EC proposals on complex VAT need to be simple in both principle and practice, says ICAEW
Commenting on the European Commission proposal to simplify rules on value-added tax (VAT) for cross-border e-commerce, Ian Young, ICAEW International Tax Manager, said:
“According to a forthcoming ICAEW-EGIAN survey of more than 170 tax professionals from 29 European countries, which is the first of its kind, VAT is seen as the single most complex tax category for businesses with 2 in 3 companies struggling to comply with VAT rules. The proposals to simplify the rules are good news but ultimately a more stable and simple tax system is what is wanted by companies of all sizes across Europe.
“The public is rightly concerned about tax avoidance and the European Commission is actively pursuing change through a variety of reform measures. These, however, need to ensure that they bring real and genuine simplification.
“The abolition of the low value consignment relief may help counter avoidance but the collection of VAT on the import of millions of small value packages may prove onerous. The EC proposal to introduce a de minimis threshold will enable the smallest businesses to treat cross-border online sales under €10,000 as if they had been sold domestically – something that has been a significant barrier to intra-community trade by small businesses. Additionally, it will be down to each government to decide if it will implement the proposal to align VAT rates between electronic and hard copy publications.”