In tandem with its ongoing work on new tax rules for the digitalised economy, the OECD is working on the development of a new international set of updated rules to ensure the taxation of the "sharing" and "gig" economies.
The sharing and gig economies involve the giving, sharing, or swapping of services through an online platform, for a fee or for free. Notable examples include ride-sharing services and the provision of temporary accommodation. This can involve either a peer-to-peer transaction or a business-to-consumer transaction, depending on whether the entity providing a service is an individual or a professional service provider.
While traditional business models are adequately captured by global tax rules, the advent of these new industries has created new challenges for tax authorities in collecting personal income taxes, value-added taxes, social security contributions, and taxes on corporate profits. Depending on the sector involved, hotel tax and vehicle tax policies may also have to be adapted.
Countries' efforts to ensure these new industry players pay the same tax as traditional businesses have led to the proliferation of new national rules and the introduction of a disparate framework of reporting requirements for platform operators.
Reporting By Services Providers
The OECD is now hoping to provide guidance to countries around the world for a uniform framework that would compel platform operators to disclose details of user and seller activity, in its draft "Model Rules for Reporting for Platform Operators with respect to Sellers in the Sharing and Gig Economy". These draft rules are the subject of a consultation, which will end by an extended deadline of April 13.
Launching the model rules, the OECD said: "The growth of sharing and gig economy platforms presents significant opportunities for tax administrations, as it 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."
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The new reporting rules are intended to ease the burden on tax authorities and platform operators alike, in aiding authorities to compel operators to report information on their users on the one hand, and easing the administrative burden on platform operators on the other.
Code of Conduct for Platform Operators
In addition to the Model Rules, 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 Code of Conduct 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 opened a consultation also on this Code of Conduct.
The OECD's work in this area will likely supersede efforts that began in 2018 at European Union level.
In 2018, the European Union created TADEAUS, the Tax Administration EU Summit, which held its first plenary meeting on September 17-18, 2019. TADEUS launched a number of projects in 2018, including a "Digital and data" project, which focuses on reporting requirements for the sharing and gig economy and is being led by Finland. It is therefore likely that even if an international agreement cannot be reached on the reporting framework the OECD is championing, the EU will likely move on this matter alone.