The Coordination Of Cross-border VAT Rules Under The Digital Economy

With the innovation of ICT technology,the digital economy has penetrated into all aspects of the global economy.Its characteristics of virtuality and intangibility are profoundly affecting the development of international trade and have brought tremendous impact on the international taxation field.This impact effect is not only reflected in the income tax field,but also prominently reflected in the value-added tax field.In fact,the orderly construction of the VAT system also plays an indelible role in the fairness of international trade.Under the current trend of global taxation,the contribution rate of cross-border value-added tax to global taxation is increasing day by day.More and more economies are paying attention to the challenges faced by cross-border value-added tax rules in the context of the digital economy,and actively respond to international and domestic levels.In the more than two decades of the growth of the digital economy,with the continuous development of international practices,cross-border value-added tax rules have also evolved from naive to mature.The international level is represented by OECD,and through the series of “International VAT/GST Guidelines” issued in2014-2017,the destination principle in the international VAT jurisdiction is clearly defined.The first item in the series of action plans for “Base Erosion and Profit Shifting” that has been launched since 2013 specifically analyzes the taxation challenges posed by the digital economy,and proposes corresponding countermeasures.The European Union is represented at the domestic level,through aseries of EU directives and tax reform measures from 2006 to 2015,the principle of destination has been established in the European Union,and a VAT collection mechanism such as reverse withholding and one-stop service has been created.Besides,the article takes the OECD's latest " International VAT/GST Guidelines " as a blueprint,and interprets the value-added tax system under the digital economy in detail from three perspectives of the taxable project,the main body of the taxable project and the application of the levy principle,and summed up the main points of the current cross-border value-added tax order.The above-mentioned international practice is parallel to the development of the digital economy.Although it is not formulated for the digital economy,it involves more or less all aspects of digital economic transactions.The discussion of the main part of this article is based on these international practices.It discusses what challenges the digital economy poses to the existing international value added tax system from the international and domestic perspectives,and analyzes whether the existing cross-border value-added tax rules can be resolved these challenges,and how to deal with them if they cannot be solved.First,from the international perspective,the challenge brought by the digital economy to cross-border VAT rules is mainly the impact on tax jurisdiction,that is,the question of how to divide.In the traditional international VAT field,the most important challenge in the allocation of jurisdiction is the double taxation and double non-taxation.The problem of double taxation and double non-taxation in the field of international VAT jurisdiction under the digital economy has its own particularities.This particularity has exacerbated the risks of double taxation and non-taxation to some extent.Since taxation is a matter of national sovereignty,different countries adopt different principles for the collection of value-added tax for many transactions.When the principles adopted by different countries,there will be a conflict of taxation jurisdiction.In the traditional international VAT field,depending on the taxable project and the main body of the taxable project,the applicable VAT taxation principle has two principles: the principle of destination and the principle of origin.As mentioned,although the current international practice in the VAT field hasbasically established the dominance of the “destination principle”,the challenges posed by the digital economy still exist.This aspect is due to the fact that the digital economy has the characteristics of "virtuality" and "intangibility",which leads to uncertainties in the taxable items and the identification of the subject of the taxable items,which in turn affects the application of the principle of taxation.The aspect is due to the challenge that the digital economy brings to the taxation principle itself,that is,the taxation principle itself is also flawed in the context of digital economy.The article discusses the challenges that the digital economy may bring from the three aspects of taxable projects,taxable project entities,and taxation principles.The issue of jurisdiction is the primary challenge faced by the cross-border value-added tax rules under the digital economy.The construction of a new order for taxation of cross-border value-added tax is mainly to avoid double taxation or double non-taxation due to jurisdictional conflicts.From a theoretical point of view,it is to implement the principle of the destination of VAT on a global scale.This article discusses the countermeasures for cross-border VAT under the digital economy.Using the destination principle as the end result and analyzing whether the principle can be established and implemented in the context of digital economy,and referring to relevant OECD recommendations,discussing global Implementation of the destination principle of feasible landing measures.Secondly,from the domestic perspective,the challenge brought by the digital economy to the cross-border value-added tax rules is mainly the impact on the value-added tax collection mechanism,which is how to levy.In the digital economy environment,the collection of cross-border VAT is often faced with many special challenges.For example,when the taxable items are digital products and electronic services,there are particularities and how they should be handled for VAT;for example,when the taxable project entity is in the B2 B model,the risk of BEPS and how to prevent the generated BEPS are limited.The principle of taxation of cross-border value-added tax should be applied to the principle of destination,and how it should be ensured that it will not violate the principle of tax neutrality in the digital economy.With regard to these special issues,the international community has specialized taxation practices.This article selects three typical collection mechanisms that the EU has put into practice to analyze one by one.These expropriation mechanisms are not in correspondence with the above-mentioned special issues,but they all alleviate the aforementioned special problems to some extent.For example,the B2 B field reverse withholding mechanism largely alleviates the BEPS problem in the value-added tax domain.Another example is B2C's one-stop service field which helps reduce compliance costs,raises tax efficiency,and thus maintains tax neutrality.Withholding obligations are provided for the collection of VAT on digital products and electronic services.The article focused on analyzing and evaluating the functions and imperfections of the aforementioned levy mechanism in the context of digital economy.In summary,the main part of this article is divided into two chapters to discuss the two major challenges brought by the digital economy to cross-border value-added tax rules and their responses.The former is based on discussions at the international level,that is,the impact of the allocation of jurisdiction,and its countermeasures are based on the principle of VAT taxation.This section selects the OECD “International VAT/GST Guidelines”(2017)as the blueprint for the study.The reason for choosing this guideline is that the latest version of the most recognized series of guidelines in the current international value-added tax domain.The latter is based on the domestic level of discussion,that is,the impact of the taxation mechanism,and its response measures are based on the rules for the collection of value-added tax.This section selects the major collection mechanisms that the EU is currently implementing as a sample of research.The reason why the EU was selected is the EU is one of the most advanced economies in the global cross-border VAT system.It is worth mentioning that the digital economy's challenges to the cross-border value-added tax rules can be divided into different ways.More importantly,the division method chosen in this paper covers both international and domestic,but also covers principles and rules,and can be more comprehensively reflected the focus and difficulty of coordinating cross-border value-added tax rules in the digital economy.To sum up,the article combines China's current VAT rules and the latest developments in VAT,and evaluates them separately from the perspective of VAT jurisdiction system and VAT collection mechanism.First of all,the author discusses the inadequacies of China's VAT jurisdiction system,including the ambiguity of the digital products,the lack of differentiation of taxable project subjects,and the need to complete the destination principle.Afterwards,from the standpoint of the comparative law,it is analyzed whether the major VAT levy mechanisms adopted in EU practice can be used for reference and reasons in China.Finally,based on the above analysis,the article proposes suggestions for China's participation in coordinating cross-border value-added tax rules and improving China's value-added tax system,such as clarifying the application of the destination principle,dividing B2 B transactions and B2 C transactions,and improving tax collection and management mechanisms.