Helsinki supports objectives of EU VAT reform

The government of Finland supports the general objectives of the amendments to EU’s value-added tax (VAT) regime proposed by the European Commission (EC), an official press release said on Thursday.

The EC on January 18 tabled the proposal for amending the VAT rates. The proposal is a part of an EU taxation package aimed at creating a single EU VAT area.

The government in the press release said all the EU member states should be given the same rights to use reduced VAT rates, but a more flexible position on reduced rates must not impede the functioning of the single market.

According to the Commission’s proposal, the EU member states could apply, in the present manner, up to two reduced VAT rates of minimum five per cent, but all the member states would also be given the right to apply a reduced rate of less than five per cent and another rate of zero per cent.

The present extensive listing of goods and services eligible for reduced VAT rates would be replaced with a list of goods and services to which the reduced rates would not apply.

The government in the press release said that it is in favour of bringing the EU rules on VAT rates up to the date, but it considers that the details of the Commission’s proposal should still be examined further.

The release also said that the model proposed by the Commission poses the danger of a growing use of reduced rates and a more complex system at the EU level. The government rather favours the principle of listing those goods and services to which the reduced VAT rates would apply rather than those to which they would not.

The government on Thursday submitted a Union communication to parliament on the matter. A Union communication is used in EU affairs whenever there is a matter concerning an EU legislative proposal or any other proposal that falls within parliament’s competence.