The Use of Cooperative Compliance for Minimizing Cross-Border VAT/GST Disputes

Abstract

The article explores the potential of cooperative compliance (CC) in preventing cross-border VAT-GST disputes. Given the current international taxation landscape lacks a mechanism enabling expeditious and cost-effective resolution of these disputes, minimization mechanisms, such as CC, come to the fore to ensure legal certainty and avoid tax controversies at the international level. The authors delve into the key features of CC relevant for VAT/GST dispute prevention. Considering the inherently “international” nature of cross-border VAT/GST disputes, the article examines the feasibility of extending domestic CC programmes to encompass non-resident taxpayers. Moreover, it delves into the prospect of minimizing disputes specific to certain industries. Lastly, the authors assess the advantages and disadvantages of employing CC for cross-border VAT/GST dispute prevention, drawing on evidence obtained from interviews with representatives of MNEs. The authors propose that the next step in establishing tax certainty in the VAT/GST area through CC could entail the development of multilateral CC (MCC) programmes.