A MULTILATERAL OPTION FOR VAT IN INTERNATIONAL TRADE?

Abstract Value-added tax, the most common form of consumption tax in the world, operates on a destination principle to ensure it is levied only in the place of final consumption in cases of cross-border transactions. The international trade in services and intangibles through digital means poses two challenges: finding the place of consumption and collecting the tax when services supplied by businesses in one jurisdiction are instantaneously consumed by customers in another. This article examines these challenges and considers how unilateral action and soft international responses have so far failed to achieve consistent destination basis taxation. An alternative option would be to adopt a hard multilateral response that would overcome the limitations of unilateralism and soft-law approaches and achieve consistent destination basis taxation in the digitalised economy.