Justice, Equality and Tax Law

S. 5441. Introduction

According to the Organization for Economic Cooperation and Development (OECD), general consumption taxes, particularly the value-added tax (VAT), that is a levy of most of the OECD countries except for one, have been a rapidly growing revenue source between 1965 to 2019. If it is compared to the percentage of the total tax revenue that represents consumption taxes from the mid-1960s to nowadays, there is a variation of 11.9 % to 21.0 % of total tax revenue. In addition, the percentage of VAT revenues in total tax revenues in Latin America and the Caribbean reached 27.5 % in 2020, a rise of 12.0% since 1990. A similar situation occurred in Asia and Pacific countries where the average participation of the VAT to total tax revenue in 2019 was 22.8%.

However, over the years, the exchange of goods and services between countries has increased causing countries to analyse their tax policies to maintain tax collection and, at the same time, continue to promote cross-border operations. This scenario is currently even more complex due to electronic and digital transactions, which is why new challenges have been presented for VAT taxation. In this regard, the OECD has issued rec...