The main principle of developing legal regulations governing VAT taxation is the principle of neutrality, the implementation of which in relation to cross-border activities is also bounded by the principle of territoriality and destination principle. A certain flexibility of the interpretation of the principles makes it possible to take into account current economic realities and the goals pursued by the transformation of social practices.

Accordingly, the regulatory legal construction of the VAT mechanism and subsequent systematic alignment of practice based on the above principles taking into account their correlation with a set of structure-forming characteristics of the tax makes it possible to build an optimal model for value added taxation.

The purpose of the research - analysis of the content and practical implementation of the principles that determine the mechanism of VAT taxation of cross-border activity, for the subsequent ensuring the neutrality of VAT taxation of cross-border transactions.

Research methods: dialectical, analysis and synthesis, deduction and induction, comparative legal.

Conclusions: Ensuring the neutrality of VAT taxation of cross-border transactions within the framework of the requirements limited by the principle of territoriality can be implemented by structuring the VAT taxation mechanism based on the principle of the country of destination. Understanding the content of the above principles allows to determine the best ways to develop legal regulations in relation to VAT taxation of cross-border transactions.

In particular, the implementation of the destination principle implies the necessity of legislative regulation of the following aspects of VAT taxation: (1) determining the place of supply (taxation), (2) the procedure for taxation at the place of supply, (3) the existence and procedure for exercising the right to reimburse the amounts of input tax, (4) the procedure for reimbursement of paid amounts of VAT (input tax).