Intentional and Unintentional Double Non-Taxation Issues in VAT

27 Pages Posted: 12 Jun 2009 Last revised: 7 Oct 2009

See all articles by Rebecca Millar

Rebecca Millar

The University of Sydney Law School

Date Written: June 9, 2009


This paper builds on an analysis of VAT jurisdiction rules in Sydney Law School Research Paper No. 09/44, to consider intentional and unintentional double non-taxation issues in the context of VAT. Since a VAT is an indirect consumption tax, imposed on suppliers but intended to burden the consumption of customers, the concept of non-taxation in VAT is inherently an economic concept, relevant primarily to business-to-consumer transactions. The paper outlines some of the examples of intentional and unintentional non-taxation or partial taxation that are common to most VATs. International passenger transport and international tourism are identified as the two main areas of intentional non-taxation or partial non-taxation in VAT. Sources of unintentional non-taxation, which are primarily analogous to source-conflicts in income tax, include the use conflicting proxies to determine the place of taxation for a particular supply, conflicting interpretations of same proxy, and the determination of tax status at different times. Furthermore, because exemption without credit is a means for intentionally imposing partial taxation, failure to impose an input tax burden on an exempt business is a form of non-taxation. The paper argues that the current interest in developing an international consensus on cross-border VAT rules should not be limited to double taxation issues and should include a focus on the prevention of non-taxation. Finally, the paper argues that there is a place for rules that tax 'exported' services in order to prevent the non-taxation of the domestic consumption of those services.

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, Intentional and Unintentional Double Non-Taxation Issues in VAT (June 9, 2009). Sydney Law School Research Paper No. 09/45. Available at SSRN: or

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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