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Parliament calls for VAT reforms to target fraud, help small firms and NGOs and promote green products

Plenary Session Press release - Taxation13-10-2011 - 12:41

Prioritising a crackdown on fraud, granting NGOs and small firms, exemptions and reducing rates for "green" products are some of the key proposals in a resolution, passed on Thursday, on the future EU value added tax system. MEPs also call for a stronger role for the Commission to push through more harmonisation to increase efficiency and reduce red tape for businesses.

The report, a response to the Commission's December 2010 Green Paper on the future of VAT, will feed into the upcoming Strategy on the Future of VAT, which is expected by the end of this year.

Rapporteur David Casa (EPP, MT) said in the debate on Thursday before the vote:  "Some businesses I spoke to told me that they prefer to trade with non-EU countries because VAT procedures are more simple. This should not continue to be the case.  We need to simplify and improve our infrastructures while at the same time giving a priority to fighting fraud which costs countries billions every year."

More revenue but also more incentives for business

The main goal of the resolution is to strike a balance between maintaining VAT revenues at the levels needed to provide a major source of income while at the same time ensuring that they do not choke off useful activity. This could be achieved chiefly by tackling fraud (which currently costs the EU €100 billion in lost revenue) and reducing the plethora of different exemptions and rates while, on the other hand, devising smart EU-wide systems that would make life easier for honest businesspeople and legitimate non-profit organisations in delivering their goods and services.

Voluntary sector and small business

The resolution calls on the Commission to propose a mechanism allowing Member States wishing to strengthen civil society to grant a general VAT exemption for all or most of the activities and transactions carried out by these organisations, particularly smaller NGOs.

It also asks the Commission and Member States to consider introducing a Europe-wide VAT exemption threshold for SMEs, with a view to cutting red tape and costs and facilitating access to the internal market.

Greening VAT

The resolution, adopted with 521 votes in favour, 50 against and 58 abstentions, calls for a "Green VAT strategy" which would provide for reduced rates on eco-friendly products thereby making them more competitive with unecological alternatives produced more cheaply.

Procedure:  Non-legislative resolution

REF. : 20111012IPR29115
Updated: ( 13-10-2011 - 13:00)