European parliament calls for VAT reform

The European Parliament plenary session passed Thursday a resolution calling for reform on VAT, aimed at cracking down on frauds, helping small companies and NGOs, as well as promoting green products. Members of parliament also called for a stronger role for the Commission to push through more harmonization to increase efficiency and reduce red tape for businesses. "Some businesses I spoke to told me that they prefer to trade with non-EU countries because VAT procedures are more simple. This should not continue to be the case," said rapporteur David Casa, a member of parliament. "We need to simplify and improve our infrastructures while at the same time giving a priority to fighting fraud which costs countries billions every year," he said. According to resolution issued by the parliament, the main goal of change is to strike a balance between maintaining VAT revenues at the levels needed to provide a major source of income while at the same time ensuring that they do not choke off useful activity. This could be achieved chiefly by tackling fraud and reducing the plethora of different exemptions and rates, and at the same time make life easier for honest businesspeople and legitimate non-profit organizations. It also asks the Commission and Member States to consider introducing a Europe-wide VAT exemption threshold for SMEs, with a view to cutting red tape and costs and facilitating access to the internal market. In addition, it calls for a "Green VAT strategy" which would provide for reduced rates on eco-friendly products thereby making them more competitive.