ICC Document & publication

ICC comments on the OECD Discussion Draft on OECD draft guidelines on VAT GST Guidelines (2015)

ICC submitted comments to the OECD’s Discussion Draft on the two new draft elements of the International VAT/GST Guidelines.

ICC submitted comments to the OECD’s Discussion Draft on the two new draft elements of the International VAT/GST Guidelines:

  1. the B2C Guidelines on the place of taxation of B2C supplies of services and intangibles, and
  2. the supporting provisions to support the application of the Guidelines in practice.

The OECD Discussion Draft on VAT/GST Guidelines aims to provide a global VAT/GST framework based on two fundamental principles – the neutrality principle and the destination principle – while at the same time safeguarding the VAT revenues for governments and achieving a level playing field.

In its comments ICC emphasised the importance of focusing on the ultimate objective of a VAT/GST framework: taxing final consumption, rather than ineffectively taxing businesses. Speaking on behalf of enterprises from all sectors in every part of the world, ICC underscores that in order to operate in a global environment, the following criteria are of equal importance to businesses: neutrality; efficiency of compliance and administration; certainty and simplicity; effectiveness; and fairness.

Although not specifically highlighted in the Guidelines, ICC notes clear links to the G20 endorsed OECD/BEPS Action Plan. BEPS refers to tax planning strategies that exploit gaps and mismatches in tax rules to make profits ‘disappear’ for tax purposes and/or to shift profits to locations where there is little or no real activity but the taxes are low. This results in little or no overall corporate tax being paid. ICC underlines Permanent Establishment status and Transfer Pricing as key BEPS-project issues with potential VAT/GST implications. For successful implementation and efficiency gains of the guidelines, ICC recommends a high level of concerted efforts by countries towards alignment of national legislations (including reporting compliance). Furthermore, ICC encourages the OECD to remain focused on simplicity and flexibility in a wider context than B2C supplies and to use best practices shown in jurisdictions around the world.