OECD: Digital platforms and VAT policy regarding sharing and gig economy

A report concerning application of VAT or GST to sharing and gig economy transactions

A report concerning application of VAT or GST to sharing and gig economy transactions

The Organisation for Economic Cooperation and Development (OECD) today released a report concerning application of value added tax (VAT) or goods and services tax (GST) to sharing and gig economy transactions.

The OECD report—The Impact of the Growth of the Sharing and Gig Economy on VAT/GST Policy and Administration—offers  solutions for the application of VAT / GST to sharing and gig economy operators. The solutions are designed to provide a level playing field between operators in the rapidly growing sharing and gig economy and more traditional businesses.

As noted in a related OECD release, the rise of the sharing and gig economy, powered by digital platforms, has fundamentally transformed several industries within just a few short years, particularly in transportation, tourism, and hospitality. Large numbers of new economic operators (often private individuals) have entered the market offering short-term accommodation, transport, and other services via digital platforms, and this has raised concerns as to whether existing VAT / GST frameworks are sufficiently capable to protect VAT / GST revenues and level the playing field with traditional businesses. The OECD report:

  • Highlights the central role that sharing and gig economy platforms can play in providing information to tax authorities and collecting the VAT / GST on activities in the sharing and gig economy
  • Sets out the core components of a comprehensive VAT / GST policy strategy for tax authorities in response to sharing and gig economy growth
  • Analyzes the main business models of the sharing and gig economy and the challenges for VAT / GST collection and administration, and presents a range of measures to address these challenges
  • Includes detailed guidance on effective solutions for sharing and gig economy platforms in providing information to tax authorities and in collecting the VAT / GST on the activities that they facilitate

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