The OECD plans to develop a single set of reporting rules for countries to use to collect information about sales made via online platforms to assist future tax collection
The move is a response to the rapid growth of online platforms facilitating the sharing and gig economies in many different business sectors.
The aim is to reduce the proliferation of different domestic reporting requirements and to create efficiencies for tax administrations and platform operators.
The OECD says these platforms presents significant opportunities for tax administrations, as they may bring activities previously carried out in the informal cash economy onto digital platforms, where transactions and related payments are recorded in electronic form.
If leveraged in the right way, this can lead to greater transparency and minimise compliance burdens for both tax administrations and taxpayers.
At the same time, certain activities carried out through these platforms may not always be visible to tax administrations or self-reported by taxpayers.
This is because the development of the gig economy entails a shift from traditional work relations under employment contracts to the provision of services by individuals on an independent basis, which is not typically subject to third-party reporting. These developments present risks of distorting competition with traditional businesses and reducing taxable income.
The OECD says that although a number of tax authorities have already introduced certain reporting obligations on platform operators to report, and others are planning to introduce similar measures in the near future, the fact that these platforms operate on a global scale means there are inherent limitations to the effectiveness of domestic reporting rules.
In particular, governments may face challenges in terms of the enforcement of domestic reporting requirements when the platform operator is not located in their jurisdiction.
At the same time, platforms facilitating transactions in multiple jurisdictions may be confronted with a wide set of permutations of domestic reporting requirements, which may lead to increased costs and potentially harmful barriers to the further development of their businesses.
In response, the OECD is taking forward work on the development of what it terms ‘model reporting rules’ that could be adopted by interested jurisdictions on a uniform basis to collect information on transactions and income realised by platform sellers.
In addition, the OECD forum on tax administration has developed a code of conduct on providing information and support to sellers on their tax obligations while minimising compliance burdens.
This is intended to supplement the model rules, in particular in instances where sellers are not subject to reporting under the model rules, for instance because the transactions are out of scope or the jurisdiction has not implemented the model rules.
The OECD has now launched a public consultation on the current draft of the model rules which is open for comment until 20 March.