A Hitchhiker’s Guide to the OECD’s International VAT/GST Guidelines
The OECD’s International VAT/GST Guidelines, which are scheduled to be released in their consolidated form at the OECD’s Global Forum on VAT in Paris on November 5-6, 2015, are the culmination of nearly two decades of efforts to provide internationally accepted standards for consumption taxation of cross-border trade, particularly trade in services and intangibles. This article provides a roadmap to the Guidelines, especially for readers who may be unfamiliar with consumption tax principles, in general, or VATs in particular. Part II of the article provides the background to the Guidelines, describing the basic features of a VAT, the problems with which the Guidelines are concerned, and a brief history of the OECD’s efforts to address these problems. Part III discusses the Guidelines’ neutrality principles. Part IV discusses the general rules applicable to business-to-business (B2B) transactions. Part V discusses the general rules applicable to business-to-consumer (B2C) transactions. Part VI discusses specific rules for particular types of supplies. Part VII discusses the Guidelines’ recommendations designed to support a consistent interpretation of the Guidelines, including the use of mechanisms for mutual cooperation and exchange of information and other arrangements allowing tax administrations to work together. Part VIII concludes.