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| Adaugat in data de 16-02-2011 |
The European Commission launches for debate the future of the Value Added Tax in a bid to simplify VAT legislation
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The European Commission has launched a Green Paper on the expected changes to the VAT legislation on a European level. The period of consultation lasts for six months and will be completed at the end of May 2011.
The aim of this consultation process is to reduce the complexity of the current system, make the single market work better, maximize revenue collection and tackle the system’s susceptibility to fraud.
According to the European Commission data, it is estimated that at the EU level, VAT related fraud amounts to 100 billion Euros annualy. By simplifying the system and reducing red-tape, the European Commission officials hope to increase voluntary compliance.
“We expect the Green Paper to include a series of proposals that would utilize the potential of the advances in technology, like electronic filing and payment methods, in order to create a simpler, more robust and efficient VAT system”, stated Daniel Anghel, Partner, Indirect Taxes, PwC Romania at the Annual Indirect Tax Conference organized by PwC Romania.
“VAT legislation has been introduced in the EU member states 40 years ago and now constitutes one of the main sources of income for the national budgets. Yet, the complexity of the current VAT system creates unnecessary costs and burdens for taxpayers and administrations, as well as obstacles for the Internal Market. We believe that the changes to the VAT legislation will lead to a broader based VAT system”, added Daniel Anghel.
In terms of harmonizing the EU VAT legislation, the Commission intends to replace the current VAT Directive with a new Regulation. “While the Directive needed to be transposed in the national legislation, therefore it lead to legislative differences from one European Member State to another, the new Regulation will have to be applied as such in all the 27 member states, thus generating a single EU wide VAT regime”, explains Daniel Anghel.
The principles of the new EU VAT system were presented to the participants at the Annual Indirect Tax Conference organized by PwC Romania. These include a broad definition of taxable person (including government bodies), high registration threshold, the use of a single rate rather than several VAT rates, reduce the number of exemptions, no limitations to the right to deduct VAT and an increase of the taxable base.
Several economic studies, including researches undertaken by PwC, have highlighted that consumption taxes are among the most growth-friendly taxes and that a robust VAT system could contribute to the economic regeneration of Europe.
“We are confident that at the end of the consultation process we will have a document that would lead to a VAT legislation fit for the 21st century. PwC is actively engaged in this consultation process and we will voice our recommendations to the authorities”, concluded Daniel Anghel.
PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See pwc.com for more information..
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