Brussels, 06/12/2011 (Agence Europe) - A VAT system is needed that is better adapted to the new realities of the economic situation - less complex for businesses to use, more effective, less vulnerable to fraud and providing a more effective contribution to member states' efforts to consolidate their budgetary situations. That, in essence, is the aim pursued by the commissioner for taxation and customs union, Algirdas Semeta, who presented a communication on reform of the VAT system on Tuesday 6 December.
Reform has become a “necessity”, the commissioner said, in that it must allow adjustment to single market requirements in a services and technology-based economy, a system that has been in place in the EU for 40 years and which accounts for over 20% of tax revenue in member states.
The new system should thus be “simpler and more transparent” to lighten the administrative burden on businesses and encourage cross-border trade, which is a factor of growth. Among the measures envisaged for a more business-friendly VAT are: expanding the one-stop-shop approach for cross-border transactions, standardising VAT declarations, and providing clear and easy access to the details of all national VAT regimes through a central web portal. Furthermore, it plans to maintain permanent dialogue with businesses so that the system may be regularly adjusted to the new requirements.
The new system should also put a stop to the huge revenue losses that occur today to uncollected VAT (12% of total revenue), and end constantly growing and increasingly sophisticated fraud. As of 2012, the Commission will study the possibility of continued review and calibration of national tax collection systems and propose a rapid response mechanism against fraud and better use of anti-fraud mechanisms such as Eurofisc. It will also take measures with a view to speeding up information exchange between member states.
Furthermore, the new system should contribute to the effort being made by member states to address their financial situation and ensure viable economic growth. Measures under review aim at enlarging the tax base and as far as possible limiting the use of reduced rates, in order to generate new receipts for states without having to put rates up. On the contrary, the discarding of certain reduced rates or exemptions which, according to the Commission, are no longer justified, should make it possible to reduce the normal rate of VAT in certain states. During review of member state budgetary policies in the context of the European Semester, the Commission will look at how reduced rates and exemptions are used.
Finally - and this is an important detail - the new system will maintain taxation in the country of destination (where the client is established), the Commission having given up its long-term objective of imposing taxation in the country of origin, now not considered appropriate. The communication is available at:
http://www.ec.europa.eu/taxation_customs/resources/documents/taxation/vat/key_documents/communications/
com_2011_851_en.pdf (FG/transl.jl)