The governments of 86 countries have endorsed the OECD’s framework for applying national VAT rules to cross-border transactions at a recent Global Forum on VAT meeting in Tokyo.

According to the OECD, the International Guidelines seek to address the problems that arise from national VAT systems being applied in an uncoordinated way in the context of international trade. The Guidelines set standards in two key areas: ensuring VAT neutrality and making taxes on B2B trade in services destination-based. The first standard seeks to ensure that VAT targets private consumption and not businesses, so it has a neutral effect on production and levels the playing field for domestic and foreign businesses in cross-border trade. The second standard aims to ensure that B2B trade in services is only taxed in the country of the recipient of the service.

For further details see the OECD’s website.