Seventy countries have already implemented, or are taking steps towards implementing, the OECD’s standards and guidance for digital VAT, according to the OECD Secretary-General’s report to G20 Finance Ministers.
The reports adds that an additional 40 countries are planning to implement the standards or are considering doing so.
Enhanced revenue collection
The report says that the standards have enhanced revenue collection. They have also created a more even playing field for online traders and brick and mortar businesses.
The revenue generated by VAT on “VAT on online sales of goods, services and digital products” is significant. For example, the report shows that €14.8 billion in digital VAT was collected in the EU in the first four years that the standards were adopted.
A framework for digital services VAT
The Secretary-General’s Report also indicates that the OECD will release a comprehensive framework on applying VAT to the gig economy.
The document will provide ”analysis and guidance to assist tax authorities in designing and implementing an effective VAT/GST policy response to the growth of the sharing and gig economy.”
As the gig economy becomes more widespread, tax authorities are consequently looking to modernise the relevant VAT rules. For example, UK authorities are planning gig economy reforms to create a more fair and rational set of regulations.
UK estimate revenue from “key Sharing Economy sectors” in the UK at approximately half a billion pounds in 2014. They expect that figure to rise to £9 billion by 2025.
The ambiguous status of workers also complicates gig economy rules. Many gig platforms maintain that workers are independent contractors. However, courts in the UK and the Netherlands have found that gig workers should be classified as employees.
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