Thank you for the question.
The model rules for reporting on digital platforms was developed by the OECD to address concerns about under-reporting in the sharing and gig economy. Many of the participants in the sharing and gig economy who would be providing services through these online platforms might be unaware of the tax consequences of the income they're receiving, or if they are aware, in some cases they might not have been voluntarily reporting their income.
The rules were developed to provide a mechanism for essentially third party reporting. It's similar to the third party reporting that many of us are familiar with with respect to sources of income, like employment and investment income, where an intermediary, like a bank or the employer, would provide that information to the tax authority.
This reporting regime would require digital platforms to provide information to the tax administration on the amounts received by people providing services through these platforms. It would also apply to sales of goods by third parties through an online platform.
Another important aspect of this is that in many cases, these platforms might not be located in the country where the individual providing the services or selling the goods is located. In this case, the logic behind the system is that with different countries implementing similar rules, they would require the platforms located in their countries to report on the sellers whom they have on their countries of residence. That would mean the tax administration would have information on the local residents and then could exchange information with other countries on the sellers who are residents in other countries.
Another dimension to this is the reporting that the platforms are to provide to the tax administration. They will also provide the same information to the sellers themselves to help ensure that those sellers are aware of their tax obligations.