Global Turnover Taxes Grow Complex: Do Tax Treaties Suffice?

RUST, DDTCNews – Beneath the blazing summer sun, an atmosphere of warmth radiated positive energy as delegates from across the globe gathered on the shores of Lake Neusiedl, Austria. Standing side by side on the iconic wooden jetty, tax experts and professionals serving as national reporters appeared to dissolve the geographical boundaries that had long existed among them.

The next session of the Rust Conference 2026 demonstrated that the treatment of turnover taxes cannot be interpreted solely from domestic tax law. In many cases, bilateral and multilateral agreements prove to be the key to determining whether VAT, GST, or other turnover-based levies may be imposed, exempt or subject to refund mechanisms.

Senegal serves as one example. For that country, the relevant instruments extend beyond bilateral tax treaties to include regional frameworks such as the West African Economic and Monetary Union (UEMOA) and the Economic Community of West African States (ECOWAS).

Both regimes harmonise provisions on VAT, including the principles of territoriality, place of supply, deductions and refunds, but do not establish specific mechanisms for turnover taxes other than VAT.

Belarus, meanwhile, presents a more institutionalised model through the Eurasian Economic Union (EAEU) agreement and its Protocol on Indirect Taxes.

Those instruments do not merely govern the allocation of the jurisdiction to tax; they also establish the destination principle, zero-rating of exports, import taxation in the destination country and cross-border VAT verification as well as refund mechanisms among member states.

Bilateral Agreements

In Belarus, the bilateral agreement with Russia goes even further by encompassing a high degree of administrative integration. Data is exchanged through a shared digital system, enabling tax authorities to trace VAT chains, scrutinise import declarations and detect discrepancies in near real time.

Beyond Russia, Belarus also enters into similar agreements with Turkmenistan, Tajikistan, Moldova and Azerbaijan. However, those agreements are more basic in nature, establishing only the principles for collecting indirect taxes on imports and exports, without the level of administrative integration comparable to that between the EAEU and Belarus.

The report from Senegal notes that most double tax treaties (DTTs) in force continue to originate from income tax and stated capital models. Accordingly, VAT, digital services taxes and other turnover taxes generally fall outside the scope of DTTs, unless a clause expressly extends their coverage.

Consistent with Senegal's position, Belarus adopts a similar stance but with a more formalistic emphasis. Turnover taxes remain regarded as indirect taxes that are neither identical nor sufficiently similar to income tax, and therefore do not fall within Article 2 of Belarus's DTTs.

Refund Mechanisms

In practical terms, Senegal illustrates that the regional VAT rules have yet to provide refund mechanisms truly comparable to the European Union system. As a result, cross-jurisdictional turnover tax disputes remain heavily dependent on domestic harmonisation and administrative co-operation, rather than on taxpayers' right to seek treaty-based resolution.

Belarus, on the other hand, offers clearer mechanisms within the EAEU framework, yet the underlying logic remains one that does not provide an unilateral exemption for turnover taxes.

The VAT refund mechanisms operate through a destination-based system design, whilst for non-resident businesses, fiscal protection arises only where the business registers as a taxpayer pursuant to the domestic law.

This session also confirmed that certain non-tax agreements may produce tax effects, but only on a sectoral basis. Senegal again provides an illustration: agreements such as the Chicago Convention, the Melbourne Agreement and the Vienna Conventions serve merely as boundaries or technical co-ordination tools, rather than as comprehensive regimes governing VAT or turnover taxes.

From these discussions, it may be concluded that turnover taxes require more specific instruments than conventional tax treaties. In the absence of dedicated clauses, countries tend to revert to inherently limited and fragmented unilateral models, regional harmonisation or administrative co-operation.

The future of turnover tax co-ordination is likely to rest not on ordinary DTTs, but on dedicated VAT/GST agreements or regional schemes that explicitly address the place of supply, refund mechanisms and dispute resolution. Without such frameworks, the risks of double taxation and cross-border uncertainty will persist. (rig)

*This article is based on reporting by Senior Specialist of DDTC Consulting, Dawud A. Q Lubis, and Specialist of DDTC Fiscal Research & Advisory, Abiyoga S. Wiyanto.