Both Revenue and the Department of Finance voiced concerns on the proposals by the EU Commission to increase the frequency of VAT returns and VIES returns to a monthly basis.

In its report to the Oireachtas Joint Committee on European Scrutiny, the Revenue outlined its concerns that the Commission's proposals, in the form of Directives, would impose a greater compliance burden on Irish businesses, while not necessarily achieving the goal of combating fraud in Europe. This perspective is consistent with submissions which ICAI had made to the authorities on the proposed Directives which would give effect to the changes – see Section 2.02 of the July issue of tax.point.

The EU Commission proposes to increase the filing of VAT returns to a monthly basis where a trader makes purchases of goods and services from EU Member States with a value in excess of €200,000. The proposals also include increasing the frequency of VIES submission to a monthly basis. The requirement to file monthly VAT returns and VIES are proposed in a Council Directive amending Directive 2006/112/EC as measures for combating VAT fraud in the EU.

Our submission to Revenue outlined strong opposition to the introduction of these measures proposed by the Commission. In practical terms we believe that the proposal doubles the compliance burden on businesses and increases compliance costs. It is crucial to remember that the EU is an economic area which is competing with other international territories for investment. Prospective investors judge an economic area using a number of criteria including the burden of regulation.

If the burden of regulation is increased unnecessarily there is a concern that the attractiveness of the EU as an economic area will be reduced. We also contend that the European Commission should subject the planned measure to a complete impact assessment before finalising the proposal.

Full details of the Revenue's report to the Oireachtas is available at http://debates.oireachtas.ie/DDebate.aspx?F=SRJ20080715.xml&Node=H2#H2