Global Tax 50 2016: Piet Battiau

Piet Battiau was also in the Global Tax 50 2015, 2014, 2013, and 2012

Piet Battiau has become a regular in the Global Tax 50, and is the only person to have been included in the feature every year since its inception in 2011 – the same year that he became head of the consumption taxes unit at the OECD's Centre for Tax Policy and Administration.

Since joining the OECD, he has worked on a variety of projects, but the OECD's greatest indirect tax achievement during his tenure was the release of the International VAT/GST Guidelines in 2015, and the work that preceded this.

Since the Guidelines were published, Battiau has been touring the globe to assist countries that have been implementing parts of the Guidelines on a bilateral and multilateral basis. Over the years, his work has focused more on the collection of VAT from online businesses – a key challenge for tax authorities and their systems worldwide.

"The work is very much focusing on countries' efforts to collect VAT, on the one hand from non-resident suppliers, which is the well-known issue and generally concerns online supplies, but also increasingly simply collecting VAT in an online environment, even if the vendors are in the country. Particularly when we're talking about pretty big countries." Battiau told International Tax Review.

"Also tax administrations are increasingly struggling and coming to us for discussions for assistance and implementing systems to collect VAT," he continued. "That's, of course, an area that features prominently in our Guidelines, but also features prominently in the BEPS Action 1 report."

It is for this reason that Battiau and the OECD are developing an implementation guide and a 'toolkit' to support countries in implementing mechanisms effectively and consistently. As discussed in-depth in ITR's cover story in the November 2016 edition, a key issue for businesses and governments is to implement tax rules for the digital economy consistently to avoid a convoluted web of laws that would be both costly for businesses to comply with and administratively inefficient for tax authorities.

Battiau and his team assist tax administrations around the world on a variety of issues, but he said that some of the most common are refund regimes, the organisation of export-related refunds to non-resident businesses, and how to create and operate these mechanisms.

"It's really about finding the balance between the importance of operating a refund mechanism from a business perspective and from an economic competitive perspective on the one hand, but on the other hand balancing that with concerns such as protection of revenue," he said. "It's often a very fine balance and it's difficult to give broad-brush advice in that area. So we have to look at the specifics of every country, the specifics of the economic environment and model, the compliance culture, the administrative capacity and all that."

Battiau picked out the example of India, which recently approved rules for taxation of online sales into the country.

"If you look at what has happened with India almost overnight with the implementation of the requirements for non-residents to register for service taxes, the regime is very much based on our Guidelines. [They were designed in such a way that] you could also implement them in a sales tax environment, and that's what India has done."

"The implementation of the Guidelines is massive. To see a country like India implementing a regime that is very much based on what we've done is huge in terms of impact on business and impact on revenue. We're very aware of our responsibility in that area in that we really work and try to work closely with governments and businesses to keep the compliance burden as low as possible and keep administrative efficiency as high as possible."

Another economic powerhouse that may be on Battiau's radar soon is the US, which is preparing for a fundamental tax reform. Although Battiau has not been in contact with the incoming Trump administration, a blueprint for corporate tax changes put forward by Paul Ryan, speaker of the US House of Representatives, shares some mechanisms with the OECD-style indirect tax recommendations.

"Some say that what is in the Ryan blueprint might become reality going forward. I don't have any specific information there, but that could include the implementation of the so-called destination-based cash flow tax. Some say that that is close to a VAT, to a subtraction type of VAT," Battiau said. Although Ryan's proposals are different from a VAT because it allows for the deduction of labour cost from the taxable base, Battiau said the mechanics might look a bit like a subtraction type of VAT.

"It's an area of personal interest, let's put it like that. In the sense that what's being proposed is a corporate income tax, it's a destination-based cash flow corporate income tax, but it has some similarities with a VAT, notably on how it would work in an international context with adjustments, zero-rating of exports, taxing of imports, etc."

During the next year, a key issue for Battiau and the OECD is likely to be online digital selling platforms such as eBay and Amazon, and how they can be part of the solution for the collection of VAT, GST and other taxes.

"What has become very clear, very rapidly, over the last few weeks even, is that one of our key priorities for next year is going to be around defining the role of platforms and typically the online platforms in a broad sense of the concept," he said. "I am focusing on VAT and GST, but this is a question which is cropping up more generally – how to ensure, on the one hand, the proper tax collection and on the other hand an even playing field in an environment where an increasing number of businesses are selling online."