sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
« VAT (Value Added Tax) »
 Filing of online return for 4th quarter of 2017-18 extension of period thereof.
 No Cenvat credit admissible on outward transportation services from factory to buyer’s premises
  Filing of reconciliation return in form 9 for the year 2016-17
 Govt may send notice to 162 companies; ask for VAT returns
 Cenvat Credit Is Not Income Liable To Be Taxed
 Cos wanting to claim VAT refund on employees' foreign stay can get professional help
 Regarding disposal of pending form DVAT 04 & 07 Form Applications
 Disposal of pending Form DVAT 04 & Form DVAT 07 applications: regarding
 Cenvat Credit Rules, 2017 III Part
 VAT phased out in TS
 Cenvat Credit Rules, 2017 II Part

Reforms in EU VAT: Lessons for the Indian GST
December, 26th 2011

The previous article in this column had discussed briefly the Communication on the future of VAT in the EU (Communication), recently adopted by the European Commission (EC), and the need for India to closely follow these developments so as to seek incorporate the best in class thinking while approaching the dual GST. This article and the next one will discuss in detail the priority areas for further action, keeping in mind the overriding objectives of the reform process.

Before we turn to the Communication however, it is important to note that the EC had, earlier in April 2011, adopted the Single Market Act [COM (2011) 206] (SMA) as part of the overall strategy for attaining sustainable and inclusive growth (Europe 2020). Amongst the twelve levers identified to boost growth and strengthen confidence in the EU common market, the establishment of a definitive VAT regime applicable to cross-border transactions was high on the agenda of the policymakers in the EU.

On the first grouping above, of a simpler VAT system, the EU takes note of the fact that divergent practices in the EU member states have led to a frustrating burden on businesses. An economic evaluation done by the EU reveals that compliance costs for businesses are very high, with estimates ranging from 2 % to as much as 8 % of the VAT collections. Furthermore, businesses carrying out intra-EU trade are subjected to additional burden of reporting. Moreover, the smaller businesses are burdened over and above their capacity to handle compliance. The EU hence recommends three areas of work in this grouping as follows:

The One Stop Shop (OSS) solution for simplifying the regulatory and administrative environment under which the businesses, particularly the smaller ones, operate. The introduction of a mini OSS, as it is called, by 2015, is seen as a high priority.

Improving the governance of VAT at the EU level, as opposed to the member state level. The EU states that stake holders want greater involvement and more transparency in the process of establishing and interpreting EU VAT law, a claim which the EC believes to be very valid. In 2012, the EC will publish guidelines on VAT legislation and will follow it up with explanatory notes on the new legislation before it is notified to be effective, giving businesses enough time to adopt to new VAT legislation. Also in the course of 2012, the EC has proposed to set up a tripartite EU VAT Forum consisting of representatives from the EC, Member States and various stake holders to exchange views on practical issues of VAT administration, especially the cross-border issues that businesses face in the EU.

The last area of work relates to standardising VAT obligations, so as to minimise reporting obligations and costs of compliance. The EU proposes to standardise a VAT declaration by 2013, to be available in all languages and to be applicable to obligations such as registration, invoicing and others.
On the second grouping, of a more efficient VAT system, the following areas of work have been identified:

Broadening the tax base
This workstream will focus on public bodies and the need for exemptions relative thereto, passenger transport services and the need for the exemptions or the particular place of supply rules relative thereto as also on other exemptions and their continued relevance, if any.

Review of the VAT rate structure
This critical workstream will focus on the need for reduced rates. The EU notes that reduced rates increase complexity and reduce growth in trade. The application of standard rates remains the basic principle and the need for fiscal consolidation in member states also necessitates limiting the use of such rates. The EU notes also that similar goods and services should be subject to the same VAT rate and convergence between on line and physical environments also pose a challenge on aligning rates. Accordingly the Commission will, in 2012, launch an assessment of the current VAT structure. It will also establish a VAT web portal, in which clear and binding information on the list of goods and services that are not covered by the standard rates will be provided.

The next and last article in this series will discuss the other two groupings and the work priorities relative thereto and the implications of these initiatives for the Indian GST.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Experience

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions