The Role of Digital Platforms in the Collection of VAT/GST and RST and Its Limits
Japanese Yearbook of International Law
30 Pages Posted: 1 Jun 2021
Date Written: March 31, 2021
This article examines whether it is appropriate to impose tax liability or collection duty of indirect consumption taxes such as VAT/GST and RST on the digital platforms that are not necessarily sellers of the goods or services themselves. This question includes following considerations. First, is it allowed under the international law for a country to impose tax liability on the digital platforms just because its residents buy goods and services through them? Second, is it feasible for the country that imposes tax liability on the digital platforms to collect the tax even if the platforms have no meaningful physical assets in the territory of the country? Third, under what condition is it allowed for a country to impose tax liability or collection duty on the digital platforms when the tax is supposed to be borne the consumers in the country’s jurisdiction? Fourth, this article investigates the possibility that a putative digital platform is considered to be a direct seller of goods and services and accordingly liable to VAT/GST or RST as a supplier.
This article will mainly present the following arguments. First, a digital platform may be, in some cases, more properly identified as a party to the transaction with consumers rather than an intermediary for the purposes of private law and tax law. Second, before examining whether a provision that imposes tax liability on digital platforms meets the requirement of a genuine link or nexus under the public international law, it is enormously important to investigate whether the nature of the liability is in personam or in rem. Third, it is necessary to make sure that the consumer’s relationship with the digital platform sufficiently close enough to justify the tax liability of the platform.
Keywords: VAT, indirect consumption tax, jurisdiction, digital platforms
JEL Classification: K33, K34
Suggested Citation: Suggested Citation