VAT

The most sustained U.S. tax policy debate of the past 30 years concerns proposals to replace and/ or supplement the Federal Income Tax with a consumption tax.[2] Public finance economists and legal tax policy scholars challenged[3] and defended[4] the current income tax system on grounds of fairness,[5] efficiency, [6] and simplicity.[7] This debate over revamping the national taxing scheme has not been argued purely...

The future of the VAT is digital.[1]In the foresee- able future, all VAT processes will be auto- mated. VAT determinations, collection, the remission of funds, as well as all reporting, audit, and refund activities will be digitized.[2]Certified proprietary and third-party software systems will perform all critical VAT functions for large and small taxpayers at minimal cost under real-time compliance conditions. Government-to-government...

A. Overview of Consumption Taxes 1. A Cash-Flow Consumption-Type Tax: Integrated Into the Current IncomeTax An income tax purportedly taxes savings twice: once when the money is earned, and again when the amount saved earns interest in later years. This has been shown to discriminate against those who postpone their personal consumption until future years.[1 ] One way to resolve this is by changing our federal income...

Written by: David Gamage and Darien Shanske Should the U.S. introduce a value added tax? How should we manage budget deficits? Should we abolish the alternative minimum tax? Why does the U.S. conduct most of its social- welfare policy through tax expenditures? Should we automate and simplify income-tax filing?  Tax salience is the key to these and other important debates. The behavioral economics revolution has...

INTRODUCTION Since the e-commerce revolution began in the 1990’s, tax policy discussions in developed economies have enlisted “e-solutions” to streamline consumption tax administration, as well as to resolve technical problems. These well-considered discussions are now producing systemic, multi-jurisdictional changes in European[2]and United States[3]consumption tax regimes. Inspiration came from the marketplace....

In March 2004 the European Commission solicited comments on a proposal to simplify value added tax (VAT) obligations through a one-stop scheme.[1] The proposal was modest in scope. It was designed to build upon the success of a similar scheme[2] that dealt with non-EU established persons supplying digital products to non-taxable EU persons.[3] That scheme is found in Article 26c of the Sixth VAT Directive.[4] In its...

We should be able to raise at least $1 trillion more revenue a year within the current income tax system just by making our tax accounting better reflect economic income. Our system has too many tax pits, which absorb revenue and distort investment decisions. We allow deductions for fictitious losses. We should tax high-class consumption better than we do. Moving toward a more comprehensive income tax base to make the...

Tradable services – VoIP termination services, mobile minutes, software as a service (SaaS), or almost any service bought or sold in the “cloud”[1] – are a distinct class of taxable supplies. These service-based supplies both resemble and differ fundamentally from goods. They also differ from services that are consumed-on-purchase (consumed services). Restaurant meals, auto repairs, or house painting services...

On January 1, 2009 a minor change in the Czech Republic VAT[1] became effective. A use and enjoyment standard was added to modify the sourcing of certain service transactions.[2] Traditional proxy-based rules, derived from Articles 43 and 56(1) of the Recast VAT Directive (RVD),[3] are set aside by this modification when the customer receiving the services has a permanent establishment (PE) in the Czech Republic. The...

Two caveats open this paper, one dealing with the scope of analysis, the other with the results we are expecting. First, the scope of this inquiry needs to be broadened. Even though the topic asks that we limit ourselves to VAT/GST and direct taxes, in most jurisdictions there are three (not two) spheres of transfer pricing analysis - income tax, customs and VAT/GST. Although they share policy objectives, terminology...

Recent developments in German VAT compliance, notably the imposition of criminal penalties for failing to immediately amend a preliminary return that is known to be in error, are leading businesses to third-party VAT solutions.[1] Germany is not alone in the creative use of criminal enforcement to collect the VAT,[2] but the size and importance of the German economy make these developments difficult to ignore. What...

The EU VAT, like most mature tax regimes, is resistant to change. Fraudsters are testing this resilience today, and this may not be such a bad thing for policy-makers. Significant challenges produce significant reforms proposals.[1] If the US is seriously considering a VAT it would do well to observe this dynamic, avoid the known pitfalls, and work to advance the policy debate before it inherits a problem. The most...