Global Tax 50 2015: Piet Battiau
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Global Tax 50 2015: Piet Battiau

Head of consumption taxes, OECD CTPA

Piet Battiau

Piet Battiau was also in the Global Tax 50 2014, and 2013

Piet Battiau leads the OECD unit responsible for creating the international VAT/GST guidelines (the Guidelines) which were finalised this year. Already, countries including Argentina, Australia, Ghana, Israel, Japan, South Korea, New Zealand, Paraguay, the Russian Federation, South Africa, Tanzania and Turkey implementing, or announcing their intention to implement, some or all of the mechanisms recommended by the Guidelines. Here, Battiau talks Joe Stanley-Smith through his 2015 achievements, before looking ahead to his priorities for the next 12 months.

Piet Battiau: The two most important outputs that we finalised in 2015 are the Guidelines, part of which was included in the BEPS package, [as part of] BEPS Action 1, where we took care of the indirect tax part, and a report we produced on the collection of VAT/GST on imports of low-value goods, which in Europe is known as the low-value consignments exemption issue.

That was a big piece of work and a challenging one which we produced within a very short timeframe, but where we achieved pretty good results.

That BEPS framework was relevant for the direct tax work as well as the indirect tax work. Everything we produced in that space in the international VAT/GST guidelines as well as the low-value imports, has been agreed – in detail, actually – by 44 countries.

The next step – which brings me to a third major output in the last year – was the Global Forum on VAT which we held in November in Paris.

Every 18 months we have a global forum on VAT, which is the largest gathering of policy officials talking about VAT. Last year we had 104 jurisdictions, international organisations such as the IMF plus about 40 global businesses.

At that meeting we had in-depth discussions about the guidelines and explained what their impact could be on policy.

We got the endorsement of these 104. So they endorsed these guidelines as an international standard, which is called, in 'international organisation-speak', the endorsement of the guidelines as an international standard to serve as a source of reference for domestic design and reform. This is a big thing because what is important for us is not just to develop standards for OECD countries but to create worldwide standards.

Work outside of the OECD

So, what have we done outside the OECD? We've done quite a lot of work over 2015 towards working with developing countries. We've done workshops in Ghana, Togo and the Democratic Republic of the Congo, each time with a range of African countries, and we've done one in Mexico.

We've organised these regional outreach events to talk about the specific VAT policy challenges that these countries have, and how the Guidelines can help to address some of these issues.

What is quite encouraging is to see the impact that the Guidelines are, and what this work generally is, already having.

The Guidelines as such are very much focused on the core principles of VAT – VAT being neutral for businesses and being a tax on final household consumption. At international level then applying the destination principle for taxing cross-border transactions is then the preferred policy option for achieving neutrality in international trade. In the destination state, so in the consumption state, imports and supplies are treated on an even playing field so you have international neutrality.

The neutrality guidelines, you may remember, were completed in 2014. We've already seen that during their development and the following years that they have really influenced policy-making in countries around the world, where for many countries, particularly the countries and jurisdictions that only implemented a VAT very recently, the concept of VAT neutrality was kind of alien.

The Guidelines have served as a good platform and a source of reference, even, and an argument at a political level to persuade countries to make their VAT system more neutral, based on the fact that this does not just reduce obstacles to international trade but because it would also increase the competitiveness of domestic businesses.

The implementation of these neutrality guidelines is less prominent. It won't often hit the headlines or even the news, but it's important to businesses. As a technician, as a practitioner, as a VAT manager, as an international business you notice and feel it.


We're just starting to hit the headlines with the work that we've done in the B2C space. Whereas it's not just about e-commerce, it's very much related to online trade and the evolution of the digital space. The trend is that we've been able to trigger, in parallel with what the Commission is doing on the implementation of regimes, the regimes that are aimed at taxing B2C supplies by non-residents in the country of the final consumer; the remote registration and payment regimes.

It's interesting to see in the international press that this is linked to the 2015 change in the EU. We worked constantly with the EU Commission – but the EU had already introduced a system for taxing remote supplies, third-country supplies into the EU of taxing broadcasting, e-commerce and telecoms back in 2003. So 2015 in that sense just made the third-country aspects – the non-EU aspects – more prominent because of the even playing field now within the EU. Countries need to comply with these regulations abroad – how were we going to make these countries comply?

That was a big issue. The obligations for non-EU traders already existed since 2003. What people often miss there is that that was based on OECD e-commerce guidelines, which also date back to 2003. It kind of illustrates the cooperation that the OECD has had with the EU and with the EC.

What we've been able to do within the OECD with the 44 countries we worked with, and subsequently at the Global Forum, is to go through the rationale for that. So why would countries have the right to claim taxes from traders who are not resident in their country? We in Europe are used to that, but outside Europe it was quite a strange and alien concept.

I remember the first conversation in that context with Australia and New Zealand were both like 'how could this ever work?' – but now you see them both implementing it. We restarted that discussion from the beginning and then went through all of the design questions, again with European countries. Part of the interest for the European Commission – though I shouldn't speak for them – was to look at how they could further improve and fine-tune the system that they had in 2003 and expand it in 2015.

Questions included whether we should work with a 'pay-only' registration system – so there's no right of refund for non-resident businesses that register abroad – which has its advantages, because then you can reduce the red tape. Does it make any sense to require non-resident suppliers of BC services to issue invoices? Well, probably not, because invoicing is relating to the right of input VAT recovery of the one who receives the invoice – but as this is B2C there is no right of input VAT recovery.

Also the discussion on thresholds was held, and will continue to be held at OECD level. There is a specific issue there in the EU, but outside of the EU, at the level of the OECD countries, you see that countries which are now announcing the VAT Guidelines, most if not all of them will implement a threshold.

The first big mover as far as we were concerned was South Africa, which has historically been very actively involved in our work. It's proving to be a very successful regime. I can't mention any figures in terms of revenue, but the only thing I can tell is that South Africa is pretty pleased with the revenue it generates, and the level of compliance seems to be satisfactory, seems to be pretty high. This has helped to convince countries around that such a regime can actually work.

We know this is very much about the digital space, and in the digital space there's a big concentration of trade among a fairly limited number of big players – and these players are complying. They represent the vast majority of trade.

It's probably not enough yet to call it a trend, but it might yet become a trend over the next year of countries implementing the regime. A couple of African countries are looking at it, then the next big movers were Japan and South Korea, and particularly New Zealand and Australia.

The particular importance of the New Zealand and Australia regime is that they are probably most in tune with the Guidelines. For us, that's very important. That we're not just developing guidelines for the sake of having guidelines, but that we're really having a tangible and important impact on policy.

Liaising with business

Another thing we're particularly pleased about having achieved is the very strong involvement of the business community in our work.

Having them working with us, and avoiding that we would develop standards in isolation – to avoid the ivory tower issue. It could always be better – nobody always gets what they want – but we've worked very closely with the international business community, which is actually led by Karl-Heinz Heidel from GE who is also active in BUSINESSEUROPE.

That has worked extremely well. We've been very transparent and had really in-depth discussions with the business community, looking at the very wording of some of the positions taken to get to a common understanding from a government and business level of what is possible and where the equilibrium must possibly lie. Governments on the one hand and businesses on the other may have to compromise, and that wasn't always easy but we've achieved that. [That way] we're not proposing anything that the business community says is impossible, or overly-burdensome, to implement. That's quite important, to be able to point out that what we achieve is not just consensus among governments, but consensus with a broad representation of the global business community.

The Global Tax 50 2015

View the full list and introduction

The top 10 • Ranked in order of influence

1. Margrethe Vestager

2. Pascal Saint-Amans

3. Wang Jun

4. Arun Jaitley

5. Marissa Mayer

6. Will Morris

7. Ian Read

8. Pierre Moscovici

9. Donato Raponi

10. Global Alliance for Tax Justice

The remaining 40 • In alphabetic order

Brigitte Alepin

Andrus Ansip

Tamara Ashford

Mohammed Amine Baina

Piet Battiau

Elise Bean

Monica Bhatia

David Bradbury

Winnie Byanyima

Mauricio Cardenas

Allison Christians

Rita de la Feria

Marlies de Ruiter

Judith Freedman

Meg Hillier

Vanessa Houlder

Kim Jacinto-Henares

Eva Joly

Chris Jordan

Jean-Claude Juncker

Alain Lamassoure

Juliane Kokott

Armando Lara Yaffar

Liao Tizhong

Paige Marvel

Angela Merkel

Zach Mider

Richard Murphy

George Osborne

Achim Pross

Akhilesh Ranjan

Alan Robertson

Paul Ryan

Tove Maria Ryding

Magdalena Sepulveda Carmona

Lee Sheppard

Parthasarathi Shome

Robert Stack

Mike Williams

Ya-wen Yang

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