The Impact of the Growth of the Sharing and Gig Economy on VAT/GST Policy and Administration

The report titled "The Impact of the Growth of the Sharing and Gig Economy on VAT/GST Policy and Administration" provides a comprehensive analysis of the implications of the growth of the sharing and gig economy on Value Added Tax (VAT) and Goods and Services Tax (GST) policies and administration. The report addresses the challenges and opportunities posed by the rapid growth of the sharing and gig economy, which has facilitated a significant socio-economic shift towards the monetization of underutilized human and physical resources.

Key Features and Business Models: The sharing and gig economy, driven by digital platforms, connects millions of new economic actors and consumers worldwide. Key business models include ride-sharing and short-term rental accommodations, among others. The growth of these sectors has been fueled by advancements in digital technology and changing consumer preferences, leading to an estimated USD 204 billion gross value in 2018, expected to reach USD 455 billion by 2023.

VAT/GST Implications: The report identifies several key features and interactions within the sharing and gig economy that influence VAT/GST policy design and administration. It outlines a basic scenario of the supply chain and categorizes the sector based on operational features relevant to VAT/GST. Broadly, it explores opportunities for simplification, sector-specific policies, and innovative approaches like split payment mechanisms and technology-based data collection.

Policy Action: The document discusses the need for a needs assessment and policy action to address the VAT/GST implications of the sharing and gig economy. It suggests reviewing existing VAT/GST rules, considering sector-specific policies, and adopting design principles for tax policy and administration. The report also emphasizes the potential roles of digital platforms in facilitating VAT/GST compliance through education, communication, and information sharing.

Compliance and Enforcement: To support VAT/GST policy responses, the report recommends risk-based compliance management, enhanced co-operation among domestic agencies, imposing real consequences on non-compliant actors, and leveraging international administrative cooperation. It includes detailed guidance on potential roles for digital platforms in compliance and enforcement measures.

In summary, the report serves as a comprehensive guide for tax authorities to assess and respond to the VAT/GST implications of the sharing and gig economy, offering insights into business models, policy options, and compliance strategies.