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OECD Proposes Harmonized Gig Economy Reporting Rules

Posted on 02-20-2020

The OECD on February 19, 2020, released a proposal for a framework for sharing and gig economy platforms to report the activities of their users.

The OECD said, “The growth of sharing and gig economy platforms presents significant opportunities for tax administrations, as it may bring activities previously carried out in the informal cash economy onto digital platforms, where transactions and related payments are recorded in electronic form. If leveraged in the right way, this can lead to greater transparency and minimise compliance burdens for both tax administrations and taxpayers.”

The OECD explained that its work in this area is intended to address potential deficiencies in the effectiveness of purely domestic transaction reporting frameworks, which have been introduced by a number of countries on businesses such as Airbnb.

The OECD said: “Given, however, that the platforms are facilitating transactions in the sharing and gig economies on a global scale, there are inherent limitations to the effectiveness of domestic reporting rules. In particular, governments may face challenges in terms of the enforcement of domestic reporting requirements when the platform operator is not located in their jurisdiction. At the same time, platforms facilitating transactions in multiple jurisdictions may be confronted with a wide set of permutations of domestic reporting requirements, which may lead to increased costs and potentially harmful barriers to the further development of their businesses.”

“It is in this light that the OECD is taking forward work on the development of model reporting rules (the Model Rules) that could be adopted by interested jurisdictions on a uniform basis to collect information on transactions and income realised by platform sellers, in order to contain the proliferation of different domestic reporting requirements and to create efficiencies for tax administrations and platform operators alike.”

In addition to the Model Rules, the OECD Forum on Tax Administration has developed a Code of Conduct on providing information and support to sellers on their tax obligations while minimizing compliance burdens. This Code of Conduct is intended to supplement the Model Rules, in particular in instances where sellers are not subject to reporting under the Model Rules, for instance because the transactions are out of scope or the jurisdiction has not implemented the Model Rules.

The OECD has opened a consultation on the key design features of the model rules and commentary, and on the Code of Conduct.

The OECD on February 19, 2020, released a proposal for a framework for sharing and gig economy platforms to report the activities of their users.

The OECD said, “The growth of sharing and gig economy platforms presents significant opportunities for tax administrations, as it may bring activities previously carried out in the informal cash economy onto digital platforms, where transactions and related payments are recorded in electronic form. If leveraged in the right way, this can lead to greater transparency and minimise compliance burdens for both tax administrations and taxpayers.”

The OECD explained that its work in this area is intended to address potential deficiencies in the effectiveness of purely domestic transaction reporting frameworks, which have been introduced by a number of countries on businesses such as Airbnb.

The OECD said: “Given, however, that the platforms are facilitating transactions in the sharing and gig economies on a global scale, there are inherent limitations to the effectiveness of domestic reporting rules. In particular, governments may face challenges in terms of the enforcement of domestic reporting requirements when the platform operator is not located in their jurisdiction. At the same time, platforms facilitating transactions in multiple jurisdictions may be confronted with a wide set of permutations of domestic reporting requirements, which may lead to increased costs and potentially harmful barriers to the further development of their businesses.”

“It is in this light that the OECD is taking forward work on the development of model reporting rules (the Model Rules) that could be adopted by interested jurisdictions on a uniform basis to collect information on transactions and income realised by platform sellers, in order to contain the proliferation of different domestic reporting requirements and to create efficiencies for tax administrations and platform operators alike.”

In addition to the Model Rules, the OECD Forum on Tax Administration has developed a Code of Conduct on providing information and support to sellers on their tax obligations while minimizing compliance burdens. This Code of Conduct is intended to supplement the Model Rules, in particular in instances where sellers are not subject to reporting under the Model Rules, for instance because the transactions are out of scope or the jurisdiction has not implemented the Model Rules.

The OECD has opened a consultation on the key design features of the model rules and commentary, and on the Code of Conduct.