Brussels, 09/05/2011 (Agence Europe) -EU Taxation Commissioner Algirdas Šemeta made the opening address at a European Commission conference on 6 May in Milan on a Green Paper on the future of VAT in the EU. He set out the following ideas - charging VAT on a larger group of goods and services rather than increasing the rate of VAT, ensuring more VAT is collected without penalising consumers, improving cooperation among tax authorities, making the most of tax collection systems and tax offices to collect VAT more efficiently and tackle tax avoidance, simplifying the VAT system and making it cheaper to run by removing red tape.
The conference in Milan was part of a consultation exercise launched by the European Commission with the publication on 1 December 2010 of a Green Paper on the future of VAT in the EU (see EUROPE 10268) and how to make the VAT system in Europe simpler, more robust and more efficient, ahead of the publication in December 2011 of a root-and-branch reform of the VAT system. The commissioner stressed the importance of the consultation exercise as the first stage in the process of drafting new rules for the VAT system in the EU for the next ten years and beyond. He urged interested parties that have not yet come forward to submit their comments before the 31 May deadline.
To achieve his aims, the commissioner suggests the VAT system has to be adjusted so that it fully meets the needs of the single market and to this end, Šemeta suggested that the VAT rules for intra-EU transactions need to be altered, particularly the question of which country must levy and pay VAT on cross-border deals (the country where goods and services are provided or the country where they are consumed) and introducing a single VAT system for such transactions (a requirement set out in the Single Market Act). Another area of improvement is to cut the cost of collecting VAT and complying with VAT rules, preventing fraud and allowing member states great flexibility in how they operate. The idea is to reduce the differences in taxation from one product and service to the next, cutting red tape as far as possible and levying and collecting and inspecting VAT returns online. In this connection, the commissioner said improvements were needed in the process of introducing new VAT legislation (shortcomings were revealed during implementation of EU VAT rules by tax offices), the slow and cumbersome nature of changes to VAT rules being particularly damaging to companies; how VAT is collected, examining new ways of collecting tax rather than the current system that combines self-declaration by people and companies registered for VAT with too many inspections by tax authorities; and getting individuals and companies to trust the tax authorities by giving incentives for VAT-registered companies and individuals to collect tax on behalf of the tax office: “We should give them the right incentives and responsibilities in this task.” (F.G./transl.fl)