WRITTEN QUESTION E-3142/02 by Sérgio Marques (PPE-DE) to the Commission. Common VAT system.
Date: 2002-11-04
Institutions: European Parliament, Provisional data
Subjects: VAT, codification of EU law, derogation from EU law, tax harmonisation, tax law

C 33 E/14

Official Journal of the European Union

EN

6.2.2004

Joint answer
to Written Questions E-2861/02 and E-2862/02
given by Mr Nielson on behalf of the Commission

(4 December 2002)

The issues of the transparency and accuracy of public accounts and the implementation/preparation of the
2002 and 2003 budgets are closely linked. There is consensus that the transparency and accuracy of
Angolan public accounts are far from satisfactory, in particular as regards oil and diamond revenues, and
that reliable data are almost impossible to come by. This is at the root of the difficulties of the
International Monetary Fund (IMF)/Angolan relationship. The Commission considers close co-operation
between Angola and the IMF to be crucial for the reconstruction of the country and encourages Angola to
make efforts to overcome the current deadlock.

The Commission stresses the need to set up transparent, responsible mechanisms for managing Angola’s
natural resources, in particular oil production and diamonds, so that revenues therefrom can be used to
combat poverty and to finance the reconstruction of
the country, complemented by the ongoing
contributions of the international community. One of the Community’s priorities in its future co-operation
strategy with Angola is therefore to assist in the improvement of the management of public finances. The
level and nature of that assistance, estimated in the range of EUR 5-10 million, depends very much on
solid co-operation with and co-ordination within the Angolan Government. The Government of Angola
declared that full transparency will be achieved during the next three years and the fulfilment of this
pledge will be followed closely. Furthermore, an audit on the oil sector is under preparation. An IMF
mission to Angola is expected to take place late 2002, indicating some positive movement.

As regards information on the implementation of the 2002 budget and the preparation of the 2003
budget, the lack of accurate and detailed information excludes a substantiated comment in this matter. In
the 2002 state budget, which was adopted in a revised form on 17 July 2002, it has not been possible to
verify to what extent (cid:1) if at all (cid:1) spending in the social sectors exceeds that in the defence sector. The
budget for 2003 is still under discussion. However, the government’s Economic and Social Programme for
2003/2004 was approved last month,
including the Investment Programme for the recovery of basic
services (health, education, water, electricity, and rural roads) for the rural population. This investment
programme envisages a USD 20 million investment per province in the next two years (USD 10 million
for 2003 and US$ 10 million for 2004). This would, if implemented, mean an important improvement in
social spending and a welcome matching of expenditure with the Community financed rural rehabilitation
programme in the central highlands.

(2004/C 33 E/014)

WRITTEN QUESTION E-3142/02

by Sérgio Marques (PPE-DE) to the Commission

(4 November 2002)

Subject: Common VAT system

The legal and political goal of promoting a system based on taxation of goods and services in the Member
State of origin, charted in 1967 when the VAT arrangements were adopted, has been shelved time after
time. Although it has enabled checks to be abolished at the Union’s internal frontiers and it is permissible
under certain circumstances to continue to levy tax in the Member State of destination, the transitional
VAT system currently in force is complex, out of date, and conducive to fraud. In particular, it is difficult
to obtain a refund of tax paid in other Member States, and the fact that tax representatives are costly and
complicated to use is the main source of problems for firms, especially SMEs, operating in Member States
other than their base. Firms frequently mention differences in treatment from one Member State to
another.

In addition, some provisions of the Sixth Directive and the various legal instruments which have amended
it over the years are ambiguous and incomplete. The numerous exceptions requested by Member States
have likewise led to a degree of confusion in the system.

6.2.2004

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Official Journal of the European Union

C 33 E/15

The recent adoption of further legal instruments has not substantially altered the situation described above.

The Commission:

1. When will it move forward to the definitive VAT scheme or at any rate gear the existing rules to meet
present needs? Regarding this latter option, does it not consider it imperative to produce a single legal
instrument grouping together the various provisions scattered throughout primary and secondary
Community legislation?

2.

Should not the many exceptions granted to Member States also be reviewed so that only those which
proved to be particularly necessary and effective would continue to be allowed?

Answer given by Mr Bolkestein on behalf of the Commission

(9 December 2002)

The definitive VAT system is intended to be based on taxation in the Member State of origin of
transactions giving rise to consumption in the Community. Before such a system can be put in place, the
taxation systems of Member States have to be closely harmonised. It has not been possible yet to achieve
the necessary degree of harmonisation.

However, although the Commission still regards the definitive system as a long-term Community goal, it
recognises that, in order to overcome the shortcomings of the present arrangements, improvements to the
present system are necessary in the short term. It therefore launched a new VAT strategy in June 2000
based on four main objectives: simplification and modernisation of current rules, more uniform application
of those rules and closer administrative cooperation (1).

Among the priorities pursued under the new VAT strategy is the codification of
the Sixth VAT
Directive (2). Codifying existing rules is consistent with the objective of simplification. This codification will
take place in the form of a recast of the existing text. It is the purpose of the recast to rationalise the
structure of the text without introducing substantial changes, which should rather be the subject of specific
proposals for implementing the new strategy. The Commission is currently preparing the recast text, which
will be presented as a Commission proposal
in 2003. Once adopted, the recast will provide a clear
overview of Community legislation currently in force.

In its Communication on the new VAT strategy, the Commission also indicated that it would proceed to a
certain rationalisation of
the considerable number of derogations, authorised by the Council under
Article 27 of the Sixth VAT Directive, currently in place. It is envisaged that this exercise should lead to the
presentation of a proposal
integrating into the Directive some derogations which have proved to be
particularly effective. The Commission has started the preparatory work for this exercise in order to be in a
position to present a proposal in the course of 2003.

(1) Communication from the Commission to the Council and the European Parliament: A strategy to improve the

operation of the VAT systems within the context of the internal market (COM(2000) 348 final).

(2) Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States
relating to turnover taxes (cid:1) Common system of value added tax: uniform basis of assessment, OJ L 145,
13.6.1977.

(2004/C 33 E/015)

WRITTEN QUESTION P-3173/02

by Charles Tannock (PPE-DE) to the Commission

(30 October 2002)

Subject: EU funding of the Palestinian Territories

In an exchange which took place in the European Parliament on 22 October 2002 over the issue of
whether or not a Parliamentary Commission of inquiry should be set-up to investigate allegations that EU
funds have been used to fund terrorist activities in the Palestinian Authority territories, Commissioner
Patten suggested that the effect of such scrutiny by the Parliament would be to dry-up assistance to the