As the gig and sharing economy expands, governments are introducing new reporting rules to ensure fair tax collection and transparency. The OECD’s Model Rules for Digital Platform Operators (MRDP) aims to standardize digital platform reporting across jurisdictions, with the EU leading the way through DAC7. Since then, countries like the UK, Canada, New Zealand and Norway have adopted MRDP, while others, such as Australia and China, have developed their own digital platform reporting frameworks with important deviations. In this emerging space, it is critical for digital platform operators to understand the reporting requirements in each jurisdiction where they operate.
Continue reading the article to find out:
- What is Digital Platform Reporting/MRDP?
- Who needs to comply?
- What needs to be reported?
- Jurisdictional Nuances
What is Digital Platform Reporting/MRDP?
Introduced by the OECD in 2020, MRDP sets out global reporting standards for digital platforms that facilitate activities such as property rentals, personal services, vehicle rentals, and the sale of goods. The aim is to ensure seller income is reported consistently to tax authorities, reducing tax evasion and creating a level playing field in the digital economy. While most global countries are adopting the OECD’s MRDP with local nuances, other countries, such as China and Australia, have used the MRDP as a rough guide to develop their own reporting frameworks that differ in significant ways.
Who Must Comply?
Platforms that qualify as Reporting Platform Operators (RPOs) must comply with MRDP. While the term “RPO” is specific to the MRDP, the concept is broadly applicable in all global frameworks. The criteria for a platform operator to be subject to reporting generally include:
- Connecting Buyers and Sellers: The platform must connect sellers with users for relevant services or activities. Platforms that only advertise without processing payments or contracts usually fall outside the scope.
- Facilitating Relevant Activities: The MRDP and related frameworks each provide a general list of reportable activities. MRDP relevant activities include real estate rental, personal services, sale of goods, and vehicle rentals. Local digital reporting adoptions, including countries that are implementing MRDP, will vary in reportable activities, so it is critical to know the rules in each country in order to comply.
- Jurisdictional presence: Some countries, like the UK and New Zealand, only require digital platforms that themselves are considered local residents to file a report in-country. Other countries, like the EU, China, Australia, and Canada, require extraterritorial reporting. This means that, regardless of where the platform itself is based, digital platforms will be required to submit a local report if they have any sellers who are tax residents in that jurisdiction.
What Needs to Be Reported?
Digital platforms must collect, verify, and report extensive data to local tax authorities. This includes:
- Reporting Platform Operator Information: Identifying details about the platform itself (name, address, registration numbers).
- Seller Information: Reportable data points vary by jurisdiction, but generally include each reportable seller’s name, address, and tax identification number. In many cases, there is a requirement to verify data collected from sellers before filing.
- Activity & Payment Information: Reportable data points include the type of activity carried out, the number of transactions, and the total payments made to sellers. For real estate, the address and property registration details must also be included.
Under MRDP, filings are generally due annually, with seller activity information aggregated by quarter. Some non-OECD frameworks (see table below) require more frequent reporting.
Comparing Certain Jurisdictional Adoptions
The table below provides an overview of jurisdictional reporting. As noted, even when a country adopts the MRDP standard, it can also introduce local nuances as well. It is important to stay up to speed on local country adoption, as well as these nuances. For example, while not summarized, Colombia, Costa Rica, Norway, and Iceland, have also adopted similar reporting requirements.
The OECD’s DPI MCAA: Information Sharing Between Countries
To reduce the risk of duplicate filings, the OECD introduced the Digital Platform Information Multilateral Competent Authority Agreement (DPI MCAA). This allows participating jurisdictions to automatically share platform-reported information with one another.
For platforms, this means that filing in one jurisdiction can, in certain cases, satisfy reporting obligations in another—reducing compliance burdens and administrative costs. However, implementation is not uniform. Each pair of jurisdictions must put specific agreements in place before information sharing can begin.
As of now, several countries have information-sharing agreements in place, but the execution of individual exchange relationships is still ongoing. For digital platforms, staying current on which jurisdictions have active information-sharing agreements is essential to avoid duplicate reporting and ensure compliance efficiency.
The Role of Taxbit in Simplifying Compliance
Managing MRDP and non-OECD regimes across multiple jurisdictions can be complex, particularly given variations in reporting frequency, scope, and data requirements. To learn more about global digital platform compliance, read our whitepaper.
Taxbit streamlines compliance by automating seller data collection, processing high volumes of transactions, and generating jurisdiction-specific reports in the correct formats. Its platform continuously updates to reflect regulatory changes, helping digital platforms stay compliant while focusing on their core business growth.
