Resolution on the communication from the Commission to the Council and the European Parliament on a common system of VAT - a programme for the single market (COM(96)0328 C4- 0458/96)
Date: 1997-06-10
Institutions: Committee on Economic and Monetary Affairs, European Parliament
Subjects: VAT, VAT rate, VAT resource, action programme, single market, tax harmonisation, tax system













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51997IP0164

Resolution on the communication from the Commission to the Council and the European Parliament on a common system of VAT - a programme for the single market (COM(96)0328 C4- 0458/96)  


Official Journal C 200 , 30/06/1997 P. 0041 





A4-0164/97Resolution on the communication from the Commission to the Council and the European Parliament on a common system of VAT - a programme for the single market (COM(96)0328 - C4-0458/96)The European Parliament,- having regard to the Commission communication (COM(96)0328 - C4-0458/96),- having regard to the report from the Commission to the Council and the European Parliament (second Article 14 report) on the application of Council Regulation (EEC) No 218/92 of 27 January 1992 on administrative cooperation in the field of indirect taxation (VAT) (COM(96)0681),- having regard to the deliberations during a hearing in the Committee on Economic and Monetary Affairs and Industrial Policy on 21 January 1997,- having regard to its opinions of. 20 November 1990 on the proposal for a Council Directive supplementing the common system of value added tax and amending Directive 77/388/EEC ((OJ C 324, 24.12.1990, p. 97.)),. 21 January 1993 on the proposal for a Council Directive amending Directive 77/388/EEC as regards the value added tax arrangements applicable to passenger transport ((OJ C 42, 15.2.1993, p. 170.)),. 22 September 1995 on the proposal for a Council Directive amending Directive 77/388/EEC on the common system of value added tax (taxation of agricultural outputs) ((OJ C 269, 16.10.1995, p 213.)),. 5 September 1996 on the proposal for a Council Directive amending Directive 77/388/EEC on the common system of value added tax (level of the standard rate) ((OJ C 277, 23.9.1996, p. 25.)),- having regard to the report of the Committee on Economic and Monetary Affairs and Industrial Policy (A4-0164/97),A. whereas the abolition of VAT checks at the internal frontiers of the European Union has eased the situation, but whereas a VAT system consistent with the internal market has yet to be established,B. whereas provision was originally made for the Commission to submit practical proposals for the final VAT system by 31 December 1994,C. whereas the current system, explicitly referred to as 'transitional', has major shortcomings and has imposed considerable burdens on enterprises, consumers and authorities,D. whereas many of these shortcomings will not automatically disappear with the introduction of a VAT system based on taxation in the country of origin and will therefore require separate solutions,E. whereas the present VAT system is unable to prevent tax fraud effectively, and the Member States therefore suffer enormous tax losses,F. whereas the smooth functioning of the internal market requires a VAT system that is simple, transparent, more uniform and, above all, capable of being monitored,G. whereas a common VAT system will contribute to the completion of the internal market and help to strengthen the competitiveness of European enterprises,H. whereas the VAT revenues of the various Member States must not be adversely affected by the transition to a common VAT system,I. whereas research carried out for the Commission into ways of promoting employment with tax measures that do not affect revenue has shown that merely shifting taxation from labour to other factors can have a favourable effect on employment; whereas this research has also shown that no measure is effective, or equally effective, in every country or every sector; whereas these findings endorse Parliament's view that opportunities must be created for the Member States to expand their range of employment-promoting measures by levying less VAT on specific labour-intensive services,J. whereas the European Community has always endeavoured to defend the weakest members of society, and whereas charities and other bodies provide services invaluable to this sector of society,1. Acknowledges that the Commission is obliged to submit a proposal for a definitive VAT system; also acknowledges that there are potential advantages associated with a VAT system based on taxation in the country of origin;2. Acknowledges that the present VAT system has very many shortcomings and is too costly in financial administrative and personnel terms; realizes that the introduction of a definitive VAT system based on the country of origin principle will be a very long process; urges the Commission, therefore, to submit proposals for enhancements which can be made within the framework of the transitional system without too great an effort;3. Acknowledges that the Commission has already taken steps towards improving the existing system - including the proposed Directive concerning VAT and telecommunications, the Fiscalis programme and proposals to change the status of the VAT Committee - but insists that further improvements will also be required;4. Endorses the system outlined in the Commission communication, but calls initially for some harmonization as progress is made towards the definitive system so as to facilitate the transition without imposing fresh burdens on enterprises and tax authorities;5. Therefore urges the Commission to table the first proposals of its programme aiming at modernising, and guaranteeing a more uniform application of, the current VAT regime, in order to overcome some of its shortcomings and to create favourable conditions for the changeover to a system based on taxation in the country of origin;6. Recognizes that one of the principal obstacles to achieving EU-wide support for a rapid move to a definitive VAT system is the widespread anxiety concerning the feasibility of a central macro-economic clearing system; calls therefore for the establishment of a new technical expert panel made up of representatives of the business community, Member States' representatives and Members of the European Parliament charged with finding solutions to this problem;7. Emphasizes the difficulty of developing and gaining acceptance for a VAT system of this kind owing to the major differences in tax structures in the EU and in the proportions of total revenue for which direct and indirect taxes account and because one-sided, comprehensive harmonization of VAT might unnecessarily and overly restrict the Member States' room for manoeuvre, especially at times of falling tax revenue;8. Remains convinced that the 1993 transitional VAT system must be replaced in the EU through a change from the country-of-destination to the country-of-origin principle and through harmonization consistent with the internal market of definitions, taxable events, procedures and penalties;9. Believes that any new VAT system must ensure that the tax continues to avoid distorting competition and that the Member States' tax revenue must not be reduced;10. Proposes for a VAT system consistent with the internal market the introduction of a clearing procedure on a macroeconomic basis to prevent shifts of revenue among the Member States;11. Calls for equal treatment of intra-Community transactions and domestic transactions when the definitive system enters into force;12. Calls for the simplification of the taxation of turnover through the introduction of the single-place-of-taxation principle, but believes this can be achieved only when the definitive system has been introduced if there is to be no shift in Member States' revenue;13. Emphasizes that the tax rates must be set at levels such that VAT is socially fair and has a positive impact on employment and that an ecological tax reform must be supported;14. Considers it politically difficult for the current band of standard tax rates to be widened or narrowed;15. Considers it necessary for the zero tax rate to be maintained, the reduced tax rate to be fixed at around 5% and for there to be a binding definition of all transactions falling into these categories;16. Calls for the continued application of the reduced tax rate, or a zero tax rate, to the objects and services listed in Annex H to Directive 92/77/EEC supplementing the common system of value added tax and amending Directive 77/358/EEC (approximation of VAT rates) ((OJ L 316, 31.10.1992, p. 1.)) and for Directive 92/77/EEC to be reviewed with a view to introducing new categories, including educational products and services, correcting the most serious distortions of competition due to the derogations associated with the transitional VAT system, which should have expired, and, in particular, permitting the harmonized application of the reduced rate to activities associated with tourism, such as catering;17. Calls on the Commission to provide in its future proposals for reduced tax rates for accurately defined labour-intensive services; urges it to submit, to this end, an appropriate proposal for the amendment of Annex H to Directive 92/77/EEC;18. Notes that NGOs in the EU play an important part in the provision of charitable and welfare services, yet they, and consequently their beneficiaries, suffer as a result of problems they face under the current VAT system, of which the most notable is the problem of irrecoverable VAT;19. Calls on the Commission to use the move to a permanent VAT system as an opportunity to improve the fiscal position of charities and other bodies in the EU, to maintain a detailed dialogue with these organizations as it draws up proposals to improve the existing VAT and permanent VAT system and to include a section on charities and other bodies in the annual report;20. Calls for the zero rate to be applied to export transactions, transactions effected by the medical professions and institutions, transactions effected by social insurance funds and charitable organizations recognized in the Member States and transactions relating to social security and education, training and sport;21. Believes that cooperation among the Member States' tax authorities should be immediately improved and accelerated through the amendment of Regulation (EEC) No 218/92, the introduction of uniform minimum training standards and the expansion of in-service training schemes (e.g. MATTHAEUS-Tax);22. Emphasizes the need to contribute to an improved uniform application of the VAT systems through a Community interpretation; expresses concern that the European Court of Justice is increasingly becoming the de facto legislature as far as taxation is concerned; believes that this situation will continue until the transitional VAT system is substantially improved and the definitive system is introduced;23. Calls for improved monitoring through the specification of minimum requirements for monitoring activities and methods and for penalties for breaches of the law that are uniform in nature and scale;24. Calls once more, in view of the large-scale rejection by the vast majority of the Member States and the need for a unanimous decision on the transition to the country-of-origin principle, for the introduction of the principle of majority decision-making on indirect tax issues in the Council of Ministers;25. Calls for the establishment of an independent organization to bring together industry practitioners and government representatives to discuss different VAT practices and to build a continental and cross-Channel consensus;26. Instructs its President to forward this resolution to the Council, the Commission and the parliaments of the Member States.