E-commerce and effective VAT/GST enforcement: Can online platforms play a valuable role?

Abstract

In recent years, the global volume of e-commerce sales has tremendously increased. At the same time, online sales have put to the test the enforcement of traditional VAT/GST rules, thus resulting in a higher risk of tax evasion and fraud. These types of risk are mainly associated with the qualification of taxable persons, the nature of transactions (C2C or B2C) and imports of low-value goods. The OECD has recently highlighted the potential role that platforms can play in the effective enforcement of VAT/GST rules in the e-commerce context. The OECD suggests the possibility to make e-commerce marketplaces liable for the VAT/GST on sales made through their platforms and other measures such as data sharing and enhanced co-operation between tax authorities and online marketplaces. However, even before the release of this OECD report States around the world had already started to consider how to involve platforms in the effective VAT/GST enforcement. A comparative analysis of the legislations adopted in the UK, Germany, Australia and of the EU VAT e-commerce package aims at individuating which are the main benefits and limits of such new provisions. As it emerges, even if there is room for improvement, provisions strengthening the role of platforms for VAT/GST enforcement are in any case a valuable measure for States to adopt in order to create a level playing field for businesses and protect States’ revenue.