Developing VAT Treaties: International Tax Cooperation in Times of Global Recovery

Zu Y (2021). Developing VAT treaties: international tax cooperation in times of global recovery. Legal Studies 1–19. https://doi.org/10.1017/lst.2021.37

19 Pages Posted: 18 Aug 2021

Date Written: July 02, 2021

Abstract

The COVID-19 pandemic highlights the pressing need to address common challenges faced by all countries and, in particular, provide special support to developing countries through international cooperation. Taxation, in particular Value Added Tax (VAT), is a key area for strengthening international cooperation because of its critical role in financing the COVID-19 crisis and supporting global recovery. This paper pro- poses the adoption of VAT treaties based on two considerations. First, there exist, in the interplay between states’ VAT laws, over-taxation and under-taxation that can be more effectively addressed by treaties than by unilateral state actions. Secondly, unlike income tax treaties, VAT treaties would distribute more benefits from cooperation to developing countries than to developed countries, leading to normatively attractive dis- tributional consequences. The proposed model offers a new approach to taxing cross-border transactions under VAT and could form part of a coordinated response to a sustainable post-pandemic recovery.

Keywords: international tax, value added tax, COVIDrecovery, tax treaties, international cooperation

JEL Classification: K34

Suggested Citation

Zu, Yige, Developing VAT Treaties: International Tax Cooperation in Times of Global Recovery (July 02, 2021). Zu Y (2021). Developing VAT treaties: international tax cooperation in times of global recovery. Legal Studies 1–19. https://doi.org/10.1017/lst.2021.37, Available at SSRN: https://ssrn.com/abstract=3894250

Yige Zu (Contact Author)

Durham University

Palatine Centre
Stockton Rd
Durham, Durham DH1 3LE
United Kingdom

HOME PAGE: http://www.dur.ac.uk/directory/profile/?id=18505

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