Readiness of EEU's electronic trade VAT collection protocol reaches a peak
New VAT System for Cross-border E-commerce in the Eurasian Economic Union Simplifies Tax Compliance
The Eurasian Economic Union (EAEU) is set to introduce a new Value Added Tax (VAT) system for cross-border e-commerce transactions, aiming to streamline taxation and improve ease of trade for businesses.
The upcoming VAT collection system will operate based on the country of buyer principle, meaning VAT will be charged and collected based on the buyer's country within the EAEU. This approach aims to simplify taxation and avoid double taxation or non-taxation in cross-border sales.
To reduce administrative burdens on suppliers selling across borders in the EAEU, simplified registration and filing processes will be introduced. This includes streamlined registration procedures for non-resident sellers and a single digital portal to file VAT returns for transactions across member countries.
Iya Malchina, the official representative of the Eurasian Economic Commission, announced these changes at a briefing held on November 16, in Moscow. The document draft amending the Agreement on the Eurasian Economic Union regarding VAT collection in cross-border e-commerce is nearing completion. Once the remaining issues are resolved, the document will be sent for internal approval. After approval, it will be sent to the countries for adoption.
Under the new system, the operator of the electronic trading platform is obliged to calculate and pay VAT. Simplified registration of the taxpayer via the internet in the country of consumption or conditional registration is part of the new taxation approach.
This structure aligns with the evolving global trend toward real-time VAT e-invoicing, digital reporting, and the "country of destination" or "country of buyer" principle advocated globally. The introduction of simplified registration is similarly consistent with EU efforts to modernize VAT for e-commerce imports.
The new taxation mechanisms are not yet sent for internal approval or adoption by the countries. The document draft is expected to be sent to the countries for internal approval after resolving the remaining issues. The EEC is working on these new taxation mechanisms for cross-border e-commerce of goods within the EAEU.
The BELTA correspondent reported this news, marking a significant step towards modernizing taxation in the EAEU and aligning with international VAT trends. The new system is expected to enhance tax compliance and revenue collection efficiency on cross-border e-commerce transactions, synchronize VAT rules among EAEU members, and improve ease of trade for businesses by reducing complexity.
[1] OECD Guidelines for Fair Taxation of the Digital Economy [2] EU Action Plan on VAT for e-commerce [3] EU Modernised VAT System for e-commerce [4] OECD/G20 Base Erosion and Profit Shifting Project [5] EU Anti-Tax Avoidance Directive (ATAD)
- The new Value Added Tax (VAT) system for cross-border e-commerce in the Eurasian Economic Union (EAEU) follows the international trend of implementing real-time VAT e-invoicing, digital reporting, and the "country of destination" or "country of buyer" principle, as suggested by the OECD Guidelines for Fair Taxation of the Digital Economy.
- In line with the EU's efforts to modernize VAT for e-commerce, the EAEU's new taxation approach includes simplified registration procedures for non-resident sellers, which is similar to the EU Modernised VAT System for e-commerce.
- The introduction of the new VAT system for cross-border e-commerce transactions in the EAEU is expected to align with the EU Action Plan on VAT for e-commerce and the OECD/G20 Base Erosion and Profit Shifting Project, aiming to enhance tax compliance, revenue collection efficiency, and synchronize VAT rules among EAEU members, while also improving ease of trade for businesses by reducing complexity, as proposed in the EU Anti-Tax Avoidance Directive (ATAD).
