On 26 March 2026 the UN Committee of Experts on International Cooperation in Tax Matters discussed the workstreams for indirect taxes. The subcommittee on indirect taxes presented its planned workstreams for comment and approval.
The subcommittee on indirect taxes has a mandate to produce clear practical guidance on policy and administrative issues in VAT design and implementation, building on work done in the previous Committee. There are challenges to the VAT system from digitalisation and platform-based supplies that will need to be examined. Innovations in financial services such as Fintech and crypto developments are creating further issues. These developments give rise to VAT fraud risks and VAT refund administrative challenges. The VAT produces a significant part of the tax revenue of developing countries and efficient VAT collection is important for domestic resource mobilisation.
Workstream 1 will be concerned with VAT in the digital economy. Increasingly there are cross-border digital supplies, and the correct tax revenue must be collected. In this context, the introduction of e-invoicing has been important for tax administrations. The indirect tax subcommittee can liaise with other subcommittees, such as the workstreams on the digitalised and globalised economy, to look at issues around VAT collection on these transactions. There are an increasing number of transactions through digital platforms, and countries need to clarify the responsibilities of the traders and platforms in relation to VAT reporting. The provision of advice by the tax administration can support voluntary compliance. The subcommittee could ask for advice from the business community on these issues.
Workstream 2 will look at VAT fraud prevention. The administration of VAT is increasingly subject to fraud. Fraudulent claims are lodged electronically with false invoices etc. There are VAT systems with multiple rates, and different VAT treatment of similar supplies, and these features can create opportunities for fraud. There has also been fraud around claims for VAT refunds. Countries must balance the need to give timely refunds to businesses with the need for safeguards against fraudulent claims.
The third workstream will examine cross-border VAT dispute resolution. There is currently limited guidance on cross-border dispute resolution, and the subcommittee could look at this. Workstream 4 will examine VAT on financial services, looking at issues such as mixed supplies, Fintech, crypto and the rapidly evolving technology.
Workstream 5 will be concerned with VAT regressivity and compensation mechanisms. Countries try to soften the regressive tendencies of VAT by introducing exemptions or lower rates on certain products; however, these can have knock-on effects. The exemptions and lower rates make the VAT less neutral and introduce distortions within the economy, with a suboptimal allocation of resources. An alternative method of lessening the effects of regressivity may be to take compensatory measures outside the VAT, such as increasing government transfers to lower income groups.
The subcommittee will liaise with other subcommittees on transfer pricing, the UN Model, the digital economy, AI and admin and tax and gender. The workstreams will aim to ensure coherence and avoid overlap. They may consider incorporating some sector-specific considerations.
Workstreams 1 to 4 would produce a first outline of their work at the next session of the Committee in October 2026, with a first draft of their output to be compiled by March 2027. Workstream 5 will produce a first outline by October 2027, after further consultation.
