Indirect tax treatment of cancellations, ‘no shows’ and bad debts – A multijurisdictional analysis (2021)

The summary tables found within the document below seek to provide high level guidance on the indirect tax position and impacts in each jurisdiction. Importantly, what they highlight is the differing nature of the indirect tax treatment around the world, and in particular, raises key issues for policymakers such as:

1. The extent to which indirect tax systems should seek to tax revenue from unfulfilled supplies in the form of cancellation fees, damages payments or liquidated damages; and
2. The nexus which may be required between the receipt of income and the performance of certain services which still take place despite a supply being unfulfilled (such as the taking of a booking, or the setting aside of stock, or a reserving a seat at an event, on a flight, or a room in a hotel).

Source KPMG

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