Global Trends in VAT/GST and Direct Taxes

S. 556I. Introduction

Cross-border conflicts in VAT are an emerging issue due to the globalization of business and the implementation of diverging VAT systems in various states. Over 100 countries have introduced VAT/GST systems in a time frame of about 20 years starting from the mid-80s of the last century. In total more than 140 countries now have VAT systems in their law. The lack of harmonization between different VAT systems and their ambiguous interpretation can result in unwanted consequences such as discrimination, and double or non-taxation. Discrimination in taxes is an obstacle to cross-border business and results in economic disadvantages. This situation calls for instruments to solve discrimination in VAT that arise in cross-border situations. Relief may be provided through the application of non-discrimination clauses in double taxation conventions.

In this paper the author focuses on Art. 24 as stipulated in the OECD Model Tax Convention on Income and on Capital as of 2014 (“OECD MC”). Art. 24 is the legal instrument within the OECD MC to avoid specific forms of discrimination in the field of taxation that may arise in one of the contracting states. In principle, discriminat...