EU: Action plan to revise VAT system

EU: Action plan to revise VAT system

The European Commission today presented an “action plan” for changes to the value added tax (VAT) system.

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According to an EC release, the VAT rules “urgently” need to be updated to facilitate cross-border trade, to keep pace with the digital and mobile economy, and to address the “VAT gap” or difference between expected VAT revenue and the amount actually collected.

The VAT action plan aims to modernize the current EU VAT rules by providing for certain action steps, including:

  • Key principles for a future single European VAT system
  • Short-term measures to address VAT fraud
  • An updated framework for VAT rates and options to allow EU Member States greater flexibility in setting them the VAT rates
  • Plans to simplify the VAT rules for e-commerce and for a comprehensive VAT package to simplify the measures for small and medium size enterprises (SMEs)

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