Paris, 23 June 2021

The surge in e-commerce following the COVID-19 outbreak has emphasised the importance of applying Value Added Tax (VAT) effectively to digital trade. A new toolkit released today offers timely and valuable assistance to tax authorities in the Latin America and the Caribbean region for the effective collection of VAT revenues from e-commerce activities.

The VAT Digital Toolkit for Latin America and the Caribbean (LAC) provides detailed guidance for the successful implementation of a comprehensive VAT strategy directed at e-commerce. It is designed to help governments secure significant VAT revenues and to ensure a level playing field between brick-and-mortar stores and foreign online sellers.

Although VAT is the largest source of tax revenue on average in the LAC region – and LAC is one of the fastest growing e-commerce regions in the world – VAT reform in response to e-commerce growth has remained relatively limited. The main VAT challenges relate to the strong growth in online sales of services and digital products to private consumers (such as “apps”, music and movie streaming, gaming, ride-hailing, etc.) and to the exponential growth in online sales of low-value imported goods, often by foreign sellers, on which VAT is not collected effectively under existing rules.

The toolkit is directed at all types of e-commerce and takes account of the specific circumstances in LAC countries. It includes detailed guidance on designing policy and legislation, on the administration of effective collection mechanisms and on a comprehensive audit and enforcement strategy. In addition to building on the internationally agreed OECD standards, it draws on expertise and best practices from jurisdictions that have already successfully implemented these standards. It has been developed in close consultation with LAC tax authorities and regional organisations.

This toolkit is the first in a series of three Regional VAT Digital Toolkits, produced by the OECD in partnership with the World Bank Group, with editions for Asia-Pacific and Africa currently under development. The Inter‑American Center of Tax Administrations (CIAT) and the Inter‑American Development Bank (IDB) have contributed considerably as regional partners for the LAC region. The Regional VAT Digital Toolkits are being developed in response to a growing number of countries, particularly developing and emerging economies, expressing interest in more detailed practical guidance for the effective implementation and administration of the OECD’s international VAT standards and recommendations. This work is also part of a wider strategy of the OECD to address the tax challenges arising from the digitalisation of the economy.

For more information on the toolkit, including a brochure outlining the core recommendations, visit: http://oe.cd/vat-digital-toolkit-lac

Media queries should be directed to David Bradbury, Head of the OECD’s Tax Policy and Statistics Division (+33 1 45 24 15 97) or to Piet Battiau, Head of the Consumption Taxes Unit (+33 1 45 24 95 91).

In line with this development, CIAT publishes the guidelines for the open software tool developed to support the collection of indirect taxes in operations carried out without physical presence in a jurisdiction. It can be accessed here.

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