Global Trends in VAT/GST and Direct Taxes

S. 660I. Introduction

Globalized markets, new challenges such as digital economy and ongoing actions of the European Union and the OECD are increasing uncertainty for taxpayers and tax administrations. Advance rulings are thus used in many countries as a tool to provide both parties in the tax game with certainty about the reaction of their counterpart.

This paper investigates the limitations and possibilities of advance rulings, and their role in the current world. Moreover, potential alternatives to advance rulings are discussed, taking into account the global trends in direct and indirect taxation. The first part describes the main characteristics of the advance ruling according to its application in different countries. The second part deals with the approach of two major supranational organizations, the OECD and the European Union, towards advance rulings. In the third part, the needs and challenges of taxpayers and tax administrations are described, and their potential solution by advance rulings is analysed. Further, this part points out the limiting factors for the efficiency of the advance ruling in today’s world. Finally, conclusions are drawn regarding the role of advance ruling...