Abstract
The global digital economy is a source of Value-Added Tax (VAT)/Goods and Services Tax (GST) revenue for governments; consequently, jurisdictions have implemented various methods to optimally collect and administer the tax. The objectives of this study were to explore the emerging roles of intermediaries and digital platforms (IDPs) in the VAT ecosystem of international digital trade, further examining the potential for proposed guidelines for consideration by policymakers from a South African VAT law perspective. The pursuance of these objectives was the foundation of this research, divided into three focus areas. The first area analyses the existing VAT rules to measure the laws in place to tax electronic services supplied through foreign non-resident suppliers. The second area explored the VAT and Customs rules adopted to tax the importation of lower value goods. The third area inspected the existing VAT laws to tax the gig and sharing economy, limited to the short-term accommodation and transportation sectors.
Through a qualitative review of literature combined with a comparative doctrinal analysis, the current study covered South Africa (SA), Australia (AUS), New Zealand (NZ), and the European Union (EU) to evaluate the level of utility and prominence extracted from the participation of IDPs in global digital trade. An interpretivist paradigm was adopted in the present study to seek the outcomes of the research questions, which was the cornerstone to attaining the aims of the study that add to the present body of literature. Consequently, a qualitative research approach was applied.
Stemming from the results of the study, primary characteristics of IDPs were identified that promoted the increased use of such entities in the global supply chain, such as, possessing a platform to facilitate the trade, written agreements for assigning responsibility to an IDP, and elements of control over the transaction. The research in the first focus area has indicated that a deeming approach is common in these jurisdictions under review, where the IDP that facilitates the supply of digital services is deemed the supplier in lieu of the underlying supplier, except in SA, where the deeming regime only applies when the IDP facilitates supplies of electronic services made by non-VAT registered foreign suppliers. The outcome in the second focus area has revealed that a deeming approach is common in all jurisdictions under review where the IDP that facilitates the supply of lower valued goods is deemed as the supplier instead of the underlying supplier, except in SA. SA’s Customs authority may experience further administrative burdens as it has opted to tax supplies of lower value goods through Customs instead of the IDP. The revelation in the third focus area has determined that SA did not address the VAT challenge of taxing the gig and sharing economy, whilst AUS decided not the tax the IDP and instead taxed the underlying suppliers. NZ and the EU legislated to tax the IDP as opposed to the underlying supplier, with NZ expanding the tax net to introduce listing intermediaries into the framework.
Culminating from a theorisation and synthesis of the study, guidelines are proposed for consideration by South African VAT policymakers to: (1) tax the IDP for all facilitated supplies of electronic services
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of both VAT registered and non-registered foreign suppliers, and extend the taxing net to include IDPs for services other than electronic; (2) assess the long-term merit of taxing lower valued goods through IDPs instead of through the Customs authority, and (3) measure the value of introducing an IDP deeming approach for facilitated supplies of short-term commercial accommodation, e-hailing transportation services, and delivery services for food and beverages in the gig and sharing economy.