European Commission announces value-added tax overhaul
The European Commission has presented an action plan aimed at overhauling the value-added tax system. The regulations governing the current EU-wide value-added tax regime, the Commission has decided, are in dire need of a make-over so as to enhance common market support and facilitate cross-border commerce.
The EC’s action plan comprises the following steps:
- formulation of principles underpinning the creation, over the course of 2017, of a common European value-added tax sphere;
- formulation and implementation of measures aimed at combating value-added tax fraud;
- streamlining of the rules governing e-commerce, the current system having been found to be both complicated and costly.
The price tag of cross-border value-added tax fraud comes to some 50 billion euros annually, with the gap between expected value-added tax revenue and realised revenue totalling 170 billion annually according to the European Commission. It is against this background that the Commission by the end of the current year intends to present its proposal for overhauling the value-added tax regime for cross-border e-commerce. One of the aspects of the shake-out will be that the same reduced rates will come to apply to electronic publications as already apply to physical publications. Follow-up should be provided in 2017 by means of the implementation of a package of value-added tax streamlining measures aimed at boosting the growth of businesses in the SME sector as well as facilitating cross-border commerce.