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Your participation needed: OECD survey on VAT/GST refunds experiences


Canadian Indirect Tax News, July 2009 (09-6)

Canadian businesses incur value-added tax/goods and services tax (VAT/GST) in a foreign country even if they have no taxable presence there and are not required to register for VAT/GST purposes. However, the burden of VAT/GST should not lie on taxable businesses except when explicitly provided for in a country’s legislation. Relief from such foreign-paid VAT/GST is applied in varied ways across jurisdictions; in some countries, this right is exercised through requests for refunds that can be complex and impose significant compliance burdens — so much so that the making of such claims is almost discouraged.
The conditions and procedures for recovery vary considerably between countries and some require a foreign business to register in order to recover any VAT/GST incurred. Others may provide zero-rating as an alternative to charging and refunding. And some have neither a refund mechanism nor provide a zero rate. Whether the mechanisms are difficult, expensive or non-existent, foreign-paid VAT/GST often becomes a cost to many businesses.
The Organisation for Economic Co-operation and Development (OECD) has been working on possible guidance to governments on the administration and policy on the provision of refunds or other relief in respect of VAT/GST paid by foreign businesses. In order to do this, it is imperative to obtain sufficient input from businesses to assess the extent of problems that may exist in this area. Accordingly, the OECD is undertaking an electronic survey, designed in co-operation with both business and government representatives (including from Deloitte), to solicit feedback from businesses across the world.
This survey is a unique opportunity for affected businesses to express their views to ensure that problems are identified with the ultimate goal of developing guidance to governments to make it easier for businesses to minimize the cost of foreign-paid VAT/GST. The survey questionnaire can be answered in 15 minutes (or less) and focuses mainly on qualitative feedback in a very simple format.
Why should Canadian businesses care? Quite simply, they are affected by the global economy and are parties to cross-border transactions and pay foreign VAT/GST that needs to be recovered. This survey presents an opportunity for Canadian businesses to be part of establishing fair and neutral guidelines that will affect them.
Find more information and a link to the questionnaire at The deadline for responses is July 17, 2009. If you have any questions, please feel free to contact Danny Cisterna at 416-601-6362.