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Global VAT news, February 2011: Commission issues Green Paper on the future of VAT

Friday, February 18, 2011

by Nick Ryan

The Green Paper issued on 1 December 2010 launches a public consultation on how the European Union’s VAT system can be improved and strengthened. The period of consultation lasts until 31 May 2011. The basis behind this is to seek views from interested parties on what they consider the current problems are, what improvements can be made and whether a simpler, more robust system is required.
Consideration firstly is given to whether the fundamentals of the current VAT system should be overhauled and, consideration as to what woud be the most efficient way to charge and collect VAT for intra-EU transactions.
Also to be considered are whether the reduced VAT rates in the various Member States are still relevant today, are the rules covering deductions neutral enough, what measures can be introduced to make the system fraud proof and, what can be done to alleviate the red tape currently in place in managing VAT transactions.
Finally, stakeholders are asked whether and how the collection of VAT could be improved in order to close the €100 billion VAT gap that currently exists in the EU.
This feedback from this consultation will be used to decide the best approach in creating a more stable, robust and effective VAT system for the future.
If you have any thoughts on this then please send these in and we would be pleased to summarise them in the next issue.