Brussels, 18/11/2013 (Agence Europe) - Making the VAT system of the EU simpler and more efficient to tighten up the fight against fraud, improve compliance with tax obligations to boost VAT revenue and ensure that this revenue makes the best possible contribution to the consolidation of the budgets of the states which have been hit hard by the crisis: these are the main subjects discussed at the 7th Tax Forum the theme of which was “An Efficient VAT System”, which was held in Brussels on Monday 18 November on the initiative of the European Commissioner for Taxation, Algirdas Semeta. The forum was attended by some 250 delegates from 37 countries and was addressed by a number of experts. These mainly dealt with measures likely to recover the €200 billion or so of unpaid or uncollected VAT in the EU every year due to fraud or the excessive disparity in national rules or collection systems.
On the first issue tackled at the three working sessions - the fight against VAT fraud (particularly “carousel” type fraud) - the introductory speech by the commissioner (who was absent for family reasons) laid emphasis on the measures adopted this year on the initiative of the Commission (rapid reaction and self-liquidation mechanisms - see EUROPE 10667 and 10893). Amongst other suggestions made by those taking part to reduce tax avoidance to a maximum: developing administrative cooperation and the sharing of best practice, rolling out electronic returns or harmonising national databases and creating centralised databases, making it possible to obtain all useful information regarding tax payers and transactions at EU level. Risks to the protection of personal data would under these circumstances be offset by a simplification and harmonisation of the system and by reducing the administrative burden and costs for businesses and administrations.
The need for simplification and harmonisation was stressed once again at the forum in its discussions of the facilitation of compliance with VAT obligations by businesses and cutting related costs. Among the measures to do this, the Commission pointed out the new harmonised invoicing rules which entered into force only this year, its proposed standardised VAT return (see EUROPE 10948), which will replace the 28 currently highly disparate returns systems and allow businesses to provide the same basic information in the same time throughout the EU, and the Mini-One Stop Shop initiative, which will allow small telecommunications companies or online services companies to declare and pay VAT in the country in which they have their headquarters rather than the one in which they sell their services (which hinders their activities in the single market). This initiative could be extended to SMEs operating in other sectors, if its success is confirmed in 2015.
The other main issue dealt with - VAT's contribution to the member states' budgetary consolidation - highlighted the need to make collection systems less complex and more effective. Whilst many member states have been tempted to raise their revenue by increasing rates in order to cut their debts and consolidate their budgets, this solution could drive prices up to the detriment of the poorest members of the population in these times of crisis. The Commission therefore suggested, instead extending the VAT base, reducing the number of sectors enjoying exemptions and reduced rates and bringing in greater uniformity among these from one member state to the next. In order to compensate for the increased cost of living which could result, it also suggests targeted measures to help the least favoured members of the population.
More generally, the chair of the committee on economic and monetary affairs of the EP, Sharon Bowles, who spoike at the start of the forum, put forward a few concrete suggestions from her institution to improve the current VAT system: - developing full harmonisation, rather than partial, as has been the case up to now, by means of regulations rather than directives; - developing a decentralised tax administration closer to the taxpayers at EU level; - improving the efficiency of the Eurofisc administrative cooperation network in the fight against VAT fraud. Other experts (Belgium, Portugal, the United Kingdom and Ireland) illustrated practices “which work” in their countries, and which could be rolled out at EU level. (FG/transl.fl)