Global Trends in VAT/GST and Direct Taxes

S. 243I. Introduction

Over a last few years, businesses have had to struggle with ever-increasing international competition. Digitalization has emerged in recent years and has allowed companies to reduce further their core business costs. Businesses in all economic sectors are being forced to optimize their core activities and support services. By now the working processes of production and related services are spread among countries. Multinational Enterprises including micro multinationals outsource and centralize certain labor-intensive functions, as a result of which corporate groups can benefit from considerable economies of scale and concentrate on their core business.

However, stakeholders of a corporate group focus on a group as a whole. Legally independent entities are in principle regarded as separate taxable persons and may encounter financial and administrative disadvantages in comparison to businesses that take the form of one single legal entity. Therefore, introducing group taxation regimes both in direct and indirect tax legislation could simplify the tax administration costs for businesses and the tax authorities.

The purpose of this paper is twofold. Firstly, it outlines th...