OECD 3rd Global VAT/GST Forum – IVA sponsors the BIAC Cocktail

Notes on the third Meeting of the Global Forum on VAT/GST held in Paris on 5th and 6th November 


The third Meeting of the Global forum on VAT/GST was held in Paris on 5th and 6th November and the IVA was represented by Stephen Dale and Mike Molony.

Senior policy representatives from some 104 Countries attended, together with members of the OECD, the European Commission and a small number of business delegates representing global businesses, under the BIAC banner.

The agenda is attached and one of the main areas for discussion was the finalisation of the outstanding points of the OECD's Guidelines on B²B and B²C supplies of services and intangibles. These Guidelines are intended to act as Global Standards for the VAT/GST treatment of International trade in services and Intangibles and serve as a reference point for designing and implementing legislation with a view to minimising unintended non taxation or double taxation.
 
The overarching purpose of a VAT/GST is as a levy on final consumption and for services to be taxed at the place of destination for both B²B and B²C supplies, with the revenues accruing to the jurisdiction where the supply to the final consumer occurs. The application of the destination principle in VAT achieves neutrality in International trade.

On the Wednesday preceding the Global Forum, Mike Molony, as part of a BIAC delegation; made a presentation to the CFA (Committee on Fiscal Affairs at the OECD), through its Working Party No 9 (WP9)  on the further work that needs to be undertaken to further extend and improve the Guidelines.

The main recommendations were as follows:

  • Consistent implementation and application of the Guidelines as a global VAT/GST standard - To achieve certainty, neutrality and consistency - VAT should not be a cost to fully taxable businesses unless specifically allowed in legislation
  • To roll out the Guidelines to non OECD countries - National consultations - support capacity building on VAT in developing countries
  • Further training programs to businesses and tax administrations around the world - with business participation
  • Tracking progress towards adoption of the Guidelines
  • Consistent implementation of the Destination principle
  • Simplified registrations - simplified collection methods
  • Flexibility in VAT registration and compliance process, incl. electronic and risk based audits
  • Recharge Method for supplies between head-office and Branch
  • Prepare further guidance on how to handle mix of Internal/External services and further guidance on how to deal with Internal added value in relation to head-office/branch supplies
  • Importance of administrative cooperation and exchange of information
  • To have National contact points and tax payer services for both National Tax administrations and for businesses
  • VAT treatment of transfer pricing adjustments and recommendations on best practice
  • Prepare guidance notes on where VAT/GST creates PE implications and linking the direct and indirect tax issues that need to be considered
  • Monitor BEPS developments and guidance on Indirect tax implications
  • Exempt sector - consideration of broadening the base for Indirect tax purposes

The Agenda for The Global Forum on VAT included the following:

  • An overview of VAT policy Trends and developments from around the world
  • Emerging VAT policy issues and challenges
  • The International VAT/GST guidelines: Status and update
  • Determining the place of Taxation - B²B and B²C supplies of services
  • Endorsing the completed set of guidelines and looking ahead
  • Collecting VAT/GST on imports of low value goods
  • Supporting the guidelines in practice, including dispute minimisation
  • Action to tackle evasion and avoidance
  • The economic impact of vat rate structures and changes

There were breakout sessions held, where all attendees discussed each topic and the feedback was consolidated and discussed at the General Forum.

Outcomes:

  • The Global Forum, welcomed the approval by the OECD Committee on Fiscal Affairs (CFA) on the complete set of Consolidated Guidelines, representing best practice in the Development of VAT/GST Systems.
  • Welcomed the increased number of Countries contributing to the development of this work
  • Welcomed the extension of the Guidelines for cross border supplies of services to the BEPS package
  • Look forward to development of OECD recommendations in 2016 to embody a complete set of guidelines. These recommendations include:

                    1) Extend the current single electronic registration and payment to Intra EU supply of goods and also to third countries
                    2) Introduce a common threshold to help small startup businesses
                    3) Allowing home control audits including a single audit for cross border purposes
                    4) Removing the VAT exemption for the importation of small consignments from suppliers in third countries.
                    5) Complete further work to design an even more inclusive framework to support especially developing countries

IVA Sponsored Cocktail event 

The OECD, The Commission and BIAC representatives expressed their grateful thanks to the IVA for sponsoring the event. At the reception a short presentation was made where we were able to explain the background to the IVA, and Business members were encouraged to join.
A number of businesses present requested further information on the IVA and expressed an interest in joining. A business card from the IVA and a pen with the IVA was presented to each member attending.

Sponsoring the cocktail has really increased the visibility of the IVA, many businesses and governments from around the world have shown an interest in what the Association does. This can only help improve relationships and ensure a simpler and fair application of the VAT rules - globally.

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