OECD: Policy and Design Considerations of Digital Continuous Transactional Reporting for VAT
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Ministry of Finance MoF | Central Board of Indirect Taxes and Customs CBIC
The OECD report titled ‘Digital Continuous Transactional Reporting for Value Added Tax’ examines the global rise of Digital Continuous Transactional Reporting (DCTR), a regime requiring businesses to report invoice data to tax authorities in (near) real-time. While DCTR is a powerful tool for closing the “tax gap” and enhancing compliance, its uncoordinated global expansion has created a fragmented landscape that complicates cross-border trade.
The report provides a framework for sustainable DCTR implementation across six key areas:
Strategic Foundation: Successful regimes require clear policy objectives, extensive stakeholder consultation, and robust cost-benefit analyses before deployment.
E-Invoicing as a Pillar: Leveraging standardized electronic invoicing is essential to minimize complexity; authorities should avoid “tax-only” data formats that differ from commercial standards.
Interoperability: To support global trade, tax systems must adopt common technical standards, allowing different national platforms to exchange data seamlessly.
Security & Trust: Governments must implement international information security standards to protect sensitive business data and ensure the long-term legitimacy of the digital tax system.
What is ‘Digital Continuous Transactional Reporting (DCTR)’? It is a tax administration model where transactional data (usually from invoices) is transmitted to the tax authority automatically at the time of the transaction, rather than through periodic summary filings (like monthly returns). This allows for “real-time” risk management and the pre-filling of tax returns, significantly reducing the opportunities for invoice-based fraud or “missing trader” VAT scams.
Policy Relevance
India is already a global leader in this space through its GST E-Invoicing system, and the OECD guidance provides a roadmap for the “GST 2.0” evolution.
Strategic Impact for India:
Strengthening GST Compliance: Further integrating DCTR principles can help India tackle sophisticated tax evasion and “fake invoice” rackets by validating transactions in real-time across the supply chain.
Facilitating Cross-Border Trade: By aligning India’s e-invoicing standards with international interoperability frameworks, Indian exporters can reduce the compliance burden when operating in jurisdictions with similar DCTR mandates.
Supporting the MSME Ecosystem: The report underscores the need for “free basic tools” for smaller players. India can enhance its existing support by providing deeper technical assistance and financial incentives for MSMEs to adopt digital-first accounting.
Sustainable Data Governance: As India collects more granular transactional data, implementing the OECD’s recommended “Information Security” protocols is vital to maintain business trust in the GSTN infrastructure.
Follow the full report here: Digital Continuous Transactional Reporting for VAT