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OECD Releases New VAT Digital Toolkit for Asia-Pacific — Orbitax Tax News & Alerts

The OECD has released a new VAT Digital Toolkit for Asia-Pacific, which provides guidance for the implementation of a comprehensive VAT strategy directed at e-commerce.


New toolkit to strengthen Value Added Taxes on e-commerce in Asia-Pacific

10/03/2022 – A new toolkit released today will support the effective collection of Value Added Tax (VAT) revenues from e-commerce activities in the Asia-Pacific (APAC), which is the world's largest e-commerce region.

The further acceleration of e-commerce growth throughout the COVID-19 pandemic has emphasised the importance of applying Value Added Tax (VAT) effectively to digital trade for jurisdictions across the region.

The VAT Digital Toolkit for Asia-Pacific (APAC) provides detailed guidance for the successful implementation of a comprehensive VAT strategy directed at e-commerce. It is designed to help governments secure increasingly significant VAT revenues and to ensure a level playing field between traditional brick-and-mortar businesses and foreign online merchants.

The VAT challenges of e-commerce growth relate primarily to the collection of the tax on the rising sales of online services and digital products to private consumers (e.g. via "apps", streaming, gaming, ride-hailing, etc.) and on online sales of low-value imported goods, often by foreign sellers.  Often, VAT is not levied effectively on these sales under existing rules. Although VAT is a crucial source of tax revenue on average in APAC, many jurisdictions have not yet implemented the necessary VAT reform in response to e-commerce growth.

The new toolkit is directed at all types of e-commerce and takes account of the APAC region's specific needs and circumstances. It covers all the key implementation and operational aspects of VAT reform including policy design and legislative reform, building the infrastructure to support the registration and compliance processes, an accompanying communications strategy, effective audit and administrative risk management strategies, including concrete measures to tackle VAT fraud associated with online trade. It has been developed in close consultation with tax authorities from across the APAC region.

This toolkit is the second in a series of three Regional VAT Digital Toolkits, produced by the OECD in partnership with the World Bank Group, with the Latin America and the Caribbean edition already published and the African edition currently under development. The Asian Development Bank (ADB) has contributed considerably as regional partner for the APAC region. The Regional VAT Digital Toolkits are being developed in response to growing demand from countries, particularly developing and emerging economies, for more detailed practical guidance on 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: