Consumption tax

OECD releases draft Guidelines on the application of VAT/GST to the international trade in services and intangibles for public consultation


From 1 February to 30 June 2010


The OECD Committee on Fiscal Affairs invites public comments on the draft Chapter II of the International VAT/GST Guidelines that deal with customer location in the context of identifying the jurisdiction of taxation.

These draft Guidelines build on the consultation documents that were issued by the Committee in 2008. They consider which jurisdiction has the taxing rights in cases where services and intangibles are supplied internationally. The Committee has already agreed the principle that the jurisdiction with the taxing rights is the one in which consumption takes place but there frequently need to be proxies to determine consumption. The draft Guidelines propose that, as a Main Rule, the location of the customer is the most appropriate proxy to determine consumption for business-to-business supplies.  The draft assumes that all supplies are legitimate and with economic substance and that there is no artificial tax avoidance or tax minimisation taking place. Further, the Guidelines address services and intangibles received by enterprises with a single location only.

The Committee, through its Working Party 9 on Consumption Taxes and the Working Party’s Technical Advisory Group (TAG) comprising government, academic and business representatives, will work on the development of further Guidelines on enterprises with multiple locations and will deal with artificial avoidance and minimisation issues later. It will also consider appropriate exceptions to the Main Rule. Given that this further work may require the Committee to review this current draft, these Guidelines should be regarded as provisional.

The Committee invites interested parties to send their comments on this draft before 30 June 2010. These comments will be examined by the TAG and the Working Party in the second half of 2010.

This draft is released for the purposes of inviting comments from interested parties. It does not necessarily reflect the final views of the OECD and its member countries.

Comments should be sent electronically (in Word format) to
Unless otherwise requested at the time of submission, comments submitted to the OECD in response to this invitation will be posted on the OECD website.



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