OECD Seeks Comments on "OECD International VAT/GST Guidelines: Draft Guidelines on Neutrality"
In December 2010, the Organization for Economic Co-Operation and Development (OECD) released for comment a document entitled "OECD International VAT/GST Guidelines: Draft Guidelines on Neutrality". The deadline for filing comments is March 22, 2011.
Canada is a member of the OECD. Canada imposes the goods and services tax (GST) and harmonized sales tax (HST), which are value-added taxes. As a result, the OECD guideline may be incorporated into Canadian law in the future. As a result, it will be important for Canadian businesses who operate multi-nationally and may be affected by the guideline to prepare thoughtful comments.
This document succinctly summarizes some of the important principles behind GST/HST style taxes and, therefore, may be VERY useful to litigants in explaining why an auditor's approach is incorrect. I have considered its usefulness in the context of may GST/HST disputes.
For example, proposed guideline No. 1 is "The burden of value added taxes themselves should not lie on taxable businesses except where explicitly provided for in legislation." This is a basic principle and I can hear you saying "YES". I can hear you saying "Why did the auditor assess me as a supplier when I am engaged in a taxable business?"
Read this document!
Cyndee Todgham Cherniak is counsel to and in affiliation with the International Trade Law and the Tax Law (Commodity Tax
