VAT and barriers to trade
From the perspective of international trade law a barrier to trade can be described as an obstacle in the form of a trade practice adopted or maintained by a country, whereas international trade rules prohibit that practice or give another country that is affected by the practice a right to seek elimination of the effect of the particular trade practice.
A barrier to trade in the aforementioned sense is not to be equated with the WTO Technical Barriers to Trade Agreement (TBT) or the WTO Sanitary and Phytosanitary Measures Agreement (SPS).
Although it is possible that in the field of VAT a barrier to trade falls under the TBT Agreement or SPS Agreement, more often the barrier to trade will exist in the form of a discrimination. Examples of the latter are violations of the Most-Favoured-Nation or national treatment obligations under WTO agreements or similar violations of regional or preferential trade agreements.
More in general, with regard to international transactions and VAT the issue of a barrier to trade can rise when the particular trade practice has an influence on the market access for foreign taxable subjects.
In the scope of the implementation of the WTO agreements, the European Union and other countries (e.g. Australia, Japan, US) have introduced in their domestic law regulations that allow their resident companies to report barriers to trade maintained by other countries. Based on such reports the competent authorities then investigate and determine whether or what actions must or can be brought against the country that applies the alleged barrier to trade.
