On 29 March 2022 the OECD published a specialized IT format for use by digital platforms when submitting tax information in respect of the vendors that use their platform. The purpose of the format is to increase the ability of digital platforms to comply with the requirements of the model reporting rules.
The Digital Platform Information (DPI) XML Schema and User Guide provides a standardised IT format for the electronic reporting and for the exchange of information that will be collected under the Model Reporting Rules for Digital Platforms issued by the OECD in 2020. The DPI XML Schema has been designed to cover the extended scope of the Model Rules and is intended to facilitate online exchanges of information under the OECD’s Model Reporting Rules for Digital Platforms and under the European Union’s Directive on Administrative Cooperation (DAC7).
The DPI XML Schema is designed to enable the exchange of information on a broad range of relevant activities reported by the vendors (reportable sellers). It will therefore cover the original scope of the OECD Model Rules, including the rental of immovable property and the supplies of personal services; and will also cover the OECD Extended Scope including the sale of goods and the rental of a means of transportation, as set out in the scope of the EU Council Directive (EU) 2021/514. The new format will therefore minimise the compliance burden for platforms fulfilling their requirements under the reporting rules.
The Model Rules for Reporting by Platform Operators with respect to Sellers in the Sharing and Gig Economy were published on 3 July 2020, following a previous consultation. The need for the rules arose from the growth of online platforms that bring together freelancers with firms needing their labour, which changed the way in which certain business sectors operate. More taxpayers are earning money through transactions in the gig and sharing economies, facilitated by online platforms. The model rules drawn up by the OECD were intended to allow tax administrations to adapt their compliance strategies to ensure that taxable income earned through the platforms is reported accurately.
From the tax administrations’ point of view, a potential advantage of these online platforms was that transactions that were previously part of the informal cash economy have been brought onto digital platforms, where the transactions and payments are recorded. However, transactions that are not subject to third party reporting or tax deduction at source may not be self-reported by the individuals providing their services on an independent basis on these platforms.
The model rules aimed to standardise the measures adopted by each country to collect information on income earned by platform sellers and thereby prevent an increase in different unilateral domestic rules that could greatly increase compliance costs. The standardisation of the rules will make it easier for jurisdictions to agree on the automatic exchange of information in relation to online platforms.
The rules outline the scope of the transactions to be reported; set out a broad definition of platform operators and sellers, and set out due diligence and reporting rules to ensure that accurate information is reported without an undue compliance burden on the platform operators.
