wong, Singapore

Hilde Bervoets, Belgium



Page 8 of 226



THE ECONOMIC IMPACT OF VAT RATE STRUCTURES AND CHANGES

The average standard VAT rate in the OECD has risen considerably since the onset of the economic crisis in 2007-2008, as many countries have sought to raise additional revenues from VAT to reduce their budget deficits. Between 2009 and 2014, 21 of the 34 OECD member countries raised their standard VAT rate at least once. By contrast, very few countries implemented a VAT rate reduction as a measure to stimulate economic activity.

This session will provide an overview of country experiences and recent analyses of the economic impact of changes in VAT rates. This will include discussion of the following topics: Estimating the pass-through of VAT rate changes to consumer prices Measuring the impact of VAT rate changes on government revenues, on consumption and on economic growth

Chair: Natasha Avedaño Garcia, Colombia

Speakers:

Michael Keen, International Monetary Fund

Simon Loretz, HIS Institute for Advanced Studies

17.15 - 17.45 CLOSING SESSION

Summary and conclusions

What comes next?

Speakers

David Bradbury, Head of the Tax Policy and Statistics Division, CTPA, OECD Karl-Heinz Haydl, BIAC



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Troisième réunion du Forum mondial sur la TVA

5 - 6 novembre 2015, Paris, France

TROISIÈME RÉUNION DU FORUM MONDIAL DE L’OCDE SUR LA TVA

PARIS, 5 ET 6 NOVEMBRE 2015

PROJET D’ORDRE DU JOUR ANNOTÉ

JEUDI 5 NOVEMBRE 2015

8.00 – 9.00 Enregistrement

9.00 – 9.30 SESSION D’OUVERTURE

La session d’ouverture présentera le Forum mondial aux délégués en mettant l’accent sur son thème central et son objectif.

Facilitateur

Marie Pallot, Présidente du Groupe de travail No.9 sur les impôts sur la consommation (GT9)

Discours de bienvenue

Rintaro Tamaki, Secrétaire général adjoint, OCDE

Remarques introductives par les entreprises

Bernhard Welschke, Secrétaire général, Business Industry Advisory Committee (BIAC)

Thème central et objectif de la troisième réunion du Forum mondial sur la TVA Pascal Saint- Amans, Directeur, Centre de politique et d’administrations fiscales (CPAF), OCDE

9.30 – 11.00 SESSION PLÉNIÈRE 1

VUE D’ENSEMBLE DES TENDANCES ET DES ÉVOLUTIONS EN MATIÈRE DE POLITIQUE TVA DANS LE MONDE

La réforme de la TVA continue à occuper une place importante dans l’agenda fiscal mondial. De nombreux pays disposant d’une longue expérience en matière de TVA envisagent de mettre en œuvre des réformes pour améliorer la structure et le fonctionnement de la taxe mais également pour faire face aux nouveaux défis posés par la mondialisation et la croissance du commerce numérique. Dans le même temps, de nouveaux pays adoptent la TVA ou envisagent de le faire. Cette première session plénière donnera une vue d’ensemble des réformes récentes ou en cours dans le monde en matière de TVA. Elle permettra aux participants d’échanger leurs expériences et analyses dans le domaine de la conception et de la mise en œuvre des réformes. Les sujets abordés dans cette session comprendront: Mise en œuvre de la TVA : expériences récentes et meilleures pratiques pour les stratégies de mise en œuvre Les projets de réformes d’ensemble en Chine et en Inde Les réformes pour améliorer l’efficacité de la TVA dans les pays d’Afrique

Président: Lincoln Marais, African Tax Administration Forum ATAF Orateurs: Christophe Waerzeggers, Fonds monétaire international (FMI) Chongjun Tan, République populaire de Chine Dr. Abhishek Chandra Gupta, Inde Dieudonné Lokadi Moga, République démocratique du Congo

11.00 – 11.30 Pause café


SÉLECTION DE QUESTIONS ET DE DÉFIS ÉMERGENTS EN MATIÈRE DE POLITIQUE TVA

Cette deuxième session plénière abordera plus en détail une sélection de questions et de défis émergents auxquels les pays du monde doivent faire face en matière de politique TVA. Les sujets abordés dans cette session comprendront: Les défis liés à l’application de la TVA à l’économie numérique L’interaction entre la TVA et les prix de transfert Le développement de nouvelles idées pour l’application de la TVA aux services financiers

Président: Marcio F. Verdi, Inter American Center of Tax Administrations (CIAT) Orateurs: Donato Raponi, Commission européenne Alain Cornet, BIAC Tor Lande, Norvège

13.00 – 14.00 Déjeuner

Page 11 of 226





LES PRINCIPES DIRECTEURS POUR LA TVA/TPS : RAPPORT D’ÉTAPE

Cette troisième session plénière présentera un rapport d’étape des travaux conduits par l’OCDE sur les Principes directeurs internationaux pour la TVA/TPS en tant que norme mondiale pour l’application de la TVA dans le contexte du commerce international. Cette session examinera le cadre général, l’objectif et les éléments fondamentaux des Principes directeurs et présentera les nouveaux Principes directeurs qui ont été élaborés depuis la deuxième réunion du Forum mondial qui s’est tenue à Tokyo en avril 2014. Les sujets abordés dans cette session comprendront: Examen des principes fondamentaux des Principes directeurs qui ont été approuvés en tant que norme mondiale lors du Forum

mondial de 2014: les Principes directeurs sur la neutralité et sur les échanges de services et de biens incorporels entre entreprises (B2B)

Introduction des nouveaux éléments des Principes directeurs : Principes directeurs sur le commerce des services et des biens incorporels entre entreprises et consommateurs finals (B2C) et dispositions sur la coopération mutuelle, la minimisation des différends et la fraude et l’évasion

Les liens entre les Principes directeurs et le projet OCDE/G20 sur l’érosion de la base imposable et le transfert de bénéfices (BEPS)

Présidente: Marie Pallot, Nouvelle Zélande, Présidente du Groupe de travail No.9 sur les impôts sur la consommation (GT9) Orateurs:

Gabriel Schutte, Pays-Bas Liz Chien, OCDE Karl-Heinz Haydl, BIAC

15.00 – 16.30 SESSIONS PARALLÈLES A ET B

DÉTERMINER LE LIEU D’IMPOSITION DES FOURNITURES B2C DE SERVICES ET DE BIENS INCORPORELS

Les Principes directeurs internationaux pour la TVA/TPS visent à promouvoir le principe d’« imposition à destination » comme la norme pour l’application de la TVA dans le contexte international. Les Principes directeurs B2C proposent deux « règles générales » en conformité avec le principe de destination pour l’attribution des droits d’imposition sur les types de services et de biens incorporels les plus courants fournis par les entreprises aux consommateurs finals. Ils recommandent que le droit d’imposer les « fournitures destinées à être consommées sur place » soit alloué à la juridiction dans laquelle elles sont matériellement exécutées, et que le droit d’imposer les autres fournitures et services (y compris les fournitures de produits numériques) soit alloué à la juridiction dans laquelle le client a sa résidence habituelle. Ils fournissent également des orientations sur les circonstances dans lesquelles l’application d’une « règle spécifique » peut être justifiée, utilisant un critère présomptif autre que le lieu d’exécution matérielle ou le lieu de résidence habituelle du client. Ces deux premières sessions parallèles examineront les approches possibles pour l’introduction des Principes directeurs B2C dans la législation nationale et leur fonctionnement pratique, illustré par la discussion de cas concrets.

SESSION PARALLÈLE A

RÈGLES GÉNÉRALES POUR DÉTERMINER LE LIEU

D’IMPOSITION DES SERVICES ET BIENS INCORPORELS B2C Concevoir des règles séparées ou non pour les fournitures

B2B et B2C : quelles sont les considérations de politique fiscale à prendre en compte pour opérer ou non cette distinction?

Comment faire la différence entre les fournitures « destinées à être consommées sur place » et les autres?

Quelle est la juridiction de résidence habituelle du client? Comment peut-on la déterminer ?

Moderateur: Nii Ayi Aryeetey, Ghana

Orateurs:

Lesley O’Connell Xego, Afrique du Sud Jessica Dove, BIAC

Rapporteur: Massimo Morarelli, Italie

SESSION PARALLÈLE B

RÈGLES SPÉCIFIQUES POUR DÉTERMINER LE LIEU D’IMPOSITION

DES SERVICES ET BIENS INCORPORELS B2C Concevoir des règles séparées ou non pour les fournitures B2B

et B2C : quelles sont les considérations de politique fiscale à prendre en compte pour opérer ou non cette distinction?

Pour quels types de fournitures une règle spécifique pourrait-elle être appropriée?

Quels sont les critères présomptifs autres que le lieu d’exécution matérielle ou la résidence habituelle du client que l’on pourrait appliquer ?

Moderateur: David Hollinrake, Southern African Development Community (SADC) Présentation générale: Rebecca Millar, University of Sydney Orateurs:

Thomas Ecker, Autriche Colin Ager, BIAC Rapporteur: Walid Loussaief, Tunisie

Page 12 of 226




16:30 – 17:00 Pause café


DÉTERMINER LE LIEU D’IMPOSITION DES FOURNITURES B2C DE SERVICES ET DE BIENS INCORPORELS

Cette quatrième session plénière fera la synthèse des résultats des discussions dans les sessions parallèles A et B sur la détermination du lieu d’imposition des fournitures de services et de biens incorporels B2C. Elle tirera des conclusions concernant les priorités éventuelles pour les travaux futurs destinés à assurer une mise en œuvre cohérente et efficace des principes des Principes directeurs B2C.

Président: David Hollinrake, SADC

Orateurs:

Massimo Morarelli, Italie

Walid Loussaief, Tunisie

18.00 Cocktail offert par le BIAC – « Salon du Parc »

Page 13 of 226



VENDREDI 6 NOVEMBRE 2015

9:00 – 10:30

SESSIONS PARALLÈLES C ET D

ASSURER UNE COLLECTE EFFICACE DE LA TVA LORSQUE LE FOURNISSEUR NE SE TROUVE PAS

DANS LA JURIDICTION D’IMPOSITION

Les Principes directeurs B2C recommandent que les fournisseurs non-résidents de services et de biens incorporels aux consommateurs finals soient obligés de s’identifier et de payer la TVA dans la juridiction d’imposition et suggèrent que les pays mettent en œuvre un régime administratif et d’identification simplifié afin de faciliter le respect de leurs obligations fiscales par les fournisseurs non-résidents. Ces Principes directeurs présentent les principales caractéristiques d’un tel régime administratif et d’identification simplifié. Bien que la simplification soit un moyen clé pour assurer le respect des obligations fiscales par les fournisseurs non-résidents, les Principes directeurs reconnaissent qu’il est nécessaire de renforcer la capacité des administrations fiscales à percevoir effectivement l’impôt grâce à l’amélioration de la coopération internationale dans le domaine des impôts indirects. La session parallèle C abordera les mesures que peuvent prendre les juridictions d’imposition pour simplifier les processus administratifs et de contrôle dans des régimes de collecte de la taxe basés sur l’identification des fournisseurs non-résidents de services et de biens incorporels. La session parallèle D se concentrera sur les stratégies d’application de la loi fiscale, y compris la coopération administrative internationale afin d’assurer la collecte effective de la TVA sur les fournitures de services et de biens incorporels par des fournisseurs non-résidents.

SESSION PARALLÈLE C

COLLECTER LA TVA SUR LES FOURNITURES EFFECTUÉES PAR DES

FOURNISSEURS NON-RÉSIDENTS

Principales caractéristiques d’un régime administratif et d’identification simplifiée pour les fournisseurs non-résidents

Expériences acquises avec les mécanismes existants de collecte de la TVA basés sur l’identification des fournisseurs non-résidents pour les fournitures de services et de biens incorporels

Le défi de la collecte et du paiement de la TVA à l’étranger pour les petites et moyennes entreprises : les seuils d’identification fournissent-ils une solution adéquate ?

Modérateur: Maria Soledad Salman Navarrete, Chili

Orateurs:

Erik Maehlen Larsen, Norvège Hiroko Matsui, Japon Eri Kataoka, Japon Julien Brugere, BIAC

Rapporteur: Jo Drum, Australie

SESSION PARALLÈLE D

PERCEVOIR EFFECTIVEMENT LA TVA LORSQUE LE

FOURNISSEUR N’EST PAS SITUÉ DANS LA JURIDICTION

D’IMPOSITION

Les instruments juridiques nécessaires sont-ils disponibles pour assurer la coopération administrative internationale afin d’assurer la collecte de la TVA sur les fournitures de services et de biens incorporels par des fournisseurs non-résidents ?

Quels types de coopération administrative internationale sont disponibles et comment peuvent-ils assurer la collecte efficace de la TVA dans un contexte international ?

Quelles sont les expériences pratiques des pays pour assurer la collecte effective de la TVA lorsque le fournisseur n’est pas situé dans la juridiction d’imposition ? Quelles meilleures pratiques peuvent être identifiées ?

Modérateur: Steve Howlin, Australie Présentation générale: Walter Hellerstein, University of Georgia Orateurs:

John Farrell, Irlande Stefan Teuber, Allemagne

Rapporteur: Hilde Bervoets, Belgique

10.30 – 11.00 Pause café

Page 14 of 226




11:00 – 11:45 SESSION PLÉNIÈRE 5

APPROBATION DE L’ENSEMBLE DES PRINCIPES DIRECTEURS ET PERSPECTIVES D’AVENIR

Cette session plénière fera la synthèse du résultat des discussions sur l’application de l’ensemble des Principes directeurs en matière de services et de biens incorporels comme norme mondiale. Rapports des sessions parallèles C et D et conclusion d’ensemble des discussions sur les Principes directeurs B2C Approbation de l’ensemble des Principes directeurs comme norme mondiale Perspectives d’avenir

Président: Pascal Saint-Amans, OCDE Orateurs:

Jo Drum, Australie Nii Ayi Aryeetey, Ghana Karl-Heinz Haydl, BIAC


COLLECTER LA TVA SUR LES IMPORTATIONS DE BIENS DE FAIBLE VALEUR

Le rapport sur l’Action 1 de BEPS « Relever les défis fiscaux de l’économie numérique », qui a été présenté aux Ministres des Finances du G20 en septembre 2014 a notamment identifié un certain nombre de défis pour l’application de la TVA à l’économie numérique. L’un des principaux défis est lié au volume croissant des importations de petits envois résultant des achats en ligne par des consommateurs finals et qui sont exonérés de TVA dans de nombreuses juridictions. L’exonération des importations de biens de faible valeur est principalement motivée par le fait que les coûts de collecte de la TVA sur ces importations excèdent probablement les recettes fiscales. Toutefois, l’augmentation du volume des importations de biens de faible valeur achetés en ligne sur lesquelles aucune TVA n’est collectée a provoqué des pertes croissantes de recettes fiscales et un risque accru de pressions compétitives injustes sur les commerçants locaux. Le rapport sur l’Action 1 de BEPS a appelé à la réalisation de travaux sur les méthodes possibles pour améliorer l’efficacité de la collecte de la TVA sur ces importations, qui permettraient aux gouvernements de réduire ou de supprimer les seuils d’exonération. Cette session examinera les résultats de ces travaux, y compris les aspects suivants : Les méthodes disponibles pour améliorer l’efficacité de la collecte de la TVA sur les importations de biens corporels de faible

valeur. Celles-ci devront notamment tenir compte de l’interaction avec les procédures douanières Les meilleures pratiques éventuelles qui permettraient aux gouvernements de réduire ou de supprimer les seuils d’exonération,

s’ils en prennent la décision Président: Ian Ayrton, Australie Présentation générale: Kshama Purohit, Royaume-Uni Orateurs:

Ana-Maria Caraman, Commission européenne P.N. Pandey, Organisation mondiale des douanes Steven Pope, BIAC

12.50 – 14.00 Déjeuner

14:00 – 15:15 SESSIONS PARALLÈLES E ET F

L’ACCOMPAGNEMENT DES PRINCIPES DIRECTEURS EN PRATIQUE

MINIMISATION DES DIFFÉRENDS ET APPLICATION EN CAS DE FRAUDE ET D’ÉVASION FISCALES

Le chapitre 4 des Principes directeurs internationaux pour la TVA/TPS vise à compléter les Principes directeurs sur la neutralité de la TVA et sur le lieu d’imposition. Il présente des méthodes pour faciliter la mise en œuvre cohérente des principes contenus dans les Principes directeurs dans la législation nationale et leur interprétation cohérente par les administrations afin de minimiser les risques de double imposition ou d’absence d’imposition involontaire, ainsi que les risques de différends qui en découlent. Il prévoit aussi explicitement que les Principes directeurs sur la neutralité de la TVA et sur le lieu d’imposition s’appliquent lorsque les parties en cause agissent de bonne foi et que toutes les transactions sont légitimes et ont une substance économique. Les juridictions peuvent prendre les mesures proportionnées pour se protéger contre la fraude et l’évasion fiscales, les pertes de recettes et les distorsions de concurrence. Le chapitre 4 ne donne pas de définition des termes de fraude et d’évasion fiscales, notant que des définitions spécifiques existent souvent dans le contexte national. Dans ce contexte, la session parallèle E se penchera sur le rôle que peut jouer la coopération avec les redevables pour améliorer le respect des règles et limiter les différends. La session parallèle F examinera la conception et l’utilisation des règles anti-évasion dans le domaine de la TVA.

Page 15 of 226




SESSION PARALLÈLE E

COOPÉRATION AVEC LES REDEVABLES

APERÇU DES MODÈLES ET EXPÉRIENCES

Caractéristiques communes des modèles de coopération avec les redevables pour le respect des règles

Expériences nationales: problèmes, solutions et retours d’expériences

Moderateur: Marijn Verhoeven, Banque mondiale Orateurs:

Michael Hewetson, OCDE Marcio F. Verdi, CIAT

Gabriel Schutte, Pays-Bas Rapporteur: Sze Teen Wong, Singapour

SESSION PARALLÈLE F

LA CONCEPTION ET LA MISE EN ŒUVRE DES RÈGLES ANTI-

ÉVASION DANS LE DOMAINE DE LA TVA

Qu’est-ce que la fraude, l’évasion, l’abus ? Règles générales anti-évasion par opposition aux règles

spécifiques anti-évasion Le fonctionnement des règles anti-évasion en pratique

Moderateur: Didier Cornillet, Centre de rencontre et d’étude des dirigeants des administrations fiscales (CREDAF)

Orateurs:

Michael Walpole, University of New South Wales Bastien Llorca, France Marcos Alvarez, Espagne Rapporteur: Hilde Bervoets, Belgique

15.15 – 15.30 Café – Temps pour les participants à la session parallèle de se rendre dans la salle de la session plénière

15:30 – 16:00

SESSION PLÉNIÈRE 7

L’ACCOMPAGNEMENT DES PRINCIPES DIRECTEURS EN PRATIQUE

MINIMISATION DES DIFFÉRENDS ET APPLICATION EN CAS DE FRAUDE ET D’ÉVASION FISCALES

Cette session plénière fera la synthèse des résultats des sessions E et F sur la minimisation des différends et l’application des Principes directeurs dans les cas d’évasion et de fraude.

Président: Carlos Achadinha, Canada Orateurs:

Sze Teen Wong, Singapour Hilde Bervoets, Belgique


L’IMPACT ÉCONOMIQUE DES STRUCTURES DE TAUX DE TVA ET DE LEURS MODIFICATIONS

Le taux normal moyen de TVA dans l’OCDE a considérablement augmenté depuis le début de la crise économique en 2007-2008, car de nombreux pays ont cherché à augmenter leurs recettes de TVA pour réduire leurs déficits budgétaires. Entre 2009 et 2014, 21 des 34 pays membres de l’OCDE ont augmenté leur taux normal de TVA au moins une fois. En revanche, très peu de pays ont réduit leur taux de TVA pour stimuler l’activité économique. Cette session donnera un aperçu des expériences nationales et des études récentes concernant l’effet économique des modifications de taux de TVA. Elle comprendra une discussion sur les sujets suivants : L’incidence des changements de taux de TVA sur les prix à la consommation La mesure de l’impact des modifications de taux de TVA sur les recettes des gouvernements, sur la consommation et la croissance

économique

Présidente: Natasha Avedaño Garcia, Colombie Orateurs:

Michael Keen, FMI Simon Loretz, Institute for Advanced Studies (HIS)

17.15 - 17.45 SESSION DE CLÔTURE

Résumé et conclusions des débats – Quelles prochaines étapes ?

Orateurs:

David Bradbury, Chef de la Division de la politique et des statistiques fiscales, CPAF, OCDE Karl-Heinz Haydl, BIAC

Page 16 of 226

SESSION 1

AN OVERVIEW OF VAT POLICY TRENDS AND DEVELOPMENTS

FROM AROUND THE WORLD

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Chair: Lincoln Marais, ATAF

Speakers:

Christophe Waerzeggers, International Monetary Fund Chongjun Tan, People’s Republic of China

Dr. Abhishek Chandra Gupta, India Dieudonné Lokadi Moga, Democratic Republic of the Congo

Page 17 of 226

of 226

Third Meeting of the OECD Global Forum on VAT5-6 November 2015, Paris, France

PLENARY SESSION 1



Lincoln Marais, ATAF

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0

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Countries with VAT 1960 - 2015

Number of countries with a VAT/GST continues to rise

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3

• VAT/GST rates increased in many countries around the world, in the aftermath of the financial and economic crisis

• In the OECD, the average standard rate has increased by one and half percentage point since 2008, from 17.7% to 19.2%

• Some base broadening, but limited:o Some increases of reduced rateso Some narrowing of scope of

reduced rates/exemptionso Extending the scope to services

supplied by offshore suppliers, notably in B2CSource: OECD Tax Database

Standard VAT/GST rates continue to increase

19.2

15

15.5

16

16.5

17

17.5

18

18.5

19

19.5

20

Standard VAT-rates in OECD countriesUnweighted average

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• Targeted anti-fraud measureso Domestic reverse charge mechanismso Split payment for public bodieso Targeted measures, notably to reduce the size of the cash economy

• Measures to stimulate complianceo Lotteries and other incentive schemes

• Broader use of e-auditing

• Generally recognised need to enhance the exchange of information and other forms of international administrative cooperation in the area of VAT

Tackling avoidance and fraud is still a key priority

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• VAT/GST registration thresholds going up

• Electronic invoicing/filing/accounting introduced in many countries– Growing use of technology to reduce cost and burden of

compliance/administration and to improve effectiveness of administration more generally

• Simplified registration and compliance regimes for non-resident suppliers introduced in / considered by growing number of countries

Reduction of compliance burdens

getting more attention

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• Strong growth in online sales by offshore suppliers to final consumers (B2C trade)– How to collect the tax on goods and services bought online from suppliers

abroad?

• Strong growth and diversification of services delivered without physical presence of the supplier in the performance or “market” jurisdiction– Use of robotics, drones, internet of things…

• Disintermediation and the growth of “peer-to-peer” networks

• New business models, types of services and players in the area of financial services raises questions about the VAT treatment of these services (crowdfunding, fintech, virtual currencies…).

Adjusting to new economic realities

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of 226


PLENARY SESSION 1



Chongjun Tan, P. R. China

1

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Introduced VAT in several cities within several industries in China

Established new tax system, in which VAT applied to all goods, Business Tax (“BT”) applied to almost all services (& real estate), Excise Tax applied to some items of goods

Allowed the creditability of input VAT incurred on the purchase of fixed assets (i. e. equipment)

Started reform pilot program in Shanghai to replace BT with VAT in transportation and certain modern service industries (e. g. R&D)

Expanded the above pilot program across China

Expanded the industry scope to postal services, railway and telecommunication services

Development of VAT System in China

1979

1994

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Why Replace BT with VAT (BT2VAT)?

In 2011, VAT & BT raised almost 45% of total tax revenue in China. BT is a cascading turnover tax – its tax base is the turnover of each stage of the supply chain. By contrast, VAT is neutral for business through the credit offset system

Why? To enhance neutrality of indirect tax regime, promote social division of labour, accelerate the development of services sector, and therefore fuel the economic transition

Moving to a single indirect tax system (VAT) for both goods and services means: Businesses which manufacture, distribute or sell goods can claim input

credits for the services purchased; and Businesses which provide services change to pay VAT such that they can

claim input credits for the goods (incl. fixed assets) & services purchased

However, shifting from BT to VAT changes: The duty of tax collection and administration on pilot industries The tax revenue sharing arrangement among central & local governments

3

JT1

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What Are the Effects of Previous BT2VAT?

The transportation industry, telecommunication industry and postal industry as well as certain modern services have been converted into VAT from BT

The policies and administrative measures concerning BT2VAT pilot have gradually become mature

Boost business vitality, assist enterprises identify new opportunities, increase employment; promote social division of labour as well as sustainable & healthy growth

Significant impact on business and fiscal revenue – total tax payable for the pilot taxpayers and other VAT taxpayers under VAT regime has been reduced by RMB 140 billion in 2013, and RMB 192 billion in 2014

4

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Future Reform Goals of Chinese VAT

• To reduce the compliance uncertainties and the distortion of the operation of multiple VAT rates (incl. 17%, 13%, 11%, 6% and 3%)

Simplify the multiple VAT rates

• Most of exported services are currently exempt from VAT and input VAT incurred on related cost is not creditable. May consider applying the zero rate to exported services and also more exported goods

Apply the zero rate to exported services & more

exported goods

• Excessive VAT input credit is currently not refunded but can be carried forward (indefinitely). May consider providing VAT refund to certain industries and taxpayers

Refund excessive input VAT credit

• To enhance the neutrality of VAT and decrease the possibility of tax evasion, it is necessary to rectify the tax incentives

Rectify the tax incentives

• Replace the existing VAT regulations issued by the State Council with a PRC VAT law passed by the National People’s Congress in the near future

Develop VAT legislation

6

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Deal with the Challenges of Chinese VAT Reform

Some business worries that VAT reform will probably increase their VAT burden such that it is important to realise the burden is on the final consumer

Adverse effect of the application of different VAT rates in different services industries which has created a competitive distortion for certain industries and increase of compliance difficulties

Hybrid VAT-BT system due to progressive expansion of VAT reforms by location and industry. Competitive neutrality issues arises from the interaction between the existing BT system and new VAT system

The timeframes for implementation are short and challenging, particularly for industries which are very ‘systems driven’ (e.g. financial services)

Learning from other countries VAT/GST systems is important, but it also needs to be adapted for the Chinese market.

7

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of 226


PLENARY SESSION 1



Dr. Abhishek Chandra Gupta, India

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• Central Excise duty (CENVAT)• Additional duties of excise• Excise duty levied under Medicinal & Toiletries

Preparation Act• Additional duties of customs (CVD & SAD) • Service Tax• Surcharges & Cesses related to supply of goods/services

CENTRAL TAXES

• State VAT / Sales Tax• Central Sales Tax• Purchase Tax • Entertainment Tax (not levied by local bodies)• Luxury Tax• Entry Tax (All forms) • Taxes on lottery, betting & gambling• Surcharges & Cesses related to supply of goods/services

STATE TAXES

Current taxation in India

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Page 27 of 226


GST in India

Unified GST

Towards Central GST

State VAT

Central VAT

Expected in 2016

2011 onwards

2005

2004

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• To create a single market for goods and services in India.

• Comprehensive indirect tax on manufacture, sale andconsumption of goods and services throughout India.

• GST to be levied and collected at each stage of sale orpurchase of goods or services based on the input taxcredit method so as to tax goods and services onprinciples of value addition.

• To replace the multiple taxes levied by the Central andState governments and simplify the current tax structureand compliance requirements.

Objectives of GST reform in India.

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• Constitutional status:

• The Constitution Amendment Bill, 2014, passed by the House of people on 06.05.2015 and is awaiting approval of Council of States and ratification by 50% of the state legislatures.

• GST Council to be constituted which will recommend GST Law and Procedures.

• GST Law to be introduced in Parliament / State Legislatures• Legislative status:

• Centre and State Governments jointly drafting model GST laws (CGST, SGST and IGST)

• The business processes of GST related to payment, registration, refund and return have been put in the public domain for feedback.

• IT Framework:

• The GSTN (GST Network), the IT backbone for implementation of GST has been established as a Special Purpose Vehicle.

GST Status in India

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Page 29 of 226

of 226


PLENARY SESSION 1



Dieudonné Lokadi Moga,

Democratic Republic of the Congo

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Summary

• Objectives of the implementation of a VAT

• Challenges

• Experience of the DRC

• Main reforms considered

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I. OBJECTIVES OF THE IMPLEMENTATION OF VAT

• Increase tax revenue

• Modernise the tax system

• Improve the competitiveness of the local production compared to imported products

• Facilitate the ta harmonisation as part of the sub regional economic groupings

• Struggle against the informal sector

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II. CHALLENGES

• Legislation adapted to the context: structure of the economy (importance of VAT generated by exporting sectors, degree of informality of the economy, degree of control for the flows of goods through the customs, registration threshold for capturing the taxpayers capable of filling their obligations, simple and flexible system for the refund of tax credits;

• Efficiency of management: communication towards all stakeholders, response from the public authorities facing strong pressures from investors for exemptions, efficiency of the VAT credit refunds system, efficiency of the customs/tax administration cooperation in the struggle against fraud.

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III. EXPERIENCES IN DRC

• DRC = one of the last countries having implemented VAT (2010)

• Acceptance of the reform and revenue increase compared to the turnover tax

• Low degree of compliance by small taxpayers and by state-owned companies

• Strong pressure for granting exemptions to support investments

• Difficulties to broaden the tax base

• Difficulties to face requests for refunds from exporting sectors (mining industry) and large investors

• Unfair competition notably due to customs smuggling

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IV. REFORMS CONSIDERED

• Keeping the characteristics of a good VAT (large base, single positive rate, strictly limited and justified exemptions for diplomatic, social and economic reasons;

• Application of a deferred VAT payment on imports in order to reduce the pressure on refunds

• Creation of a computerised system allowing the transmission of the VAT data collected to the Tax Administration for an improved efficiency of the control and a broadening of the tax base

• Simplification of the VAT credits refund procedure by the creation of a dedicated account managed by the tax administration.

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IV. REFORMS CONSIDERED (cdt)

• Reinforcing tax/customs cooperation for theprevention, detection and treatment of the risks ofVAT fraud

• Improvement of the VAT management: compliancewith the rules of jurisdiction for operational divisions,modernisation and improvement of procedures, taxcontrol planning based on risk analysis

• Strengthening the skills of the staff and better education ofcitizens, taxpayers and political stakeholders with a view toimprove the implementation of the reform

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THANK YOU FOR

YOUR ATTENTION

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Page 34 of 226

Troisième réunion du Forum mondial de l’OCDE sur la TVA


SESSION PLÉNIÈRE 1

VUE D’ENSEMBLE DES TENDANCES ET DES

ÉVOLUTIONS EN MATIÈRE DE POLITIQUE TVA DANS LE MONDE

Dieudonné Lokadi Moga,République Démocratique du Congo

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SOMMAIRE

Objectifs de la mise en œuvre de la TVA

Défis

Expériences de la RDC

Principales réformes envisagées

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Page 35 of 226



I. OBJECTIFS DE LA MISE EN ŒUVRE DE LA TVA

Accroitre le niveau des recettes fiscales

Moderniser le système fiscal

Améliorer la compétitivité de la production locale par rapport aux produits importés

Faciliter l’harmonisation de la fiscalité dans le cadre des regroupements économiques sous-régionaux

Lutter contre le secteur informel

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II. DEFIS

Législation adaptée au contexte : structure de l’économie (importance de la TVA générée par les secteurs tournés vers l’exportation, niveau de l’informalité de l’économie, degré de contrôle des flux des marchandises au cordon douanier), seuil d’assujettissement permettant la saisie des assujettis à même de remplir leurs obligations, système de remboursement des crédits souple et simple ;

Efficacité de la gestion : communication en direction de l’ensemble des acteurs, attitude des pouvoirs publics face aux fortes sollicitations d’exonérations de la part des investisseurs, efficacité du système de remboursement des crédits de TVA, efficacité de la collaboration douanes-impôts dans la lutte contre la fraude ;

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III. EXPERIENCES DE LA RDC

RDC = l’un des derniers pays à avoir introduit la TVA (2010)Acceptation de la réforme et amélioration du niveau des recettes par rapport au système d’Impôt sur le Chiffre d’AffairesFaible degré d’accomplissement des obligations par les assujettis de petite taille ainsi que les entreprises du portefeuille publicForte pression en vue de l’octroi d’exonérations pour soutenir les investissementsDifficultés d’élargissement de l’assiette fiscale Difficultés à faire face aux demandes croissantes de remboursement provenant des secteurs tournés vers l’exportation (mines) et de gros investisseursConcurrence déloyale subie par des assujettis en raison notamment de l’importance de la contrebande douanière

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IV. REFORMES ENVISAGEES

maintien des caractéristiques d’une bonne TVA (assiette large, taux positif unique, exonérations strictement limitées et justifiées pour des raisons diplomatiques, sociales et économiques et reprises dans un texte unique) ;

Institution de la procédure de paiement différé de la TVA à payer au cordon douanier pour diminuer la pression de remboursement

Institution d’un système informatique permettant la remontée des données sur la TVA collectée vers l’Administration des Impôts pour plus d’efficacité dans le contrôle et l’élargissement de l’assiette

Simplification de la procédure de remboursement des crédits de TVA par l’ouverture d’un compte dédié au remboursement et actionné par l’Administration des impôts

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IV. REFORMES ENVISAGEES (suite)

Renforcement de la synergie douanes-impôts dans le cadre de la prévention, de la détection et du traitement des risques de fraude à la TVA

Amélioration de la gestion de la TVA : respect des règles de compétence des services opérationnels, modernisation et amélioration des procédures, programmation du contrôle fiscal sur base de l’analyse de risque

Renforcement des capacités du personnel et intensification de la vulgarisation à l’endroit de la population, des opérateurs économiques et des acteurs politiques en vue d’une meilleure assimilation de la réforme.

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MERCI DE VOTRE ATTENTION

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Page 38 of 226

SESSION 2


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Chair: Marcio F. Verdi, CIAT

Speakers:

Donato Raponi, European Commission

Alain Cornet, BIAC

Tor Lande, Norway

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of 226


PLENARY SESSION 2

THE CHALLENGES OF

APPLYING VAT

IN THE DIGITAL ECONOMY

Donato Raponi,

European commission

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Progress to Date in ensuring taxation from the Digital Economy

– OECD 1998 Ottawa principles – consumptions taxes like VAT should be taxed on the basis of destination i.e. the country where the consumer is established.

– EU has led the way on applying the destination principle

• 2003 - non-EU supplies,

• 2015 – intra EU supplies of telecommunications, broadcasting and electronically supplied services.

– Supported by electronic registration and payment – the MOSS.

– The benefits are that tax revenues accrue from such supplies to the country of consumption plus a level playing field.

– If taxation at destination is not applied BEPS issues may arise and this can cause competitive distortions – we saw this in the EU between 2003 and 2015.

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Impact of 2015 Changes– New place of supply rules for B2C supplies of telecommunications,

broadcasting and electronically supplies services

– Overall there is high satisfaction with the implementation of the 2015 changes. Business see the EU vendor registration and remittance model (the MOSS) as a first step.

– Systems in 28 Member States in place and working on 1 January 2015 – significant achievement by EU Member States

– In excess of 3 billion euros in VAT revenues through the MOSS in 2015 representing 18 billion in trade.

– Intense communication efforts in 2014 on the changes - Revenues from non-EU business has tripled

– Some teething problems - 95% of issues have come from UK small business.

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Future Reforms– Digital Single Market Strategy one of the Top 10 objectives of the

Juncker Commission.

– VAT identified by business as one of the Top 3 barriers to cross-border E-Commerce – E-Commerce Europe 2015.

– Costs EUR 8000 annually per Member State for registering and accounting for VAT. 6 Billion costs in total – Preliminary results from Deloitte report.

– Increase of the number of exempted small consignments imported from non EU countries (~+300 % in 15 years, 115 million packages in 2013), VAT losses from small consignment exemption of up to EUR 650m – EY 2015 report.

– Compliance losses (including non-taxation and incorrect place of taxation) from the current regime estimated at between EUR 2.6 billion and 3.8 billion – Preliminary results from Deloitte report

– Current system is complex, it is costly, there is a lack of certainty for business, it is not neutral and there are compliance risks and losses for Member States.

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May 2015 - Digital Single Market for Europe Strategy - VAT Measure• The Commission will make a legislative proposal in 2016 to reduce the

administrative burden on businesses arising from different VAT regimes including:

I. extending the current single electronic registration and payment mechanism to intra-EU and 3rd country online sales of tangible goods,

II. introducing a common EU-wide simplification measure (VAT threshold) to help small start-up e-commerce businesses,

III. allowing for home country controls including a single audit of cross-border businesses for VAT purposes, and

IV. removing the VAT exemption for the importation of small consignments from suppliers in third countries.

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International Dimension– EU experience has been positive - Applying taxation at destination with

simplified collection mechanisms does work.

– VAT has a critical role to play in ensuring taxation from the digital economy – the report of the OECD Task Force clearly recognises this and has given more impetus to the excellent work of WP9.

– There needs to be greater international cooperation to ensure compliance.

– But we need to be careful on the type of cooperation we need. Should be intelligence and risk led but supported by multi-lateral agreements on cooperation and recovery. Tax collection fees/revenue sharing may also be useful to assist compliance.

– EU has commenced negotiations on an agreement with Norway – this experience can feed into the future OECD discussions.

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Thank you very much for your attention

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Page 44 of 226


PLENARY SESSION 2


Alain H. Cornet, BIAC

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Transfer Pricing essentials

When related parties have commercial dealings with each other, market forces do not apply to define a negotiated price. Transfer pricing then ensures a proper value is defined.

Under the Arm’s length principle,

• Related parties determine the price as if they were unrelated.

• Various methods (OECD): Comparable Uncontrolled Price, cost+, Resale Minus, Transactional Net Margin, …

• Based on profit drivers

• “Comparables” analysis – unrelated parties data

• Aligned through contracts, TP documentation, Agreements, APA

Transparency & promise of a given outcome with regards to the taxable base in given countries

Transfer Pricing is not good or bad. It is a reality and a necessity to ensure good governance in today’s global world.

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Page 45 of 226


Transfer Pricing Agreement

IP contract for 3% of sales

Manufacturing contract at Cost +5%, agreed by country A

VAT consequences all “easy and usual”

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Then comes reality…

Spontaneous AdjustmentA customer obtained a Year end discount …Thanks to strong volumes, unit costs went down in Plant B ...We “missed” the margins!

OR

Consequence of an AuditTax inspector in Country B considers margin too low and requires 1% extra to be taxed

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Page 46 of 226


Transfer Pricing Adjustments

PROSPECTIVE

• Adjust future prices to correct for a miss in past margin

• Easy for VAT & Customs

• Often unacceptable for Corporate tax

RETROSPECTIVE

• Issue a Credit note, an invoice, or another document to make the correction at end of an accounting period

• Perfect for Corporate tax

• But what for VAT & Customs?

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Opinion 1 – “just a margin adjustment”

ADJUST TAX RETURN

ONLYNO INVOICE

FLOW

Au

TP adjustment is only a Corporate tax / TP item. It has nothing to do with VAT. The underlying transaction was already taxed at the then fair price.

Perform only an adjustment on Corporate tax return

Is it done on both sides?

Are books adjusted?

Can open to abuse?

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Page 47 of 226


Opinion 2 – “Consideration, but no supply”

DN/CNOut of VAT

Scope

Th

This is only done for Corporate tax / TP purposes. The underlying transaction was already taxed at the fair price, but …an accounting entry should be documented.

Issue a CN/DN that is out of VAT scope

The DN/CN makes sure it is done on both sides

Will both sides agree?

Can open to abuse?

Applies both for over and under shooting?

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Opinion 3 – “Adjustment to the price”

Corrective invoice(ssss)

The initial price is only “provisional”. The final price is the real value “to be paid”

Issue a CN/DN as price correction

Done on both sides

No risk of abuse

What level of detail, allocation, …

Time of transaction?

Customs angle?

Applies both for over and under shooting?

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Page 48 of 226


Opinion 4 – “something else ‘on top’ ”

Invoices for “intangible”

Vn

Parties have charged the “fair price” that would have existed between unrelated parties. The fixed margin guarantee is an extra “intangible”, like an insurance. After charging fair calculated price, parties can activate this extra “item”

Issue an invoice for “intangible” from one to the other party

Done on both sides

limited risk of abuse

Simple execution

Place of taxation?

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Today’s reality

• Lack of alignment – all 4 approaches exist in different parts of the world

• Difficult to comply: unclear regulations, incompatible approaches, documentation

• Administrative burden high, even for fully taxable business (+ penalties)

• VAT recovery period can close by the time the adjustment is fixed based on TP audit settlements

• BEPS will increase the number of TP Adjustments

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Another Challenge - Profit Sharing Methods

• 2 or more legal entities

• Agreement that the total annual profit should be split in defined proportions

• Transactions might all be in one entity, or in several

• At year end, a “profit push back” is to be executed to achieve agreed result

• No VAT definition….

• How do I comply?

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How to move

• We need harmonized legislation to ensure neutrality of TP adjustments

In the meantime,

HELP US COMPLY

• Clarify how you want us to handle TP adjustments / regulation / approach in your country

• If taxable, ensure timing of adjustment is taxable timing

• No penalty/interest should apply to bona fide TP adjustments

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Page 50 of 226


PLENARY SESSION 2


Tor Lande, Norway

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Background

• Each jurisdiction has the right to decide how to tax the financial sector

• The mobility and the size of the financial sector indicates a need for further work also on international level

• This part of the session will concentrate of VAT or «VAT like» taxation

• A lot of work has been done earlier e.g. in the OECD and EU on this subject

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Norwegian legislation

• Norway applies a broad VAT exemption covering financial and insurance services

• The sector is input taxed - No specific rules regarding deduction e.g. when exporting these services

• Quite liberal grouping rules

• Current law is not ideal from a tax policy view

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Challenges posed by the exemption

• Gives rise to tax planning

• Is not predictable for traders, several court cases

• Is not in harmony with the broad principles described in the international VAT/GST guidelines:1. Neutrality (influence business decisions)

2. VAT is a burden on the business in the sector

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White Paper on Tax Reform - Norway

• White Paper of 7th October 2015:

– Reduce CIT-rate from 27% to 25% in 2016 and further to 22% in 2018.

– The VAT exemption for financial services (FS) is distortive and should be removed.

– Will propose to extend the VAT-base to insurance and other FS provided for by direct payment (fees, charges etc.)

– Margin-based income should be taxed on an aggregate base and ideally be designed with neutrality characteristics of VAT (destination based and not a burden on business).

– Full deductibility of input VAT

– If design not neutral: low rate should apply

– Proposal at the earliest for 2017

• Summary of the White paper in English

https://www.regjeringen.no/contentassets/52300872ef08449b86e422d87f7726bd/summary_whitepaper.pdf

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Further international cooperation

• The broad VAT exemption creates difficulties for many countries

• A mobile/international sector like this calls for international cooperation

• The best approach may be «soft law» instead of harmonised legislation.

• In light of the recent success in designing VAT/GST Guidelines and global standards the OECD/Global Forum on VAT seem an ideal combination to bring the issue forward

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Further work:

1. Take stock of the present situation

2. Best practice

3. Look at the neutrality guidelines, involving multiple location services in the exempted sector

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Page 54 of 226

SESSION 3


*********

Chair: Marie Pallot, New Zealand

Speakers:


Liz Chien, OECD


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of 226


PLENARY SESSION 3


Cab Schutte, Netherlands

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International VAT/GST GuidelinesBackground

Objective - To reduce risks of double taxation and unintended non-taxation through more

consistent VAT-treatment of international trade

Builds on international dialogue among OECD/G20 countries and other OECD Partner countries plus the global business community and academia Linked to BEPS work on Tax Challenges of the Digital Economy (Action 1)

Emerging global standard for the application of VAT/GST to international trade in services and intangibles

Soft law – Not legally binding

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International VAT/GST Guidelines

Two Core Principles

• Neutrality principle • “The burden of value added taxes themselves should not lie

on taxable businesses except where explicitly provided for in legislation.”

• Destination principle• “For consumption tax purposes, internationally traded

services and intangibles should be taxed according to the rules of the jurisdiction of consumption.”

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The International VAT/GST Guidelines

Five Components

OECD International VAT/GST Guidelines

Core Features of Value Added Taxes Covered by the Guidelines

VAT Neutrality

Place of Taxation of B2B Supplies of Services and Intangibles

Place of Taxation of B2C Supplies of Services and Intangibles

Provisions on the Guidelines in Practice

2

0

1

4

2

0

1

5

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The International VAT/GST Guidelines

What had been delivered in April 2014?

General Rules

Customer locationGuideline 3.2 [business location]

Guideline 3.3 [business agreement]Guideline 3.4 [multiple location entities]

B2B

B2C

Specific Rules

Location of immovable

property Guideline 3.8

Evaluation frameworkE.g. on-the spot

suppliesGuideline 3.7

Destination PrincipleGuideline 3.1

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The International VAT/GST GuidelinesWhat has been done since April 2014?

General Rules

Customer location

Guideline 3.2 [business location]Guideline 3.3 [business agreement]

Guideline 3.4 [multiple location entities]

B2B

B2C

Specific Rules

Location of

immovable

property Guideline 3.8

Evaluation

frameworkE.g. on-the

spot suppliesGuideline 3.7

Destination PrincipleGuideline 3.1

On spot

Other

Place of performanceGuideline 3.5

Customer’s usual residenceGuideline 3.6

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B2C Guidelines on Place of TaxationCollecting VAT from non-resident suppliers

• Registration based collection mechanism for non-resident suppliers is recommendedo Remote suppliers required to register and remit the tax in

jurisdiction of customer’s usual residence

• Simplified registration and compliance regime recommended to facilitate compliance by non-resident suppliers

• Jurisdictions committed to strengthening international administrative cooperation and EOI in the area of VAT to support enforcement

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Chapter 4 of the VAT/GST Guidelines Supporting the Guidelines in practice

• Arrangements allowing tax administrations to communicate and work togethero Mutual cooperation and exchange of information

• Taxpayer services

• Application of the Guidelines in cases of evasion and avoidance

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Status and next steps• Guidelines approved by OECD / G20 countries (July 2015)

o G20 Finance Ministers in October 2015, Lima, Peru (Report on Addressing the Tax Challenges of the Digital Economy - BEPS Action 1)

o OECD Global Forum on VAT – Gather input from countries around the world

o OECD Council - Adoption as OECD Recommendation (2016)

• Next steps?o Exchange of information and international administrative cooperation?

o Implementation packages?

o New challenges

Goods – Complex supplies?

Financial services?

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Page 61 of 226

of 226


PLENARY SESSION 3


Liz Chien, OECD

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OVERVIEW OF BEPS ISSUES AND BROADER TAX CHALLENGES

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BEPS in the digital economy

• No unique BEPS issues, but in the digital economy, BEPS issues are exacerbated by:

– Role of intangibles, combined with their mobility, in MNEs operating online platforms

– Ability to fragment functions and centralise infrastructure outside of a market country and sell into a market with minimal use of personnel

– Structuring entities as VAT exempt activities

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Measures to address BEPS issues in the digital economy• Market jurisdiction

– Prevent treaty abuse (Action 6)

– Prevent the artificial avoidance of PE status (Action 7)

• Market, intermediate and ultimate parent jurisdictions

– Neutralise the effects of hybrid mismatches (Action 2)

– Limit interest deductions (Action 4)

– Counter harmful tax practices (Action 5)

– Assure that TP outcomes are in line with value creation (Actions 8-10)

• Ultimate parent

– Design effective CFC rules (Action 3)

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The Broader Tax Challenges

• Direct tax

– Nexus and the ability to have a significant presence without being liable to tax

– Data and attribution of value created

– Characterisation of Income derived from new business models

• Indirect tax

– Collection of VAT on B2C sales

– Exemptions for low value imports

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Several options considered to address broader tax challenges

1. Modifications to the exceptions from PE status

2. Significant economic presence test

3. Withholding tax on certain types of sales of digital goods and services

4. Introduction of an "equalisation levy“

5. Destination principle in VAT and ensuring compliance and collection

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A country’s individual choice

• Introduce in domestic laws (for cases where tax treaty does not apply) or

• Introduce in tax treaties if there is bilateral agreement

• In both cases further calibration of the options needed

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OVERVIEW OF KEY OUTCOMES

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Page 66 of 226


Key Outcomes

• It is impossible to ring fence the digital economy for tax purposes, or to predict with certainty future developments

• While there are no unique BEPS issues, key features of the digital economy exacerbate BEPS concerns

• These have been taken into account and addressed in the BEPS work.

• BEPS measures expected to address digital economy-related BEPS issues.

• Broader direct tax challenges expected to be mitigated once the BEPS measures are implemented.

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Key Outcomes

• Options 1 & 5 were adopted and included in the work on Action 7 and in the VAT/GST Guidelines.

• Options 2, 3 & 4 (expected to have similar economic incidence) were not adopted as internationally agreed standards. Why?

– Once implemented, the BEPS measures are expected to better align the location of taxable profits with the location of economic activity and value creation.

– Many businesses still require a local physical presence in order to be present in a market.

– certain BEPS measures will mitigate some aspects of the broader tax challenges

– indirect taxes (i.e., VAT/GST) will be levied effectively in the market country

– More data needed and will be available soon

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Key Outcomes

• Countries have the sovereignty to introduce any of the three options in:

– Domestic laws as additional safeguards against BEPS, provided they respect existing treaty obligations

– Bilateral tax treaties

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BEPS

IMPLEMENTATION

PHASE

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Calls for inclusive BEP implementation

G20 Finance Ministers Communiqué, September 2015:We call on the OECD to prepare a framework by early 2016 with the involvement of interested non-G20 countries and jurisdictions, particularly developing economies, on an equal footing

BEPS Explanatory Statement, October 2015:Focus on the upcoming challenges, which include supporting the implementation of the recommended changes in a consistent and coherent manner, monitoring the impact on double non-taxation and on double taxation, and designing a more inclusive framework to support implementation and carry out monitoring

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Developing an Inclusive Framework• Objectives:

– Supporting implementation to ensure consistency

– Monitoring implementation to ensure level playing field and to assess the impact of the measures in all countries

Positive past experiences

Global Forumon Transparency and Exchange of Information

127 members – Equal footing – Peer reviews

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Page 69 of 226


Future DE monitoring

• Focus primarily on:

1. Developments in ICT and new business models that have an impact on international tax policy.

2. Impact of implementation of the BEPS measures on BEPS and on the tax challenges exacerbated by the digital economy, as part of the wider post-BEPS monitoring process.

3. Actions taken by countries in the implementation of the options as domestic law measures or in their bilateral tax treaties, and their impact over time.

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Future DE monitoring• Review and analyse data now available: from remote sellers through

simplified VAT/GST regimes, and statistics from CBC template

• Indication of ability of businesses to be able to participate in the economic life of a country without a taxable presence

• On the basis of this, a determination will be made based on:– broad look at the ability of existing international tax standards to deal

with the tax challenges raised by developments in the digital economy,– taking into account not just direct taxes, but also – indirect taxes, – administrative issues, – countries’ differing levels of development,– impact of any potential change on cross-border trade and investment.

• Consult a broad range of stakeholders

• A report reflecting the outcome of the continued work in relation to the digital economy should be produced by 2020.

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Questions?

BEPS Project website:http://www.oecd.org/ctp/beps.htm

Follow us on Twitter: #OECDtax and #detax

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of 226


PLENARY SESSION 3



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International VAT/GST Guidelines… VAT/GST in a changing world

Globalisation Technology Internet – Social Media

… the world becomes …

Internet - Industrial … a global village !!!... VAT/GST as global transaction based tax is heavily impacted by these changes – special focus required !!!

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• Global dimension of VAT

– Requires a global standard that achieves both government and business needs

– The purpose of the Guidelines is to provide this global standard

• Importance of the Guidelines

– Neutrality Guidelines

– Destination Principle


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• 2014 Global Forum on VAT (GF) in Tokyo

– Confirmed the big need for and the big interest in work on global VAT/GST matters

– Endorsed the Neutrality Guidelines and the B2B part on cross-border services as a truly global standard for VAT/GST

– Urged the OECD to finalize its work on the remaining chapters, incl. B2C services for endorsement at the 2015 GF meeting in Paris


... Tokyo endorsement was highly welcomed by business as

important foundation for further work on VAT/GST !!!

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International VAT/GST GuidelinesWorking process

• Inclusiveness - Dialogue & Cooperation – Established efficient TAG + Task Team process, based on a

building block approach, with active input from BIAC/business community

– Huge time pressure & resource constraints - big commitment from OECD and non-OECD countries and BIAC /business community

– Transparency through public consultations – broader engagement with stakeholders

– BIAC/business community highly committed to actively support

... tremendous joint effort from all stakeholders involved – got us

where we are today !!!

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International VAT/GST GuidelinesB2C Guidelines on place of taxation

• General Statements – Chapter 3:

– Safeguarding VAT/GST revenues and achieving a level playing field is very important for business too

– There is no perfect collection mechanism for B2C – foreign vendor collection still best suitable – need for a simplified registration

– Key elements for business are simplicity, consistency, flexibility and proportionality

– Chapter 3.3 “Main features of a simplified registration and compliance regime”, taxing jurisdictions are encouraged to look at these measures to simplify their administrative/compliance process, call for a consistent implementation

... simplicity, consistency, flexibility and proportionality are key to

achieve a level playing field !!!

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Page 75 of 226


International VAT/GST GuidelinesB2C Guidelines on place of taxation

• General Statements – Chapter 3:

– Application of a simplified registration in a B2B context –is the r/c mechanism not best suited to ensure enforceability for governments and simplicity for business in B2B scenarios? – to be explored further as part of our future work

– Importance of footnote 24 of the Guidelines – a registration for VAT purposes by itself does not constitute a permanent establishment for the purposes of these Guidelines

... need to encourage and facilitate a level playing field, only then revenues

will be safeguarded and distortion of competition will be abolished !!!

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International VAT/GST GuidelinesChapter 4

• General Statements:

– Prevention is the best way to minimize disputes – the more consistent implementation of the Guidelines in practice around the world, the less disputes on neutrality and place of taxation

– Chapter 4 is highly important to resolve disputes when they occur in practice

– Mutual cooperation and exchange of information between governments is key not only to help resolving disputes but also when it comes to making compliance as simple as possible for business

... consistent implementation vital to reduce disputes !!!

… if disputes occur, need to resolve them in a straight forward way !!!

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Page 76 of 226


International VAT/GST GuidelinesChapter 4


– Taxpayer services (provision of local guidance, creation of point of contacts), WP9/TAG/VAT Global Forum as platforms for engagement on implementation issues and best practices: highly important and highly welcomed by business – FTA principles of good tax administration as fundament

– Starting point: good faith, legitimate business /legitimate transactions – but as practice shows proportionate counter-measures applied responsibly and in line with the principles of these Guidelines are important to protect against evasion and avoidance in the context of the Guidelines

... resolve and protect - taxpayer services and proportionate protection

measures against evasion and avoidance are important !!!

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International VAT/GST GuidelinesBEPS related aspects


– BEPS action items mainly direct tax driven but have also big impacts on VAT/GST

– Important to consider the bigger tax picture

– Bridging the silos between direct tax and VAT/GST is crucial – interaction with VAT/GST requires close coordination with different WPs

– BIAC is very happy to support and to help being a connector between direct and indirect tax

... big need to look at BEPS aspects from an overall tax perspective,

including VAT/GST !!!

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Page 77 of 226



Specific aspects:

Action item 1 – digital economy:• VAT/GST issues covered by B2C work of the Guidelines. Striking the right balance

between collecting VAT/GST revenue and ensuring the simple and cost effective means of collection for business & tax administrations is critical

• Number of countries already implementing national rules to tax inbound digital supplies. Need to ensure consistent implementation at a global level – consultation with global business community is key – best practices available

• Exemptions for low value imports - taking stock of available options, best practices

Action item 7 – permanent establishment:• Definition of PE for CIT purposes and fixed establishment for VAT/GST purposes

are not the same, but more PEs will bring more VAT/GST registrations leading to additional compliance burdens (force of attraction), costs and complexity for VAT/GST

– Tendency for the reverse situation to apply – tax authorities attempting to qualify mere VAT/GST registrations as PEs for CIT purposes

... consultation and coordination direct tax - indirect tax and business –

governments is important !!! Establish regular updates !!!

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• Specific aspects: Transfer pricing:

– More transfer pricing adjustments to be expected with potential significant impact on VAT/GST, different treatments for VAT/GST purposes on the compliance side

Cost Contribution arrangements:

– CCAs may be used more frequently for the development of new assets, critical to consider VAT/GST treatment

Corporate Restructuring:

– Crucial to consider VAT/GST treatment of transactions steps and recoverability of associated restructuring fees

... big need to look at these aspects from an overall

tax perspective, including VAT/GST !!!

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Page 78 of 226


International VAT/GST GuidelinesPossible future work

• Next steps: Guidelines related aspects

– Consistent implementation of the Guidelines around the world – implementation packages (i.e. destination principle and impacts on neutrality – refunds, etc.)?

– Importance of administrative cooperation and exchange of information, important for business as well to ease compliance?

– Application of simplified registration - separation B2B/B2C, pro´s and con´s – flexibility: option for business, win – win for tax administrations and business?

– Further elaboration on recharge method?

... BIAC/business community is highly committed to support !!! … need to

set the right priorities !!!

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International VAT/GST GuidelinesPossible future work

• Next steps: BEPS related aspects

– Transfer pricing adjustments and its impacts on VAT/GST compliance – collect global approaches with the aim to identify best practices?

– Monitor other direct tax action items re. impacts on VAT/GST -bridge direct/indirect tax silos?

New aspects

– Physical world and virtual world are merging: need to focus on goods - complex supplies?

– Exempt sector - what about broadening the base?

... BIAC/business community is highly committed to support !!! … need to

set the right priorities !!!

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Page 79 of 226


International VAT/GST GuidelinesBIAC/business community support

• Next steps - summary: BIAC/Business community is highly committed to: – Promote the Guidelines as global standard and actively support on their

consistent global implementation# Business participation in OECD events across the globe on the

Guidelines# Support in national public consultations, feeding in global experience

from a business perspective – best practices available # Support on future work re. implementation packages

– Support on other areas of future focus– Support on BEPS related VAT/GST aspects – Support the global outreach of the OECD to non-OECD countries – Support the Global Forum on VAT initiative and its actions– Support on capacity building on VAT/GST in developing countries

... you can count on us, we are very committed and very happy to support,

our wealth of business practical and VAT technical expertise is Yours.

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International VAT/GST Guidelines… VAT/GST in a changing world

... the world has become a global village

!!!

... and we a global VAT/GST family !!!

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Page 80 of 226


International VAT/GST GuidelinesThank you for your trust and support !!!

... we still have a couple of laps to run !!!... but as a team and with all your great support !!!... we will reach the finish line in the years to come !!!... thanks for hanging in there !!!

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of 226

PARALLEL SESSIONS A AND B:

DETERMINING THE PLACE OF TAXATION FOR B2C SUPPLIES

OF SERVICES AND INTANGIBLES

*********

PARALLEL SESSION A

GENERAL RULES FOR DETERMINING THE PLACE OF TAXATION


Moderator: Nii Ayi Aryeetey, Ghana

Speakers:

Lesley O’Connell Xego XEGO, South Africa

Jessica Dove, BIAC

Rapporteur: Massimo Morarelli, Italy

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of 226

Third Meeting of the OECD Global Forum on VAT 5-6 November 2015, Paris, France

Parallel Session A

Case study

“Chef” is a company established and registered for VAT purposes in Country A. It provides tailor made menus and cooking recipes to its clients for consideration. “Chef” has no establishments outside Country A and its services are provided at a distance through the Internet. Clients contact “Chef” by Internet and download the menus and cooking recipes from Chef’s website. For the purpose of this case study, it is assumed that “Chef” has many clients in Country B and exceeds the registration threshold in this country.

Supply 1

“Chef” has a business agreement with Company D1 established and registered for VAT purposes in Country B. According to this business agreement, “Chef” provides every day a tailor made menu and the cooking recipes to the manager of the canteen of Company D1. “Chef” also provides online assistance to the employees of the canteen to cook the meals. The service is exclusively provided at a distance. The payment for the supply is made from D1 bank’s account in Country B.

Questions:

What is the place of taxation for Supply 1? What are the compliance obligations of “Chef” in Country B if it provides B2B supplies only

there?

Supply 2

“Chef” provides tailor made menus, cooking recipes and online assistance to private consumers resident in Country B e.g. as part of personal diet programmes, weddings, receptions, etc. The service is exclusively provided at a distance.

What is the place of taxation for Supply 2; what is the proxy used? How can the supplier determine the “usual residence” of the final consumers? What are the compliance obligations of “Chef” in Country B?

Supply 3

A private customer, which has its usual residence in Country B organises the wedding of his daughter in Country C. Given the size of the event, “Chef” sends its employees in Country C to cook the meals on place. The wedding meal is physically supplies in Country C. The payment is made from the bank account of the private customer in Country B.

Page 85 of 226


Country A

Chef

Country B

Country C

Supply of online service Payment Physical supply

D1

Supply 1

Supply 2

Supply 3

Page 86 of 226


PARALLEL SESSION A

GENERAL RULES FOR DETERMINING THE PLACE OF

TAXATION OF B2C SERVICES AND INTANGIBLES

Lesley O’Connell, South Africa

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A South African perspective

VAT principles

• Currently no specific place of supply rules

• No distinction between B2B and B2C when required to register

• Use of imported services (reverse charge) when VAT registration is not required

• 1 June 2014 registration of non resident electronic service suppliers

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Page 87 of 226


Policy rationale for registration

• Level playing fields between local and foreign suppliers

• Use of threshold

• Initial regulation tried to capture mostly B2C supplies

• Tried to achieve same VAT result as with imported services

• No input tax initially envisaged to be deducted, but online gambling? Double input tax deduction?

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Future considerations

• Extend ambit of regulation to include other services supplied electronically

• Audit capacity?

• Fraud

• Collection of outstanding debts

• Balancing act with protecting local market

• Davis Tax Commission – interim report recommends refunds for VAT incurred by foreign businesses

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Page 88 of 226


Case study

Supply 1

• No South African VAT implications for Chef

• Services fall outside of the regulation

• If D1 is wholly taxable, no imported services

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Case study

Supply 2



• Private consumers liable for VAT on imported services

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 89 of 226


Case study

Supply 3



• No imported services for private customer in country

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Case study

• If supplies fall within the regulation and meet threshold, Chef would be required to register for VAT

• Charge VAT on all supplies irrespective of the customer’s status if meet 2/3 test– Resident

– SA bank account

– Address in SA

• Supply 3 – potential for double tax in country B and C

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 90 of 226

-


PARALLEL SESSION A

GENERAL RULES FOR DETERMINING THE PLACE OF

TAXATION OF B2C SERVICES AND INTANGIBLES

Jessica Dove, BIAC

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


B2B and B2C Supplies

• Flexibility is welcomed by business

• Mandatory inclusion of B2B supplies is likely to create additional administrative burden

• The reverse charge already levels the playing field

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 91 of 226


MNC Co Group

CompanyMNC Local Company

Supplies of digital content

VAT registration?? Already VAT registered and

accounting for VAT on supplies to local consumers

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


• Supply 1 example

• Place of supply is country B

• Optimal position is that Chef does not have to register for VAT in country B

• Company D1 performs a reverse charge

• VAT is effectively accounted for via the reverse charge mechanism, with no requirement for a remote seller registration

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 92 of 226


B2C – Determining Residence

• Indicia will differ according to the type of business, and will change over time

• Approaches which permit the use of information routinely available in the business are likely to be most effective

• Challenge only in cases of abuse or misuse

• What about scenarios with limited or no information, such as prepay telecoms?

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


• Supply 2 Example

• Place of taxation is where the customer is resident (proxy for place of consumption)

• Chef may have a number of indicia of residence to draw upon

• The OECD VAT Guidelines envisage that Chef would need to register for VAT, subject to any threshold in place

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 93 of 226


• Supply 3 Example

• Chef must consider the type of supply

• The OECD VAT Guidelines envisage that this is an ‘on the spot’ supply

• Place of taxation is in country C and Chef must register for VAT there, subject to any threshold in place

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 94 of 226

PARALLEL SESSIONS A AND B:



*********

PARALLEL SESSION B

SPECIFIC RULES FOR DETERMINING THE PLACE OF TAXATION OF B2C

SERVICES AND INTANGIBLES

Moderator: David Hollinrake, SADC

Scene Setting: Rebecca Millar, University of Sydney

Speakers:

Thomas Ecker, Austria Colin Ager, BIAC

Rapporteur: Walid Loussaief, Tunisia

Page 95 of 226

of 226

Parallel Session B

Case study

Consider a private individual, a resident of Country A, who travels to Country B for a holiday.

Before her departure, she connects to the website portal of an online hotel booking platform and books a room in a hotel Country B. The company that operates the online platform, which is based in Country C, charges a booking fee for its services to both the consumer (Transaction ) and the hotel (Transaction . The consumer will pay the agreed rate for her room to the hotel at the end of her stay (Transaction ).

The customer flies to Country B and on arrival she calls home using the global roaming service available from her Country A mobile telecoms service provider (Transaction ). Since this is quite expensive, she resolves to avoid using the roaming service if at all possible. At the end of her first day, she calls home from a telephone booth around the corner from her hotel (Transaction ) but on the second day she decides to purchase a pre-pay SIM card from a local Country B telecoms service provider and insert this into her mobile phone (which is conveniently unlocked). She loads sufficient value onto her new account to enable her to make local and international calls (Transaction ) for the rest of her stay in Country B.

The consumer is so enamoured with Country B that she decides to learn the language and she enrols in an online language course provided by a Company in Country D. The course includes weekly, online classes with a tutor in Country D. On the relevant days while she is in Country B, the consumer uses a computer at an Internet café to access the Internet (Transaction ) and attend her classes (Transaction ). She continues the classes, for which she has paid a full-year upfront fee, once she returns home to Country A.


Page 97 of 226

The discussion will focus on the identified transactions. [We will not discuss the place of taxation of the international transport service, nor any supplies of goods (such as the sale of the SIM card). To reiterate, the transactions are:

(1) Booking service supplied online by booking service company located in Country C to consumer ordinarily residing in Country A and located in Country A at the time of booking;

(2) Booking service supplied online by booking service company located in Country C to hotel in Country B; [Note that this is a business-to-business supply and so will only briefly be mentioned.]

(3) Hotel accommodation provided by Hotel in Country B to consumer ordinarily resident in Country A;

(4) Telecommunications service provided by Country A telecoms provider to customer ordinarily resident in Country A but while she is global roaming in Country B;

(5) Telecommunications service provided by Country A telecoms provider to customer ordinarily resident in Country A, where the service is accessed in a phone box in Country B;


Page 98 of 226

(6) Telecommunications services provided by Country B telecoms provider to customer ordinarily resident in Country A, where the customer has purchased a Country B SIM card and is using the services in Country B;

(7) Internet access services and the use of a computer provided in Country B by a Country B internet café to a customer ordinarily resident in Country A;

(8) Online education services supplied by a company in Country D to a customer ordinarily resident in Country A, where payment for the service is made while the consumer is in Country B and some of the online lessons are taken while the customer is in Country B.


Page 99 of 226

of 226


PARALLEL SESSION B

SPECIFIC RULES FORDETERMINING THE PLACE OF TAXATION OF B2C


Prof Rebecca Millar, University of Sydney

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

KEYNOTE SPEECH: Professor Rebecca Millar

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 101 of 226


What are “specific” rules?

• Specific rules are place of taxation rules other than

the “general” rules

• B2B and B2C: Guidelines 3.7 & 3.8 deal with

“specific” rules for supplies of services and intangibles

to consumers and/or businesses

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Services supplied

Type of Service

General Rule Specific Rules

B2B Any/allCustomer Location(Guideline 3.2)

Guidelines 3.7 & 3.8

B2C

On-the-spotPlace of performance(Guideline 3.5)

Guidelines 3.7 & 3.8

OtherCustomer’s usual residence(Guideline 3.6)

ALL these rules (general and specific):

have the objective of achieving Guideline 3.1: the destination principle

recommend outcomes, not the detailed design of legal rules

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 102 of 226


• The Guidelines prescribe outcomes/objectives, not mechanisms (para 6)

• Different approaches to legislating rules that are consistent with the guidelines can include:

– Categorisation:

• place of taxation = place of supply

• single proxy for each category

– Iterative:

• place of taxation = place of supply + zero-rating

• layering of proxies for most/all supplies

– Hybrids

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


What is NOT a specific rule?

• Any rule that uses a proxy other than one specified in the general rules, but with the objective and actual effect of taxing at the place specified by the general rule

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 103 of 226


Example (different proxy but not a specific rule):

Hairdresser in Country A cuts the hair of consumerfrom Country B, who is in Country A on holiday

• Hairdressing = an ‘on-the-spot’ service

– General rule means it should be taxed where performed

• EU VAT Directive: categorisation approach – no special rule for hairdressing Art 45 general rule applies – place of supply = place of taxation = supplier location

• NZ GST: iterative approach – if NZ is Country A, place of supply = NZ (supplier residence/place of performance) – not zero-rated (customer = non-resident but is in NZ) – place of taxation = NZ

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


• A specific rule identifies the place of taxation as somewhere other than the place identified by the general rule

• Guideline 3.7 sets out 2 pre-conditions for applying a specific rule:

– the general rule does not lead to an appropriate result;

AND

– an alternative place of taxation would lead to a significantly better result

• Both pre-conditions are assessed by reference to neutrality, efficiency of compliance and administration, certainty & simplicity, effectiveness, and fairness

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 104 of 226


• A specific rule identifies the place of taxation as somewhere other than the place identified by the general rule

• Guideline 3.8 sets out a specific rule for B2B and B2C supplies of services and intangibles directly connected with immovable property:

– for such services, the place of taxation should be the place where the immoveable property is located

– requires a very close connection between the services and particular immoveable property

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Other possible specific rules?

1. Services physically performed on moveable tangible property, e.g. repairing a watch for consumer from Country B:

a. consumer brings watch into store in Country A for repairs

b. consumer sends watch to Country A for repair

2. Services connected with exports of goods

a. preparing and packing for transport

b. insurance

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 105 of 226


Other possible specific rules?

Services supplied to a tourist ordinarily resident in Country A who visits Country B for a holiday:

(1) & (2) Online hotel booking services (Country C supplier)

(3) Hotel accommodation in Country B

(4) Global roaming services using home telecoms supplier

(5) Telecoms services through a telephone booth in Country B

(6) Telecoms services using a Country B SIM card & prepay account

(7) Computer & Internet access at an Internet café in Country B

(8) Online language learning course (enrolment, payment, and initial lessons while in Country B; Country D supplier).

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

❽

❼

❹

❶

❸

❺❻

❷

Country A Country B

Country C Country D

Online Hotel Booking Platform: Supplier & Server

Education:Institution, teacher, class-room, infrastructure

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 106 of 226


Conclusions?

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 107 of 226

of 226


PLENARY SESSION B

SPECIFIC RULES FOR DETERMINING THE PLACE OF TAXATION OF B2C


Colin Ager, BIAC

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


• Businesses look for :

– Certainty

– Consistency

– Simplicity

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 109 of 226


• Main Rules will not always be appropriate

• Recognise the need for Specific Rules

but

• Follow Guideline 3.7 & 3.8

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


• Specific Rules = more VAT Registrations

• Consider recommended approaches in Chapter 3

• Compliance needs to be simple and cost effective

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 110 of 226

SESSION 4



*********

Chair: David Hollinrake, SADC

Speakers:

Massimo Morarelli, Italy

Walid Loussaief, Tunisia

Page 111 of 226

of 226

PARALLEL SESSIONS C AND D:

ENSURING EFFECTIVE VAT COLLECTION IN CASES WHERE THE SUPPLIER IS NOT

LOCATED IN THE JURISDICTION OF TAXATION

*********

PARALLEL SESSION C COLLECTING THE VAT ON SUPPLIES MADE BY NON-RESIDENT SUPPLIERS

Moderator: Maria Soledad Salman Navarrete, Chile

Speakers:


Hiroko Matsui, Japan

Eri Kataoka, Japan


Rapporteur: Jo Drum, Australia

Page 113 of 226

of 226


PARALLEL SESSION C

COLLECTING THE VAT

ON SUPPLIES MADE BY

NON-RESIDENT SUPPLIERS


__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


• Cross-border supplies of services

– Destination principle

– B2B – taxable by reverse charge mechanism (2001)

– B2C

• From 1 July 2011: VAT on supplies of electronic services

• Applying a simplified registration scheme for non-resident suppliers

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 115 of 226


• 2011 VAT rules for B2C e-services

– Background and key objectives

• Domestic suppliers VAT liable - foreign suppliers were not taxable

• Increase in cross-border e-commerce market

• Competitive distortion and VAT revenue losses

Need of a level playing field

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


• Main features of the simplified scheme– Non-resident suppliers may opt to use the scheme

(alternatively ordinary VAT registration)

– Threshold (50 000 NOK)

– Services covered by the scheme

– Simplified on-line registration and reporting procedures

– Simplified documentation requirements

– No input VAT deductions –separately apply for VAT refunds

– Payments

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 116 of 226


0

20

40

60

80

100

120

140

160

Q3 '11

Q4 '11

Q1 '12

Q2 '12

Q3 '12

Q4 '12

Q1 '13

Q2 '13

Q3 '13

Q4 '13

Q1 '14

Q2 '14

Q3 '14

Q4 '14

Q1 '15

Q2 '15

Registration figures (accumulated)

Source: The Norwegian Tax Administration

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


46.9

59.6 59.8 58.0 56.9

67.7

81.0 78.785.5

99.1

110.0106.3

115.3

139.9133.6

128.3

0

20

40

60

80

100

120

140

160

Q3 '11

Q4 '11

Q1 '12

Q2 '12

Q3 '12

Q4 '12

Q1 '13

Q2 '13

Q3 '13

Q4 '13

Q1 '14

Q2 '14

Q3 '14

Q4 '14

Q1 '15

Q2 '15

Revenue figures – million NOK

Source: The Norwegian Tax Administration

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 117 of 226


• Key issues in designing and applying the scheme– Threshold, intermediaries, identification of the

customer

– How to facilitate compliance for non-resident suppliers?

• Obligations limited to what is strictly necessary for the effective tax collection

• Simplicity and flexibility

– OECD International VAT/GST Guidelines

– Strengthening international administrative cooperation in the area of VAT

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 118 of 226


PARALLEL SESSION C

COLLECTING THE VAT

ON SUPPLIES MADE BY


Hiroko Matsui & Eri Kataoka, japan

1

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Introduction・The Criterion for determining the place of taxation for cross-

border supplies of electronic services has changed from 2015 Oct 1.

・ (before revision) Location of the office of service provider⇒ (after revision)Address of the service recipients

Japan’s Consumption Tax is levied on electronic services provided by foreign business suppliers.

・ BackgroundCompetitive inequality between foreign and domestic businesses

・ Definition of electronic servicesServices supplied via electronic and telecommunication networks, excluding those ancillary to other transactions

2

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 119 of 226


B2B electronic servicesB2B electronic services are defined as following as we do not have a VAT Number system.・Ｄｅｆｉｎｉｔｉｏｎ of “B2B electronic services”

- The nature of the services(example: advertising services)

- Terms and Conditionsthat normally are limited to businesses

・ Reverse charge mechanism

Tax office

Japan

<Taxpayer>

Japanese business

Foreign business

Overseas

Filing taxreturnsTax payment

Provision of services

3

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


B2C electronic services・ Any electronic services other than electronic

services defined as “B2B electronic services”(Not limited to services only consumers receive but also

include services received by businesses)・ Foreign businesses are obliged to file and pay tax

Foreign business

OverseasJapan

Consumers Japanese business

Tax office

Provision of services

Filing taxreturnsTax payment

4

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 120 of 226


Taxable Person・ Threshold for small business: 10million JPY or less

taxable sales during the Base Period(second proceeding business year before the Tax Period）（* 10million JPY is equivalent to 73.7 thousand EUR

and 83.1 thousand USD (as of Oct. 2015))・ The same threshold amount is equally adapted to foreign

and domestic businesses.

・ Designation of Tax AgentThe foreign business who is obliged to file a tax return must designate a resident who does necessary procedures related to tax payments on behalf of the taxpayer.

5

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Enhancement of Compliance with respect to B2C electronic services

Japanese business as a customer is not eligible for purchase tax credit except when a foreign supplier is a “Registered Foreign Business”.

Registered Foreign Business

・ Foreign business can opt for registration.＊The foreign business has an obligation for

paying consumption tax even if not being registered as a “Registered Foreign Business”.

* Japanese business as a customer is eligible for purchase tax credit if a foreign supplier is a “Registered Foreign Business”. 6

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 121 of 226


Registered Foreign Business

・ While being a “Registered Foreign Business”, threshold for small business would not be applied.

・ Designation of Tax Accountant Proxy(If the foreign business supplier does not have a office providing B2C electronic services in Japan.)

・ Publication of “Registered Foreign Businesses” on theNTA website(Name, Address, Location of the office providing B2Celectronic services in Japan, Registration Date)

7

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Points and Questions・ The importance to well inform businesses of detailed

prescription(the points different from other countries).

・ What would be effective rules for the methods of

determining customer’s location?

・ To enhance foreign businesses’ compliance, how and

by what schemes could governments provide

incentives?

・ What cross-border services (other than electronic

services) are causing competitive inequality by VAT system between foreign and domestic businesses?

8

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 122 of 226


PARALLEL SESSION C

COLLECTING THE VAT

ON SUPPLIES MADE BY



__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 123 of 226


22 .

> $50k

108 .

< $10,000150

97% $22m

0.6%

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


• These numbers are business critical

• Computed daily

• From a single ERP system

• Using a unique set of logic specifically designed by us

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 124 of 226


Constraints of the Logic:

• How do we sell?

• How do we collect data?

• How do we get paid?

• When do we get the data?

• How is the data?

Direct or

via Intermediaries

Instantaneously or

with some Time Delay

Individual or

Aggregate

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 125 of 226


Practical Considerations:

• Communication

• Thresholds

• Degree of complexity of the system/rules

• Intermediary Rules

• B2B

• Registration Process

• Invoices / Receipt

• Submission of Return

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


It is possible to have a system that:

1) Achieves tax authorities’ objectives of level playing field and tax collection;

And

2) Is reasonably simple to comply with

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 126 of 226

PARALLEL SESSIONS C AND D:

ENSURING EFFECTIVE VAT COLLECTION IN CASES WHERE THE SUPPLIER IS NOT

LOCATED IN THE JURISDICTION OF TAXATION

*********

PARALLEL SESSION D

ENFORCING VAT IN CASES WHERE THE SUPPLIER IS NOT LOCATED IN THE JURISDICTION

OF TAXATION

Moderator: Steve Howlin, Australia

Speakers:

Walter Hellerstein, University of Georgia John Farrell, Ireland

Stefan Teuber, Germany


Page 127 of 226

of 226


PARALLEL SESSION D

ENFORCING VAT IN CASES WHERE THE SUPPLIER IS NOT LOCATED IN THE JURISDICTION OF TAXATION

Prof.Walter Hellerstein, University of Georgia Law School

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Introduction

• The Guidelines and the BEPS Report recommend greater use of OECD and other instruments for international administrative cooperation in tax matters to:

– Support the consistent application of the principles of the Guidelines to avoid double taxation and unintended non-taxation

– Ensure effective collection of VAT/GST on cross-border trade in services and intangibles, particularly with respect to supplies by nonresident suppliers

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 129 of 226


Principal Types of Administrative Cooperation in Tax Matters

• Exchange of information– Exchange of information on request

– Spontaneous exchange of information

– Automatic exchange of information

– Simultaneous tax examinations

– Tax examinations abroad

– Joint audits

– Industry-wide exchange of information

• Assistance in recovery

• Service of documents

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Existing Instruments – Multilateral

• The Multilateral Convention on Mutual Administrative Assistance in Tax Matters (as amended by 2010 Protocol)

– Ratified by over 60 countries, extended to over 10 jurisdictions, and ratification process continues in other countries

– Broad scope, including VAT/GST

– Includes the main types of administrative cooperation, including assistance in recovery and service of documents

– Subject to possible reservations

– Subject to general limitations (assistance may be refused if it is contrary to laws of Contracting State, to public policy, or would imply disclosure of trade, business, commercial or industrial secrets)

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 130 of 226


Existing Instruments – Regional

• EU Regulations

• Nordic Mutual Assistance Convention on Mutual Administrative Assistance in Tax Matters

• Inter-American Center of Tax Administration (CIAT) Model Agreement for the Exchange of Tax Information

• African Tax Administration Forum (ATAF) Agreement on Mutual Assistance in Tax Matters

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Existing Instruments – Bilateral• Articles 26 and 27 of the OECD Model Tax Convention on

Income and on Capital and of the UN Model Double Taxation Convention– Apply to taxes “other than those on income and capital” since

2000, so now cover VAT

– Allow information to be exchanged on request, automatically and spontaneously

– Provide for assistance in the collection of revenue claims

– Subject to the same general limitations as the Multilateral Convention (assistance may be refused if it is contrary to the laws of Contracting States, to public policy or implies disclosure of trade, business, industrial, etc. secrets)

– Provisions are subject to reservations by the contracting parties to bilateral agreements

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 131 of 226


Existing Instruments – Bilateral• Tax Information Exchange Agreement (TIEA)

– Includes a bilateral and a “multilateral” models (parties wishing to be bound by a “multilateral” Agreement must specify the parties vis-à-vis which they wish to be so bound)

– Originally meant to apply to direct taxes, the Contracting Parties may agree to extend the Agreement to indirect taxes

– Provides for exchange of information on request only (but Contracting Parties can extend it to automatic and spontaneous exchanges)

– Subject to any restrictions decided by the parties to a bilateral or multilateral agreement

– Subject to the same general limitations as the Multilateral Convention (assistance may be refused if it is contrary to the laws of Contracting States, to public policy or implies disclosure of trade, business, industrial, etc. secrets).

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


OECD Tools to Facilitate Implementation of Administrative Assistance Instruments

• The OECD has developed tools to facilitate the implementation and use of the administrative assistance instruments:

– The Model Memorandum of Understanding on Automatic Exchange of Information and the related Technical Standard (the standard transmission format STF) used as the basis for an operational working agreement between tax administrations

– Model Memoranda of Understanding on assistance in tax collection and recovery based on Article 27 MTC/Article 11 of the Multilateral Convention used as basis for operational working agreements between the competent authorities.

– Manual on Exchange of Information on the practical aspects of the exchange of information.

– Manual on the Implementation of Assistance in Tax Collection on the practical aspects of assistance in tax collection

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 132 of 226


Concluding Observations

• Preceding discussion was largely theoretical – what are the available instruments for international administrative cooperation to ensure effective collection by nonresident suppliers?

• Leads to next set of questions: the instruments may work in theory, but what works in practice to support effective VAT collection?

• One answer – simplified registration and compliance regimes – focus of parallel session C; our focus is on instruments for mutual administrative cooperation.

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 133 of 226

of 226


PARALLEL SESSION D


John Farrell, Ireland

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Audit/Control

• Our experience once out-of-country supplier identified/contacted

– Do Register– Do Comply

• BUT how to identify

– In-country data protection restictions on transaction data mining

– Other-country restriction on provision of transaction data for mining in the absence of evidence of fraud or crime

– SNA Project

– Stakeholder influence – tax practitioners/intermediaries influence/persuade clients into compliance

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 135 of 226


EU VIES Exchange of supplier/recipient data • Aggregate level data by supplier exchanged between 28 EU MS

on a quarterly basis [High compliance cost]

– Enable MS of recipient to ensure registration and payment compliance

– Mutual Assistance required to obtain transaction level details

• Issues– Delay in VIES filing (quarterly);

– Delay in MS identifying problem recipients;

– Delay in other MS responding to MA request for transaction level details;

– Delay in confronting the recipient with the MA evidence.

• Result: – Bogus recipients may have disappeared or have no assets to pay VAT

liability.

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Audits/Multi-Lateral Controls

• Business preference is for in-country audit with results shared with other MS

• Member States can opt out of Multi-Lateral Controls (MLC)

• Which Member State sets the agenda for a MLC?

• Which Member State(s) has responsibility for resolving issues that arise in a MLC?

• Post-audit feedback on issue resolution!

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 136 of 226


Area for further consideration [Low compliance cost]

• Implement Article 5 of EU Directive 2000/31 or equivalent

• Supplier must show VAT number including country prefix on website and issued documentation

• Make it compulsory for companies to provide the VAT identification number to the national Company Registry

• Provide information to consumers to allow them to check with the tax administration that the VAT identification number is valid

• Mutual assistance requests can then be VAT identification number specific

• The power to request mutual assistance based on VAT identification number may be lead to a compliance bounce

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Conclusions

• There is a need for enhanced international cooperation in the area of VAT

• OECD is the right forum for this work

• Most businesses want to comply

• Simple steps with minimal compliance costs should be explored/tried

• Data mining should be a key compliance tool but data restrictions may need to be addressed

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 137 of 226

of 226


PARALLEL SESSION D


Stephan Teuber, Germany

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Background

• Challenges for Tax Administrations:

– Characteristics of the Digital Economy

– Destination Principle

– B2C-Transactions

• Discussing issues of international cooperation at global level is necessary

• Short-term enhancement is very desirable

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 139 of 226


Legal Instruments

• Multilateral Convention on Administrative Assistance in Tax Matters could be mostpromising

• Advantages– Already existing

– Intended to have a global reach

– Framed to provide for all possible forms ofadminstrative cooperation

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Types of Adminstrative Cooperation

• Tax Administrations need information to identify– taxable persons carrying out supplies into or in their

jurisdiction

– types and volume of these supplies

• Standardised and systematical Exchange ofInformation

• Promising if– as simple as possible

– the costs for tax adminstrations and businesses arekept to a minimum

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 140 of 226


Possible Approaches

• Development of a standard by the OECD stepby step

• Keep everything as simple as possible

• Information to be collected and exchangedshould be:– defined clearly

– kept to a minimum in terms of the number of thedata as well as the period for which it will becollected and exchanged

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Thinking further: An additional „Virtual Network“ as best practice?

• A network of officials responsible foradministrative cooperation in the area of VAT– Covering all aspects of administrative cooperation

in the area of VAT

– Point of contact for officials

• Helpful to ensure an effective cooperationbetween the participating jurisdictions

• OECD could serve as a platform

__________________________________________________________________________________

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Page 141 of 226


Conclusions

• There is a need for enhanced international cooperation in the area of VAT

• Legal instruments are available, but wehave to begin using them for VAT purposes

• Developing simple standards seems to bemost promising

• OECD is the right forum for this work

__________________________________________________________________________________

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Page 142 of 226

SESSION 5

ENDORSING THE COMPLETED SET OF GUIDELINES AND LOOKING AHEAD

*********

Chair: Pascal Saint-Amans, OECD

Speakers:

Jo Drum, Australia

Nii Ayi Aryeetey, Ghana


Page 143 of 226

of 226

SESSION 6

COLLECTING VAT /GST ON IMPORTS OF LOW VALUE GOODS

*********

Chair: Ian Ayrton, Australia

Scene setting: Kshama Purohit, United Kingdom

Speakers:

Ana-Maria Caraman, European Commission

P.N. Pandey, World Customs Organisation

Steven Pope, BIAC

Page 145 of 226

of 226


PLENARY SESSION 6


Kshama Purohit, United Kingdom

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


SCOPE - Collecting VAT on Importation of Low Value Goods

• Background to the work

• Concerns to address

• Methodology to work

• Options

• Analysis Criteria

• Looking Ahead

__________________________________________________________________________________

__________________________________________________________________________________

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Page 147 of 226


BACKGROUND TO THE WORK

• Global Market Place

• Evolving Technology

• Competitive Distortions

• Base Erosion and Profit Shifting – BEPS

• Action 1: Addressing the Tax Challenges of the Digital Economy

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


CONCERNS TO ADDRESS

• Increase in volume of imports of low value goods

• Competitive Distortions

• Incentives

__________________________________________________________________________________

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Page 148 of 226


SCOPE OF WORK

• Limited to collection of VAT/GST on sales of goods to consumers –B2C transactions only

• Report only provides options of collection models

• No model recommended – no easy solutions

• Jurisdictions to decide – what works best for them

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


STAKEHOLDERS COLLECTION MODELS

Purchaser Purchaser Collection

Vendor Vendor Collection

E-commerce platformsIntermediary CollectionTransporters

Financial Intermediaries

Customs/Tax Administrations Traditional Collection

__________________________________________________________________________________

__________________________________________________________________________________

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Page 149 of 226


ANALYSIS CRITERIA – OTTAWA FRAMEWORK

• Neutrality – similar transactions are subject to similar taxation

• Efficiency – compliance costs for taxpayer and administrative costs should be minimised

• Certainty & Simplicity – clear & simple to understand tax & duty rules

• Effectiveness – reduction or removal of exemption threshold gives right tax collected in right place (e.g. place of consumption)

• Fairness – potential for tax evasion & avoidance minimised

• Flexibility – systems should be flexible & dynamic

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Collection Model Disadvantages Advantages

Traditional • Paper based system • Burdensome on

tax/customs authorities

• Advances in IT development can help improve current inefficiencies.

Purchaser • Highly reliant on consumer to comply

• Increased compliance burden/costs to tax authority

• No compliance costs for vendors

Vendor • Possible additional burdens on business and tax authority.

• Burdens could be reduced with simplification.

Intermediary • Not possible for all intermediaries

• Systems already in place for some intermediaries e.g. express carriers

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Page 150 of 226


LOOKING AHEAD

• Report gives Jurisdictions lots of good quality information & analysis.

• No Collection model recommended.

• Is a complex area and much more work is needed - No quick fix

• Reform needs to be complemented with international administrative co-operation between tax/customs authorities.

• Important distinction – trade in goods is not the same as trade in services

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Page 151 of 226

of 226


PLENARY SESSION 6


Ana-Maria Caraman,

European commission

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Digital Single Market – Commission Juncker priorities

– The Digital Single market is among the 10 strategic priorities of the Juncker Commission

– 6 May 2015 – EU Digital Single Market strategy: http://ec.europa.eu/priorities/digital-single-market/index_en.htm

16 initiatives under 3 pillars for Europe’s digital future

VAT included in Pillar I Better online access to digital goods and services

– Simplifying VAT rules – legislative proposals to reduce the administrative burden on businesses arising from different VAT regimes

__________________________________________________________________________________

__________________________________________________________________________________

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Page 153 of 226


EU Context

– December 2011 – Communication on the future of VAT

"a level playing field for non-EU and EU suppliers also has to beensured. The treatment of small consignments and other internet sales isto be tackled in this context."

– May 2014 – Commission's Expert Group on taxation of the digital economy: Remove the VAT exemption for imports of small consignments, due to

distortions for domestic and intra-EU trade.

Enable suppliers to account for sales of goods in the EU (max. valueEUR 150 - customs threshold) through a single VAT registration andpayment system.

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


International Context– OECD/G20 – Base Erosion and Profit Shifting (BEPS),

Addressing the Tax Challenges of the Digital Economy report (2013-2015) OECD survey among members

Challenges posed by VAT exemption on small consignments: growing losses of VAT revenue; growing risks of unfair competitive pressures on domestic retailers

Low Value Imports Task Team - Report on the collection of VAT/GST on imports of low value goods

– WCO Policy Committee: Explore alternate models of revenue collection for low-value cross-

border e-commerce;

Cooperation with OECD, UPU and other relevant stakeholders to develop solutions for e-commerce challenges

__________________________________________________________________________________

__________________________________________________________________________________

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Page 154 of 226


Economic Context– Significant importance of Digital Economy and

continuous growth E-commerce – the fastest growing retail market in Europe. Depending

on sources growth in 2014: between 17% to 18.4%), forecast until 2016: continue the growth at similar rate.

Share of online retail sales to increase from 12.7% (2012) to 21.5% by 2018

– Ensuring Taxation from the Digital Economy is a major concern

– First steps taken with electronic services (MOSS, 2003 and 2015)

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


VAT exempt imports of small consignments - Problems in EU

– Important administrative burden for customs administrations and operators when dealing with the customs clearance procedures

– Distortion of competition: similar goods sold on the EU market are subject to VAT at a rate up to 27%

– Negative impact on businesses and employment

– Indications of significant amounts of VAT foregone in EU, that will increase due growth in e-commerce

__________________________________________________________________________________

__________________________________________________________________________________

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Page 155 of 226


Small consignments study

– Carried out for the European Commission by EYbetween 2014 and 2015

– Scope: Overview of the legal framework and procedures in place in the 28

EU member States Economic analysis of the small consignments market from 1999

until 2013, including estimation of VAT forgone

– Published on 22 May 2015: http://ec.europa.eu/taxation_customs/common/publications/studies/index_en.htm

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Small Consignments Study – procedures and costs/fees

__________________________________________________________________________________

__________________________________________________________________________________

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Page 156 of 226


Small Consignments Study – economic analysis (estimated figures)

– Number of small consignments increased in the EU:

Volumes: from ~30 million in 1999 to ~115 million in 2013,

Percentage: increase of 286%.

– VAT foregone

Increased from EUR 118 million in 1999 to EUR 535 million in 2013.

Higher values in 2008 - 2011, with a maximum of ~ EUR 640 million (influence of the VAT exemption abuse by Channel Islands traders in the UK)

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Proposed VAT Approach

– Presented under the DSM strategy

– The Commission will make a legislative proposal in 2016 to reduce the administrative burden on businesses arising from different VAT regimes including:

I. extending the current single electronic registration and payment mechanism to intra-EU and 3rd country online sales of tangible goods to final consumers,

II. introducing a common EU-wide simplification measure (VAT threshold) to help small start-up e-commerce businesses,

III.allowing for home country controls including a single audit of cross-border businesses for VAT purposes, and

IV. removing the VAT exemption for the importation of small consignments from suppliers in third countries.

__________________________________________________________________________________

__________________________________________________________________________________

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Page 157 of 226


Proposed VAT approach – imports– Scope

Goods with values below 150 EUR (customs duties threshold)

Consideration for goods with restrictions (excise, etc.)

– Customs clearance of small value goods Advanced VAT collection:

Vendor registration and collection; or

Third party collection (e.g. postal/courier/customs agents, market place, financial institution, etc.); or

Current system with improvements (simplified declarations) as fallback position if no VAT collection at sales stage

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Proposed VAT approach - imports (2)

– Simplifications for advanced VAT collection: electronic VAT registration to a single web-portal in a EU MS of its

choice(i.e., extended MOSS),

simplified VAT compliance self-assessment of VAT – declare and pay the VAT at the end of the reporting period on the total transactions, not per transaction

simplified customs procedure – identification of consignment/vendor via a pre-defined system allowing a fast track declaration in customs

__________________________________________________________________________________

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Page 158 of 226


PLENARY SESSION 6


P. N. Pandey,

World Customs Organization

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Increasing Low-value cross-border e-commerce - Challenges

Trade facilitation and security- Increasing volumes – ensuring faster clearance and security

- Disaggregation of large shipments into a number of small shipments

- B2C, B2B2C & C2C – Limited knowledge on importers and supply chain (new class of traders/occasional mailers)

- Absence of electronic reporting (postal items)- Data Quality: accuracy and adequacy

Fair and efficient collection of duties and taxes - Splitting, under-invoicing and mis-declaration

- De minimis- Smuggling of high-value dutiable and excisable goods

Society Protection - Criminal exploitation of e-commerce

- Illicit trade (e.g. restricted & prohibited goods)

- Drug trafficking- Counterfeited and pirated goods - Illicit financial flows & Money laundering

__________________________________________________________________________________

__________________________________________________________________________________

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Page 159 of 226


De Minimis

Why

-RKC and WTO provisions-Administrative costs of processing the imported low-value items outweigh the

revenue gained

Challenges

- Revenue implications

- Distortionary impact on domestically produced goods- Lack of harmonization of de minimis thresholds for Customs duties and taxes

Principle

- Balance between revenue collection from a large number of low-value shipments and the processing costs

- Simplified risk-based e-processing - lower de minimis

- Some Tax authorities are considering eliminating de minimis for VAT/GST

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Discussions at the WCO:

Implications of e-commerce on Revenue Collection - December 2014 and June 2015 Policy Commission

Remit and scope of ‘de minimis’ provisions of the RKC (Transitional Standard 4.13 of General Annex)– October 2015 RKC Management CommitteeObligatory but flexible approach

__________________________________________________________________________________

__________________________________________________________________________________

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Page 160 of 226


Alternate Models of Revenue Collection

Vendor Collection Approach

Intermediary Collection Approach

- Collection by the postal operators, express service

providers or transporters (FedEx, DHL, etc.)- Collection by commercial agents that provide a trading

framework for businesses (EBay, Amazon, Facebook, Alibaba, Tencent, etc.)- Collection by financial intermediaries (Paypal, Alipay, Tenpay, WeChat, etc)

Potential considerations: Exploring impact on Customs environment Strengthening security and other risk profiling and mitigation mechanisms Adapting procedures for an efficient identification of VAT/GST pre-paid

shipments and fast-tracking thereof and fallback mechanism Developing simplified return/refund procedures Enhancing cooperation and exchange of information between Customs and

Tax authorities

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Customs approach

Risk based approach

- targeting of high-risk consignments

- enhanced facilitation to legitimate shipments

Transactional processing to account processing

Ensuring integrity of tax assessments

Advance electronic information (between Post and Customs), for pre-arrival risk analysis

Predictive analytics capabilities and cross-border network connections, for an early detection and prevention of risks

Exchange of information between Customs and e-commerce intermediaries (vendors/e-marketplaces, transporters and financial intermediaries)

Access to express operators/freight forwarders systems

Trusted Trader/AEO programmes in e-commerce supply chain

Closer cooperation with other agencies and stakeholders

Coordinated Border Management and Single-Window

Enhanced international cooperation

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 161 of 226


Thank you!

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 162 of 226


PLENARY SESSION 6


Steven Pope, BIAC

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Current situation

• No harmonized treatment of VAT on E-Commerce.

• Complex registration requirements in some regions.

• VAT collection based on a transactional basis via Customs declarations.

• Customs v VAT legislation.

• The growth in E-commerce is stretching Customs.

__________________________________________________________________________________

__________________________________________________________________________________

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Page 163 of 226


Future proposals

• The need for a solution to be flexible enough to accommodate both large e-traders and SMEs.

• The need for solutions to be as simple as possible.

• Must be cost effective both for Business and Tax Authorities.

• Must be robust from a compliance perspective.

• Customs requirements must align with the need for simplicity.

• Solutions must involve both Government and the Private Sector.

__________________________________________________________________________________

__________________________________________________________________________________

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Page 164 of 226


SUPPORTING THE GUIDELINES IN PRACTICE DISPUTE MINIMISATION AND APPLICATION IN CASES OF

EVASION AND AVOIDANCE

*********

PARALLEL SESSION E

CO-OPERATIVE COMPLIANCE AN OVERVIEW OF MODELS AND EXPERIENCES

Moderator: Marijn Verhoeven, World Bank Group

Speakers:

Michael Hewetson, OECD Marcio F. Verdi, CIAT


Rapporteur: Sze Teen Wong, Singapore

Page 165 of 226

of 226


PARALLEL SESSION E

CO-OPERATIVE COMPLIANCE AN

OVERVIEW OF MODELS AND EXPERIENCES

Michael Hewetson, OECD

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Co-operative compliance - Overview:

• What is co-operative compliance?

• Tax Administration benefits

• Taxpayer Benefits

• FTA Member Experience

• Challenges/Opportunities

• Conclusion

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Page 167 of 226


Co-operative compliance - Overview

• Tax Administrations have long advocated trust relationships

• OECD, Co-operative Compliance Framework published 2013-based on experiences of 24 countries with models

• No agreed definition – but systemic approach which is more than a relationship

• Obligation based, with minimum disclosure & transparency

• Early disclosure of tax risk essential to programme

• To date approach has been mainly within the bounds of large taxpayer units and with MNE’s

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Co-operative compliance – Administration benefits

• Changes the tax paradigm

• Increased commercial awareness

• Real time management of emerging tax risks

• Opens up new business arrangements and options

• Reduced administrative costs

• Better compliance

__________________________________________________________________________________

__________________________________________________________________________________

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Page 168 of 226


Co-operative compliance - Taxpayer Benefits• Greater certainty over tax position/treatment

• Improved risk management practices

• Strengthens corporate governance

• Opportunity to highlight problems with the tax code or the administration

• Faster resolution of issues

• Reduction in tax compliance cost

• Linkage to tax control framework

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Co-operative compliance - FTA Experience

• Over 30 FTA bodies now using or testing approach

• Each country has adopted framework to suit its needs

• Value clearly established

• Compliance with the spirit as well as the letter of the law

• Invitation or registration

• Aid to dispute management

• No evidence of partiality but society attitudes need watching

• Cultural change shouldn’t be under estimated

__________________________________________________________________________________

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Page 169 of 226


Co-operative compliance – Opportunities• Expansion of the concept into other key segments based on tax

risk, opportunity and need

• What impact will BEPS and AEOI have on co-operative compliance, particularly across borders?

• Mutually exclusive approaches to managing data will influence revenue bodies role in the system and relationship with the taxpayer

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Co-operative compliance – Summary

• Model is based on trust and transparency

• Fits well with modern thinking on tax risk

• More work needed on measuring effectiveness

• Involves active change management

• Value clearly established

__________________________________________________________________________________

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Page 170 of 226


PARALLEL SESSION E

CO-OPERATIVE COMPLIANCE AN OVERVIEW OF MODELS AND

EXPERIENCES

Marcio F. Verdi, CIAT

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Márcio F. Verdi

Executive Secretary

Interamerican Center of Tax Administrations - CIAT

Third Meeting of the OECD Global Forum on VAT

Cooperative ComplianceA trend or a need?

__________________________________________________________________________________

__________________________________________________________________________________

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Page 171 of 226


CIAT working paper results

15 Countries = 37 initiatives

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


CIAT working paper results

Number of initiatives by category

__________________________________________________________________________________

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Page 172 of 226


Argentina

Meetings held within the

sphere of the Consultative

Council and special

commissions

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Mexico

Conclusive Agreements

150 requests received up to march 30, 2014

__________________________________________________________________________________

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Page 173 of 226


India

LTU Scheme (Large Taxpayer Unit)

As on July, 2013, four LTUs in four major citiesof India are functioning and about 170 units areregistered in these four LTUs

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


El Salvador

Corporate Compliance Customs Program (CCCP)

As of April 2014, 35 companies are assigned to the program, for which in selectivity has been reduced by 100%; and assistance times have been reduced by at least 50%

__________________________________________________________________________________

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Page 174 of 226


Dominican Republic

Sectorial Agreements

• Provide certainty• Improve transparency• Reduce administration and compliance costs• Improve compliance

__________________________________________________________________________________

__________________________________________________________________________________

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Page 175 of 226

of 226

__________________________________________________________________________________

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Horizontal Monitoring

- Strategic change in 2005

- Mutual trust, transparency, understanding

- More business involvement

- Work in real time

2Cooperative compliance in the Netherlands, 6 November 2015

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


PARALLEL SESSION E

COO-PERATIVE COMPLIANCE AN OVERVIOEW OF MODELS AND

EXPERIENCES


Cooperative compliance in the Netherlands, 6 November 2015 1


PARALLEL SESSION E

CO-OPERATIVE COMPLIANCE AN

OVERVIEW OF MODELS AND EXPERIENCES


Cooperative compliance in the Netherlands, 6 November 2015 1

Page 177 of 226


Compliance agreement- Common starting points and working practices

- ‘In control’ / Tax Control Framework

- No ‘one size fits all’ approach

- Certainty; it works both ways

- Agree to disagree


__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Counterparts- Focus on (very) large business (pilot of 20)

- SME segment

- Individual and overarching agreements

- Tailor made vs attitude and responsibilities

- Free of choice


__________________________________________________________________________________

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Page 178 of 226


International - Similarities and differences

- Compliance Risk Management Strategy

- All or nothing?

- Conditions, goals, target groups, definitions

- Cross border?


__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Evaluation & way forward- Positive experiences, especially large business

- More certainty

- Lower administrative burden and compliance costs

- SME’s?

- Committee Horizontal Monitoring 2012


__________________________________________________________________________________

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Page 179 of 226


‘Tax supervision – Made to measure. Flexible when possible, strict whennecessary’

- Appropriate approach

- Expanded awareness and further development

- Not ‘the’ but ‘a’ supervision instrument

- Justified trust


__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Further recommendations- Measure effectiveness and efficiency

- Basis for adjusted supervision

- Criteria for level of ‘in control’

- Guidance on quality of Tax Control Frameworks

- 2013: Tax Administration Guidelines and FTA


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Page 180 of 226


Thank you

Cab Schutte

Ministry of Finance of the Netherlands

[email protected]

+316 18304550


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Page 181 of 226

of 226


SUPPORTING THE GUIDELINES IN PRACTICE DISPUTE MINIMISATION AND APPLICATION IN CASES OF

EVASION AND AVOIDANCE

*********

PARALLEL SESSION F

THE DESIGN AND APPLICATION OF ANTI-AVOIDANCE RULES IN A VAT CONTEXT

Moderator: Didier Cornillet, Credaf

Speakers:

Michael Walpole, University of New South Wales

Bastien Llorca, France Marcos Alvarez, Spain


Page 183 of 226

of 226


PARALLEL SESSION F

THE DESIGN AND APPLICATION

OF ANTI-AVOIDANCE RULES

IN A VAT CONTEXT

Michael Walpole,

University of New South Wales

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


• Evasion; Avoidance; and Abuse – key features

– Evasion: crime/fraud/criminal deception

– Avoidance: structuring/timing/other artifice to take a benefit or to escape a tax consequence

– Abuse: similar to avoidance but born of a different legal paradigm

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Page 185 of 226


• Official responses should align with seriousness of the activity – Evasion attracts criminal sanctions

• Fines

• Imprisonment

• Criminal record

– Avoidance and abuse attract administrative responses

• Removal of the tax benefit– Reconstruction

– Taxation and interest

– Penalties

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


• Methods to eliminate avoidance and abuse in VAT

– A general anti avoidance rule

• examples of the “shotgun” response

• Australia’s Div 165

• New Zealand’s s 76

– Specific anti-avoidance rules

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Page 186 of 226


• Specific anti-avoidance rules– Examples of the “sniper” approach

– Australia s 40-75(2AA) preventing the creation of “new residential premises” through establishment of a property subdivision plan if they were not “new residential premises” immediately beforehand

– New Zealand s 61 – extending liability for unpaid GST from asset-stripped companies to the director/s and controlling shareholders (subject to conditions)

• The pro’s and con’s of general vs specific rules

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


• Does a VAT general anti-avoidance rule have to be very different to income tax?– Australian experience

• Similar but some unique GST (VAT) concepts– Lower than expected GST payable

– Higher than expected input tax credits (ITCs)

– GST being paid later than expected

– ITCs available sooner than expected

– References to

» “scheme from which the avoider got a GST benefit”

» negating disadvantage borne by a loser from the scheme

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Page 187 of 226


• The efficacy of a VAT general anti-avoidance rule

– Australian experience

• Little used but successful so far

• Essential ingredients

– Breadth

– Clarity

– Sound Administrative Law backing

– Purposive interpretation

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Page 188 of 226


PARALLEL SESSION F

THE DESIGN AND APPLICATION

OF ANTI-AVOIDANCE RULES

IN A VAT CONTEXT

Marcos Alvarez, Spain

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


General anti-Taxavoidance rule

• Significantly artificial or unnaturaltransactions for theachieved results

• No relevant legal oreconomic effectsother than obtainingtax benefits

Abusivetransactions (ECJ

iurisprudence)

• Notwithstandingformal aplication of the law the intendedtax advantge iscontrary to thepurpose of the law

• Essential aim: obtaining a taxadvantage

Glossary of taxterms

• Intention of thearrangement: reduce tax liability

• Although thearrangement could bestrictly legal it isusually in contradiction with theintent of the law

Specific procedure. Consequences: penalties????Marcos Alvarez Suso. Spanish Tax Administration

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Page 189 of 226


General anti-fraud rule

• Sham transactions will be taxedaccordingly to the real transactionsperformed

Glossary of tax terms

• Evasion: illegal arrangements whereliability to tax is hidden or ignored(hiding income of information)

• Fraud: a form of deliberate evasion(fake documents, deliberate false statements)

Consequences: penalties, criminal casesMarcos Alvarez Suso. Spanish Tax Administration

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


• Tax avoidance vs. Tax fraud: the “grey zone” ECJ cases C-255/02 Halifax, C-662/13 Surgicare, etc.

NON DEDUCTIBLE VAT

SUBSIDIARY

DeductibleVAT

Leasing agreement

Legal transaction, tax avoidance, sham transactions???

Marcos Alvarez Suso. Spanish Tax Administration

__________________________________________________________________________________

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Page 190 of 226


• Art. 59 a) VAT Directive 2006/112

• In order to prevent double taxation, non-taxation or distortion of competition,Member States may, with regard to certainservices:

• “consider the place of supply of any or all ofthose services, if situated outside theCommunity, as being situated within theirterritory if the effective use and enjoymentof the services takes place within their territory”


__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


3rd country

recipient

SpanishVAT

WhoseVAT is It?


__________________________________________________________________________________

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Page 191 of 226


• Examples

ADVERTISING

TELECOMMUNICATION MEANS OF TRANSPORT HIRING


__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


• Reverse charge as a mean to prevent revenuelosses. B2B transactions

Supplier Recipient

VAT CHARGED

RIGHT OF DEDUCTION (FULFILLING FORMAL

REQUIREMENTS)

PAYMENT TO THE

TREASURY

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Page 192 of 226


• Reverse charge as a mean to prevent revenuelosses.

Recipient

VAT CHARGED

RIGHT OF DEDUCTION (FULFILLING FORMAL

REQUIREMENTS)

NO PAYMENT

TO THE TREASURY

REVERSE CHARGE

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


VAT Directive 2006/112, arts. 199 and 199 a. RC is an optionfor EU MS national legislation for (amongst others)

TELECOM SERVICESCONSTRUCTION SERVICES

W

OTHER SUPPLIESMarcos Alvarez

__________________________________________________________________________________

__________________________________________________________________________________

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Page 193 of 226


• Challenges of generalised RC

SUPPLIER1 RC SUPPLIER 2 RC RETAILER VATFINAL

CONSUMER


__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________


Other specific anti-avoidance rules in the Spanish VAT system:

• Taxable amount in transactions betweenrelated parties (open market value)

• Special schemes for entrepreneurs(natural persons) in the retailer phase

• Margin scheme for re-sellers of secondhand goods


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Page 194 of 226


THANKS FOR YOUR ATTENTION


__________________________________________________________________________________

__________________________________________________________________________________

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Page 195 of 226

of 226

SESSION 7

SUPPORTING THE GUIDELINES IN PRACTICE: DISPUTE MINIMISATION AND

APPLICATION IN CASES OF EVASION AND AVOIDANCE

*********

Chair: Carlos Achadinha - Canada

Speakers:

Sze Teen Wong, Singapore

Hilde Bervoets, Belgium

Page 197 of 226

of 226

SESSION 8


*********

Chair: Natasha Avedaño Garcia, Colombia

Speakers:

Michael Keen, International Monetary Fund

S. Loretz, HIS Institute for Advanced Studies

Page 199 of 226

of 226

ESTIMATING VAT PASS THROUGH

Michael Keen

OECD Global Forum on VAT

November 6, 2015

Views are mine alone

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Outline

• Issues

• Strategy and data

• Results

• Conclusions

__________________________________________________________________________________

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Page 201 of 226

ISSUES

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

• Who bears the real burden of the VAT?

• What are the determinants of that incidence?

Presentation based on:

Benedek, Dora, Ruud de Mooij, Michael Keen and Philippe Wingender (2015), “Estimating VAT pass through,” IMF Working Paper 15/214

Very basic questions

__________________________________________________________________________________

__________________________________________________________________________________

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Page 202 of 226

• Standard assumption is full and instantaneous pass through. But

• Basic theory predicts it may be otherwise

– Competitive case: depends on supply and demand responses

– Imperfect competition: under-/over-shifting both possible

• So do macroeconomic assessments

– Anticipation and intertemporal substitution

– Menu costs

Typically

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Previous work

Identification a critical issue

• Some look at a narrowly defined VAT change, using similar/related goods as controls. But:

– Can be biased by cross effects

– Broad-based changes of interest

• US studies use prices of same goods in other cities

– But generalizable to VAT?

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Page 203 of 226

• Estimate impact of VAT on consumer prices– Using prices of same goods in other Eurozone countries

as controls

– Dynamic adjustment

• Relate pass through to type of VAT reform– Standard or reduced rate; rate reclassification

– Durables vs non-durables

– Increases/decreases

– Breath of the base that is affected

• Assess robustness of results– Endogeneity

Distinctive features of the analysis

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STRATEGY AND DATA

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Page 204 of 226

• Large monthly panel of 17 Euro-zone countries, 14 years (1999-2013) and 67 consumption goods

• Historical information (rates, reform dates) from annual publications of the EC Directorate General on Taxation and Customs Union (and IBFD)

Panel data compromising….

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• Monthly price data from Eurostat Harmonized Indices of Consumer Prices – tax inclusive

– 67 categories (3-digit level)

– excludes VAT-exempt goods, non-market prices

• Sample identifies 65 distinct reforms– generating 1,231 individual rate changes

…and

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Page 205 of 226

CountryBeginning of sample

Number of VAT reforms

Number of Consumption Categories AffectedStandard Reduced Reclassification

Austria 1999 3 0 0 4Belgium 1999 4 0 0 6Cyprus 2008 6 44 1 17Estonia 2011 0 0 0 0Finland 1999 4 44 30 4France 1999 6 49 6 4Germany 1999 2 51 0 1Greece 2001 6 136 83 2Ireland 1999 7 168 21 4Italy 1999 2 51 1 1Luxembourg 1999 5 0 0 6Malta 2008 2 0 1 2Netherlands 1999 1 41 0 0Portugal 1999 10 242 20 9Slovakia 2009 1 62 0 0Slovenia 2007 4 0 0 8Spain 1999 2 84 28 0

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Number of obs Mean St Dev Min MaxVAT Levels

Standard 107,089 19.24 2.14 15.00 23.00Reduced 41,667 7.92 3.40 2.10 17.00Zero-rated 3,341 0.00 0.00 0.00 0.00

VAT changes

Standard 972 1.05 0.96 -0.83 2.55Reduced 191 0.42 1.98 -6.45 6.45Reclassification 68 -0.32 8.58 -13.38 14.87VAT increase 1,009 1.67 1.69 0.41 14.87VAT decrease 222 -3.02 3.49 -13.38 -0.41

Price changes

HICP Index 155,385 0.01 1.34 -117.96 142.82Others

Unemployment rate 155,385 8.22 4.15 1.70 27.60Real Quarterly GDP growth 155,385 0.38 1.20 -8.50 7.90Consumption weights 155,385 3.38 3.23 0.00 17.56

Summary Statistics

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Page 206 of 226

� �

where

• is the consumer price of good i in country c and month t; is the tax rate j periods ahead

• is elasticity consumer price w.r.t. VAT increase j

periods from now

• Controls include unemployment rate and realquarterly GDP growth and consumption category, country and month fixed effects

Estimating equation

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RESULTS

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Page 207 of 226

Treating all VAT changes the same

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(1) (2) (3)VAT pass through

Pre-Reform 0.12* 0.07 0.08(0.06) (0.07) (0.07)

Contemporaneous 0.17*** 0.15*** 0.15***(0.03) (0.03) (0.03)

Post-Reform 0.11* 0.07 0.09(0.06) (0.06) (0.06)

Total 0.40*** 0.29*** 0.32***(0.09) (0.10) (0.09)

Unemp Rate -0.01***(0.00)

Real quarterly GDP growth -0.01(0.01)

Fixed Effects No Yes YesObservations 155,385 155,385 155,385R-squared 0.00 0.02 0.02

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Page 208 of 226

-0.1

0.0

0.1

0.2

Elas

ticity

-12 -6 0 6 12Month

Coefficient 95% CI

Pass through month by month

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0.0

0.2

0.4

0.6

Cum

ulat

ive

Elas

ticity

-12 -6 0 6 12Month

Coefficient 95% CI

Cumulative pass through

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Page 209 of 226

Distinguishing between types of VAT change

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-0.5

0.0

0.5

1.0

1.5

Cum

ulat

ive

Ela

stic

ity

-12 -6 0 6 12Month

Standard ReducedReclassification

Standard rate, reduced rate, reclassification

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Page 210 of 226

-0.2

0.0

0.2

0.4

0.6

Cum

ulat

ive

Elas

ticity

-12 -6 0 6 12Month

Durables Non-durables

Durables/Non-Durables

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-1.0

0.0

1.0

2.0

Cum

ulat

ive

Elas

ticity

0 25 50 75Month

Consumption share k 90% CICubic Polynomial 90% CI

Consumption share

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Page 211 of 226

(1) (2) (3) (4)

Pooled Increase DecreaseCoefficients

Equal

Pre-Reform 0.41** 0.47** 0.25 0.45

(0.16) (0.21) (0.21)

Contemporaneous 0.32*** 0.23*** 0.59*** 0.07

(0.06) (0.06) (0.19)

Post-Reform 0.24* 0.22 0.29 0.79

(0.13) (0.14) (0.26)

Total 0.97*** 0.92*** 1.14*** 0.58

(0.25) (0.33) (0.24)

Number of VAT changes 1163 978 185

VAT cuts vs. VAT increases

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Addressing possible biases

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Page 212 of 226

• If (counter-cyclical) policy responds to current and expected economic fluctuations, VAT reform could be caused by price changes

• Use narrative approach to identify “exogenous” policy changes driven by fiscal consolidation considerations

• 5 advanced economies for 1980-2009

Robustness: endogeneity

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(1) (2) (3)

Fiscal Consolidation OthersCoefficients

Equal

Pre-Reform 0.35* 0.46* 0.75

(0.20) (0.28)

Contemporaneous 0.23*** 0.47*** 0.02

(0.07) (0.09)

Post-Reform 0.31 0.39 0.88

(0.42) (0.27)

Total 0.90** 1.33*** 0.38

(0.45) (0.32)

Number of VAT Changes 198 636

Endogeneity:Narrative approach

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Page 213 of 226

CONCLUSIONS

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• Who bears the burden?

Standard VAT rate changes:

–consumers: ~100%, producer, ~0%

Reduced rate VAT reform:


VAT reclassification:


• Much of the adjustment occurs before and in month of reform

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Page 214 of 226

• Greater pass through for durables

• Pass through not necessarily greater the broader the base affected

• No sign of strong asymmetries

• Findings quite robust against endogeneity

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Page 215 of 226

of 226


PLENARY SESSION 8


Simon Loretz,

Institute for Advanced Studies

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Reasons for reduced VAT rates

• Mitigate regressive nature of VAT

• Correct distortions from other taxes

• Increase low-skilled labour demand

• Production and consumption externalities

• Provide an advantage in international competition

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Page 217 of 226


Mitigate regressive nature of VAT?

• Lower income households consume a larger proportion of their income

• Reducing rates of heavily consumed goods mitigates the regressive nature of VAT

• But, other measures might be more efficient (income tax, means tested benefits)

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Correct distortions from other taxes?

• Income taxes and high VAT rates might bias towards home production

• Reducing rates of goods/services which can be substituted with home production can prevent this double tax loss

• But, direct measures should be more efficient

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Page 218 of 226


Increase low-skilled labour demand?

• Reducing VAT rates on products which are low-skilled labour intensive might help to reduce structural unemployment

• These goods are also often imported so effect may vanish

• Again, direct measures should be more efficient

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Production and consumption externalities?

• Reducing VAT rates on products have positive externalities boosts their consumption

• Difficult to measure externality

• Reduced rate might benefit mostly persons where the externality is smaller

• Again, direct measures should be more efficient

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Page 219 of 226


Provide an advantage in international competition?

• Reducing VAT rates on hotel accommodation may increase international competitiveness

• Classical beggar-thy-neighbour strategy

• Results in welfare losses if everybody reduces VAT rates

• Also, hard to argue for the regressive nature of hotel accommodation

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How regressive is the VAT ?

• Currently (study uses 2011 data) many reduced VAT rates apply

• Study to quantify the effect of the reduced rates

• Are they in place in countries where the VAT is higher? And are the reduced rate able to reduce the regressive nature of the VAT?

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Page 220 of 226


How regressive is the VAT ?

• Calculate the effect of abolishing all zero and reduced rates and …

– … raise the rate to the standard rate

– … lower the standard rate to have a revenue neutral reform

• Analyse how different households and other VAT paying institutions are affected by such reforms

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Overall importance reduced VAT rates

AT BE

BG

CY

CZDE

DK

EEEL

ES

FI

FR

HU

IEIT

LT

LU

LV

MT

NLPLPT

RO

SE

SI

SK

UK

1015

2025

Rev

enue

neu

tral V

AT

rate

(in

%)

15 20 25Standard VAT rate (in %)

Revenue neutral rate 45°

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Page 221 of 226


Progressivity of reduced VAT rates I

0

.005

.01

.015

Effe

ctiv

e V

AT

incr

ease

1 2 3 4 5Income quintiles

BG DK EE HULT LV RO SK

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Progressivity of reduced VAT rates II

.015

.02

.025

.03

Effe

ctiv

e V

AT

incr

ease

1 2 3 4 5Income quintile

AT BE CY CZ DEEL FI NL SE SE

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Page 222 of 226


Progressivity of reduced VAT rates III

.02

.03

.04

.05

.06

Effe

ctiv

e V

AT

incr

ease

1 2 3 4 5Income quintile

ES FR IE IT LUMT PL PT UK

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First Recap

• Current reduced VAT rates differ substantially across Member States

• No clear correlation between high standard rates and generous reductions

• In some countries the reduced VAT rates indeed favour lower income households

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Page 223 of 226


Revenue effects of reduced VAT rates

0

1

2

3

4

Add

ition

al V

AT

reve

nues

(% o

f GD

P)

AT

BE

BG CY

CZ

DE

DK

EE EL

ES FI FR HU IE IT LT LU LV MT

NL

PL

PT

RO SE SI

SK

UK

Revenue needed to Compensate 1st and 2nd quintileAdditional revenue through abolishing reduced VAT rates

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GDP effects of reduced VAT rates

-10

12

% c

hang

e in

GD

P

AT

BE

BG CY

CZ

DE

DK

EE EL

ES FI FR HU IE IT LT LU LV MT

NL

PL

PT

RO SE SI

SK

UK

GDP effects of revenue neutral abolition of reduced VAT rates, efficiency gains included

GDP effects of abolition of reduced VAT rates, reduction in capital investment taxes

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Page 224 of 226


Summary of main finding

• Reduced VAT rates are very prevalent in the EU, although less so in new Member States

• Only weak theoretical arguments in their favour

• Reduced rates are somewhat able to reduce regressive nature of VAT

• This goal can be achieved with more direct measures

• GDP effects of reduced rates depend largely on the use of potential tax revenues

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Page 225 of 226

of 226

5-6 NOVEMBER 2015 PARIS, FRANCE



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