The COVID-19 pandemic highlights the pressing need to address common challenges faced by all countries and, in particular, provide special support to developing countries through international cooperation. Taxation, in particular Value Added Tax (VAT), is a key area for strengthening international cooperation because of its critical role in financing the COVID-19 crisis and supporting global recovery. This article proposes the adoption of VAT treaties based on two considerations. First, there exist, in the interplay between states’ VAT laws, over-taxation and under-taxation that can be more effectively addressed by treaties than by unilateral state actions. Second, unlike income tax treaties, the VAT treaties would distribute more benefits from cooperation to developing countries than to developed countries, leading to normatively attractive distributional consequences. The proposed model offers a new approach to taxing cross-border transactions under VAT and could form part of the coordinated responses to a sustainable post-pandemic recovery.
Zu, Y. (2022). Developing VAT Treaties: International Tax Cooperation in Times of Global Recovery. Legal Studies, 42(1), 159-177. https://doi.org/10.1017/lst.2021.37