International Tax Review hosted its Indirect Tax
Forum in Amsterdam on March 22, in association with WTS.
ITR editor Joe Stanley-Smith, who
chaired the conference, highlights the key topics of the
The interactive one-day event featured presentations from
David O’Sullivan, VAT policy adviser in the
consumption taxes unit within the OECD’s Centre
for Tax Policy and Administration, Maria Teresa
Fábregas, director for indirect taxation and tax
administration at the European Commission, as well as a host of
indirect tax experts across the WTS network, and tax
professionals from Lloyds Banking Group, Ascom, VdA Portugal
and Sovos, among others.
While opinions and experiences varied on certain tax
matters, many of the panellists agreed that indirect taxes are
becoming an increasingly popular regime for governments
worldwide as they try to balance tax revenues when corporate
tax rates are falling.
O’Sullivan, who was the first speaker to take
to the stage, emphasised the increasing importance of VAT/GST
to governments in his presentation, showcasing figures that
value-added taxes now make up 20.1% of revenue for OECD
countries – more than that of taxes from corporate
income, corporate gains, property and payroll combined.
Taxation of goods and services is also a particularly important
contributor to government revenues in low- and middle-income
All G20 countries operate a VAT/GST, with the exception of
the US, and 170 countries globally have implemented either a
VAT or GST regime.
The VAT policy adviser also talked about how digital
platforms could play a key role in collecting VAT/GST on online
sales. According to O’Sullivan’s
presentation – which can be downloaded in full at
LINKLINK – the market dominance of multi-sided
platforms "creates challenges for administrations (tax and
customs) in terms of collection".
With 1.6 billion online shoppers worldwide – a
number which is forecasted to rise to 2.2 billion by 2022
– global online retailers could have a key role to
play in collecting tax in the future, said
O’Sullivan. Countries are already acting on this,
and tax authorities now need guidance to ensure
The OECD’s Working Party 9 (WP9) is analysing
"the functions performed by digital platforms in online sales
and delivery chains", and "the possible role of platforms
performing these functions in the collection of VAT/GST on
online sales including an overview of approaches implemented or
considered by tax authorities around the world", the OECD
This work will result in the release of an OECD report on
the topic this year that will include possible guidance and
approaches based on good practice, O’Sullivan
said, but he assured delegates that this is not intended to
"delay or impinge on jurisdictions’ current
domestic policy development and implementation strategies".
He also outlined how important it is that any
strategy’s impact on the value chain should be as
limited as possible, and respect neutrality principles. The
business and academic community is being consulted through the
technical advisory group to WP9.
Download David O’Sullivan’s
Maintaining a global outlook at the event, Jürgen
Scholz, global head of indirect tax at WTS, gave delegates an
update on VAT around the world, noting how some countries are
achieving high revenues from the regime. He humorously spoke
about the tendency of European crime agencies to hunt tax
criminals nowadays, drawing attention to the EU’s
unsustainable VAT gap.
The EU VAT gap (the difference between expected VAT take and
the actual amount collected) stood at €151.5 billion ($185
billion) for 2015, the most recent year for which data is
available. This represents a loss of 12% of the total expected
VAT revenue across the EU’s 27 member states, with
the gaps ranging from -1.4% in Sweden, to 37.18% in
While a large portion of this is down to missing trader
fraud, the system is simply not built to cope with types of
commerce that didn't even exist in 1993 when the EU's temporary
VAT system entered into force.
Scholz told delegates that the need to chase down missing
revenues is leading to more compliance obligations for
companies, whether this be the mini one-stop shop, more
transactional reporting requirements, or split payment
procedures of electronic declarations.
Download Jürgen Scholz’s global VAT
During the first panel discussion of the day, the higher
compliance burden was discussed in more detail by Mario
Fernandez, head of indirect tax at Lundgrens, WTS Denmark;
Conceição Gamito, head of indirect tax at VdA
Portugal; Marco de Weerd, VAT solution principle at Sovos;
Tamás Laszlo, VAT manager at WTS Budapest; and Joel
Wessels, partner at Atlas, WTS Netherlands.
The panel discussed how, in the Netherlands, Denmark and
Portugal, the requirements of VAT declarations, as well as EC
sales lists (ESLs), the Intrastat, VAT ledgers and split
payment processes are keeping tax directors busy.
In Hungary, where VAT declarations have to be monthly, and
the ESL, Intrastat and VAT ledger obligations also apply, there
will be more tax reporting from July. Companies will be
required to comply with live VAT invoice reporting from July 1
2018, which will apply to invoices with VAT chargeable above
HUF 100,000 ($390). This will eventually replace the existing
domestic sales invoice filings.
Download merged presentations from our four panellists from
the Netherlands, Hungary, Denmark and Portugal
Forum: Can artificial intelligence simplify the VAT
The topic of artificial intelligence (AI) and indirect tax
spurred lively discussions across the room, where, after an
introductory presentation on the topic by Scholz, delegates on
each table debated AI and its use in tax.
Scholz explained that AI has the potential to increase
compliance and reduce tax risks, standardise routine activities
and proactively provide information. On the cost side, it can
also improve resource utilisation and increase
Whether tax professionals prefer paper or not, tax functions
are going digital and the development of AI and robotics is an
issue of global significance. Tax management tools and robots
have the ability to replace difficult, repetitive or even
dangerous activities and encourage efficiency. But people are
concerned that these technological developments will require
clear legal definitions to avoid unfair taxation on the use of
robotics in the future as they replace some human tasks and
risk higher unemployment.
The way to succeed, according to some, is for there to be a
good blend of interaction between governance and processes,
technology, tools and data analysis.
Download Jürgen Scholz’s presentation on
The new EU proposals on the future of VAT
One of the highlights of the day was Maria Teresa
Fábregas, director for indirect taxation and tax
administration at the European Commission, who talked openly
above the EU’s VAT reforms in what was the final
session of the day.
She spoke through the progress the Commission has made on
the definitive VAT system package in the past year, including
the introduction of the concept of a certified taxable person
and four "quick fixes" proposed in October 2017.
On the subject of VAT rates, Fábregas wants to give
more flexibility to member states, which are currently bound by
EU-mandated minimum and maximum standard and reduced rates. She
believes that reform is necessary because "current rules do not
fully take into account technological and economic
developments". She also identified that the system was designed
for taxation at origin even though the world is transitioning
to tax at destination, and the "rules are too restrictive for a
destination-based VAT system and do not respect the
subsidiarity principle". Reform, she asserted, will give more
freedom and put an end to unnecessary litigation.
As well as outlining the objectives to reduce VAT compliance
costs for SMEs and shielding them from distortions of
competition, she discussed how there can be greater
administrative cooperation and data exchange not just between
member states, but with other law enforcement bodies such as
OLAF, Europol and the European Public Prosecutor’s
Fábregas’s speech came just one day
after the EU released its digital tax package on March 21, and
while perhaps not everyone in the room was able to digest the
proposed measures – which controversially includes
either a 3% digital turnover tax or a virtual permanent
establishment concept – it was a great chance for
attendees to ask questions on the subject.
"Global corporate tax rules have not kept pace with the
digital economy," said Fábregas in her presentation.
"Many digital companies make profit from new services created
largely from users’ input and data – huge
user and consumer bases within the EU."
She also touched on less well publicised parts of the
package, including a recommendation from the EU to member
states to make certain amendments to their double tax treaties
so that the same rules apply to EU and non-EU countries.
Ultimately, the event offered great insight and clarity for
tax professionals on the VAT plans of the OECD and EU over the
coming year, and the direction and trends of indirect taxation
matters to provide tax directors with the knowledge they
Once her presentation was finished, she faced comments and
questions from Stijn Vastmans, partner at Tiberghien, WTS
Belgium; Charlene Adline Herbain, lawyer at Law Square in
Belgium and also lecturer at the University of Luxembourg;
Cendrine Chappuis, senior manager of global indirect tax at
holiday rentals website Homeaway, and Greg Lockhart, tax
principal at Irish firm Matheson.
Members of the audience were then also able to ask questions
– and so many were asked that the post-event drinks
reception had to be delayed by 15 minutes.
Download Maria Teresa Fábregas’s
presentation on EU VAT reforms
International Tax Review would like to thank all of
the day’s attendees, speakers, sponsors and staff
for making the 2018 Indirect Tax Forum a success.