The Organisation for Economic Cooperation and Development has issued model gig and sharing economy tax reporting guidelines. This framework aims to provide clarity and consistence between global tax authorities on the data they require to help monitor the activities of sellers or users of the major platforms.
Harmonising tax data requests
Tax authorities are increasing replying on marketplaces for taxing the gig and sharing economies. The OECD is looking to prevent an outbreak on conflicting and overlapping tax authority data requests from marketplaces. Aside from the bureaucratic burden, this threatens to leave missed business models or traders to slip through the tax net. The OECD model covers reporting requirements, plus administrative and enforcement good practise.
The gig and sharing economies have created challenges to sustain the tax base as they enable millions of private individuals to trade whilst they fall under the tax radar. This creates VAT and GST gig and sharing economy risks, which potentially billions in lost tax revenues and unfair tax-free competition of traditional businesses. The guidelines also suggest innovative reporting frameworks and digital technologies to help maximise the efficacy of tax data requests.
The framework covers: peer-to-peer online marketplaces, food delivery companies and sharing-economy companies like Uber Technologies Inc. and Airbnb Inc. In July 2021, it will be extended to include digital platforms that sell goods online and rent transportation.
EU review of VAT and platform economy
The EU is also reviewing VAT treatment for the platform economy, which includes the gig and sharing economies. And the DAC 7 EU marketplace reporting requirements come into effect on 1 January 2023.
