Brussels, 29/06/2007 (Agence Europe) - EU Taxation and Customs Union Commissioner Laszlo Kovacs told the European Parliament's Economic and Monetary Affairs Committee on Wednesday 27 June that he would be submitting 'a proposal enabling the continuation until the end of 2010 of most of the temporary derogations given to some of the new Member States which are due to expire at the end of 2007'. As part of their accession negotiations, some of the new member states wanted to apply reduced VAT to specific categories of goods and services. Lithuania, for example, is applying a reduced level of VAT, 9%, to the building of private housing and Slovenia is levying 8.5% VAT on building and maintenance work for residential units which are not covered by a social policy and is also levying 8.5% VAT on the renovation and repair of private housing.
The new draft directive will accompany the eagerly awaited European Commission report on the impact of the cut level VAT rates on the functioning of the Single Market (see EUROPE 9448). Not wanting to speak on the subject at length, Kovacs mentioned the 'Communication on reduced VAT rates that the Commission will soon present. As you know, the Commission was asked to prepare an overall assessment report on the impact of reduced rates in terms of job creation, economic growth and the proper functioning of the Internal Market… The Commission Communication will contain the main conclusions of the study. It will also present possible ways forward, in order to launch the reflection with all the interested parties.'
The Commissioner explained: 'I will bring a proposal modernising the VAT treatment of financial services and insurances to the Commission in the autumn. There is general agreement that this legislation, which has not been revisited since 1977, is out of date and does not meet the needs of a modern economy. Work on the proposal combined with a draft regulation and the accompanying impact assessment is well advanced,' (see EUROPE 9426). He added: 'In the second semester of 2007 also the 'horizontal' Directive on general arrangements for products subject to excise duty (Council Directive 92/12/EEC) will be revised and modernised. It is necessary to incorporate the legal basis for the introduction of electronic procedures which are replacing the paper-based control system for the movement of excise goods.' Laszlo Kovacs also announced that 'a communication regarding a coordinated approach to the application of anti-abuse rules in the direct tax field has been scheduled for later this year' and the Commission will be reporting on the operation of the savings tax directive in 2008. (mb)