Global Trends in VAT/GST and Direct Taxes

S. 584I. Introduction

The OECD Model Tax Convention on Income and Capital (hereinafter “OECD MC”), has a well-defined scope: first, only persons resident in one or both contracting States fall under the personal scope of the convention; second, it applies only ‘to taxes on income and capital’ (Art. 2 (1)). Therefore, at first glance, one could argue that dealing with the ‘Impact of Arts. 26 and 27 OECD Model Convention on VAT/GST’ is a contradiction in terms.

However, the aim of the present paper is to illustrate the existence of a hidden nexus between the OECD and VAT/GST (hereinafter VAT), and, in particular the impact of Arts. 26 (Exchange of information) and 27 (Assistance in the collection of taxes) OECD MC on solving VAT issues. The first part of the paper reveals the hidden link between the OECD MC and indirect taxes. It is followed by an analysis of which taxes could be affected by the provisions of both Arts. 26 and 27 OECD MC (with some references also to Arts. 24 and 25 OECD MC). After the introduction of the topic, there will be a short overview of the historical evolution of both Arts. 26 and 27 OECD MC. Awareness of the evolution of both articles is essential in order to bett...