OECD – International VAT/GST Guidelines

Recently the OECD VAT/GST Guidelines established further validation at the 4th OECD Global Forum on VAT.

These guidelines make available a wide-ranging structure of standards and principles for countries around the world, to monitor the development of comprehensible and reliable indirect tax rules. Additionally, they also want to provide for simplicity and synchronisation on the handling of cross-border transactions, including the collection of taxes on such operations.

The aims of the guidelines include:

• Improve the responsibilities and certainty for businesses looking to remain compliant;
• The administration of VAT rules to be more simple;
• Try to reduce the occurrences of double taxation;
• The reduction of opportunities for VAT fraud.

The areas covered in the guidelines include:

• Trying to achieve neutrality for business, including cross-border transactions;
• The core features of national VAT rules: staged collections standard, a wide-ranging base; and taxing the final consumption;
• Embracing the destination principle for cross-border B2B and B2C supplies of goods and services.

Developments in the future

The OECD will continue to progress these guidelines in the future, including the following:

• How to implement the guidelines as technology changes the way goods or services are provided, and how VAT can be managed;
• Further guidance on the efficient operation of VAT rules;
• How to deal with tax related issues, including transfer pricing and permanent establishment.