The OECD’s new reporting framework for the gig economy

The Organisation for Economic Co-operation and Development (OECD) released model rules on 3 July that would require digital platforms to report information to tax authorities about platform users’ income from offering accommodation, transport, and personal services.

The model rules will help those in the gig and sharing economy “in being compliant with their tax obligations” and ensure a level playing field with traditional businesses, according to an OECD press statement. The rules were approved 29 June by the OECD/G20 Inclusive Framework on BEPS and will apply only in jurisdictions that choose to formally adopt them.

The model rules focus on accommodation, transport, and personal services because “[t]hese are the sectors that pose certain tax compliance risks in light of their scale, the income they generate and the profile of the sellers [platform users] involved”, the OECD said. The rules could be expanded in the future as digital markets evolve.

Two key features of the Model Rules for Reporting by Platform Operators With Respect to Sellers in the Sharing and Gig Economy is that they cover:

• A broad scope of platform operators and sellers to ensure that as many relevant transactions as possible are being reported. “Sellers” can be either individuals or entities;
• A targeted scope of reportable transactions, focusing on accommodation (eg, the rental of homes), transport (eg, delivery), and personal services. Personal service generally means “a service involving time- or task-based work performed by one or more individuals at the request of a user, unless such work is purely ancillary to the overall transaction”, and some examples include manual labour, tutoring, copywriting, and data manipulation, as well as clerical, legal, or accounting tasks.

The model rules require annual reporting to tax administrations and sellers by 31 January of the year following the reportable period.

A multilateral approach

Some nations have already implemented measures requiring platform operators to report platform users’ income to the tax authorities. The OECD says it hopes the model rules will help limit or contain this recent proliferation of unilateral reporting requirements. The OECD intends the model rules to streamline reporting regimes for tax administrations and platform operators alike.

Efforts will continue, the OECD said, to develop an international framework to facilitate the automatic exchange of information collected under the model rules.

The OECD noted that the platform economy increases opportunities for tax collection by creating electronic records of transactions that previously were carried out in the informal cash economy.

The model rules are one aspect of the OECD’s larger effort to address challenges arising from the digitalisation of the economy, and their approval by the OECD/G20 Inclusive Framework on BEPS proves that multilateral solutions “are possible”, Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration, said in the press statement.

— Dave Strausfeld, J.D., (David.Strausfeld@aicpa-cima.com) is an FM magazine senior editor.