Echoes of Source and Residence in VAT Jurisdictional Rules

35 Pages Posted: 10 Jun 2009 Last revised: 5 Jan 2010

See all articles by Rebecca Millar

Rebecca Millar

The University of Sydney Law School

Date Written: June 9, 2009


This paper focuses on the principles underlying the jurisdiction to impose value-added-type consumption taxes (VATs). It analyses existing VAT models to identify the concept of consumption on which they are based and to determine whether there is a common language in which questions of non-taxation (and taxation) can be discussed, looking in particular for echoes of the income tax source-residence dichotomy. A subsequent paper (Sydney Law School Research Paper No. 09/45) uses the framework proposed in this paper to analyse intentional and unintentional double non-taxation issues in the context of VAT. The paper suggests that the usual analogy drawn between the residence and source concepts for income tax and the destination and origin principles for VAT is of little practical significance. A more useful analogy is found in the distinction between tangible and intangible supplies, which underlies the way in which VAT laws predict the place of consumption. When examined in detail, it appears that VAT laws do have an underlying concept of place of consumption, which differs for different types of supply. The VAT concept of consumption cuts across the source and residence concepts in a number of ways, with the effect that VAT is applied sometimes at the source of the supply (which includes the residence of the supplier), sometimes at the residence of the consumer, and sometimes at a place of consumption that is neither source nor residence.

Keywords: VAT, GST, tax, consumption tax, value added tax, goods and services tax, cross-border transactions, destination principle, origin principle, source, residence, jurisdiction, place of supply, place of taxation, double taxation, non-taxation

JEL Classification: K10, K30, K34

Suggested Citation

Millar, Rebecca Mescal, Echoes of Source and Residence in VAT Jurisdictional Rules (June 9, 2009). Sydney Law School Research Paper No. 09/44. Available at SSRN:

Rebecca Mescal Millar (Contact Author)

The University of Sydney Law School ( email )

New Law Building, F10
The University of Sydney
Sydney, NSW 2006

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