Research On The Application Of The Destination Principle Of Cross-border Value-added Tax Under The Digital Economy

In the cross-border value-added tax(VAT)system,the destination principle is an essential taxation principle.The destination principle is gradually recognized as the tax principle for countries to exercise tax jurisdiction.Due to the advantages of the destination principle over the origin principle,major international economies gradually establish the destination principle as the main tax principle.VAT is the largest type of tax revenue in China,of which the income of cross-border VAT is an important part.Compared with other countries that have successively carried out the reform of valueadded tax system to establish a tax system guided by the destination principle,China’s current VAT rules do not clearly adopt the destination principle in cross-border transactions,nor do they formulate specific and unified application rules,although there was similar practice of the destination principle in the application of cross-border VAT of China.According to the comparative analysis of the origin principle and the destination principle,as well as the value mismatch trend and value creation theory under the digital economy,it is necessary for China’s cross-border VAT system to gradually transfer from the current rules to the application of destination principle.With the rapid development of information and communication technology,digital economy,as a new economic form,had changed the appearance and characteristics of traditional economy.The development of digital economy is quite fast and covers a wide range of areas.It shows great impact on the current social business model and global supply chains,resulting in the blurring of the differences between goods and services in global cross-border trade.Therefore,the cross-border VAT system based on the traditional tangible commodity economy will inevitably be greatly challenged.In the digital economy,the application of the destination principle also faces kinds of challenges.In order to deal with the challenges brought by the digital economy,OECD and countries continue to put forward countermeasures to improve the cross-border VAT system,including International VAT/GST Guidelines which continuously revised by OECD since its first publication and the VAT system continuously reformed by the EU.The impact of digital economy on the tax rules of VAT shall not be neglectable in any way.On the one hand,China should unify the applicable rules of the destination principle as soon as possible,on the other hand,it is also important for China to actively take various measures to improve the application of the destination principle,so as to response to the challenges of the current digital economy to cross-border VAT.This paper takes the application of the destination principle of cross-border VAT under the digital economy as the core research problem,deeply analyzes various challenges brought by the digital economy to the application of the destination principle,expounds and analyzes various countermeasures of OECD and various countries under the digital economy,and finally puts forward the improvement path of the application of the destination principle of cross-border VAT in China.This paper mainly researches the application of the destination principle of cross-border VAT in the digital economy from the following aspects,and puts forward some conclusions on how to improve the application of the destination principle:Firstly,in the first chapter of the text,this paper expounds the relevant concepts and characteristics of digital economy and cross-border VAT,compares the differences between the origin principle and the destination principle,analyzes the main advantages of destination principle,so as to lay the foundation for the follow-up demonstration of this paper.Secondly,in the second chapter of the text,this paper focuses on the different challenges faced by the current application of cross-border VAT destination principle,and makes an in-depth analysis of the root causes and specific manifestations of the difficulties in the application of destination principle under the digital economy,such as the problem that the destination cannot be determined,the problem that the subject and object of cross-border transactions cannot be determined,the difficulty of tax collection and management and tax complianceThirdly,based on the analysis of the dilemma of the application of the destination principle under the digital economy,this paper analyzes and draws lessons from the current international application rules of the destination principle by using the research method of comparative law.Among them,the guiding rules of the OECD International VAT/GST Guidelines systematically explain the rules for determining the destination under different transaction scenarios,which provides a better solution for the determination of the destination.The “proxy method” has become a feasible method for determining the destination.This paper also makes an in-depth study on the OECD destination determination rules by means of case analysis.The EU tax rules also have great reference significance.The evolution of the EU tax collection and management rules can reflect how to better improve the tax collection and management under the destination principle in the digital economy.The GST reform rules of New Zealand and Australia also have reference significance for the determination of destination transaction subjects.Although these international reference rules have certain significance and solve the problems such as how to determine the destination and tax collection and management,there are still some problems.For example,there are differences in the applicable rules of the principle of destination among countries,and they have different understandings of some different concepts,which objectively has the risk of double taxation.In addition,at present,there is a lack of bilateral and multilateral cooperation mechanisms in the world,which makes the application of the principle of destination unable to be effectively coordinated..Finally,the last chapter of the text combs the historical practice and existing problems of China’s VAT involving the application of the destination principle since the development of digital economy.At present,China has not explicitly adopted the destination principle in the current laws and regulations,which will lead to the risk of double taxation for some enterprises in China.Therefore,this paper puts forward several suggestions on the application and improvement of the destination principle in China in the future.For example,China should uniformly apply the destination principle in the future and formulate detailed rules for the application of the destination principle.For the problem of how to levy taxes,an effective tax collection and management system is an important guarantee for the application effect of the destination principle.Finally,China should actively coordinate with other countries and participate in the construction of bilateral and multilateral cooperation mechanisms of cross-border VAT.