ECOFIN has backed the Commission's strategy for reforming the EU VAT system. The Commission's work in this area is set out in a communication on the future of VAT (IP/11/1508) released last June.

The communication outlines three objectives for the new VAT system. First, VAT must be made more workable for businesses. A simpler, more transparent VAT system would relieve businesses of considerable administrative burdens and encourage greater cross-border trade. Second, VAT must be made more efficient in supporting Member States’ fiscal consolidation efforts and sustainable economic growth. Broadening tax bases and limiting the use of reduced rates could generate new revenue for Member States without the need for rate increases. Third, the huge revenue losses that occur due to uncollected VAT and fraud need to be stopped.

The EU 27 Ministers made a number of recommendations to the Commission for the purposes of furthering its work on the VAT communication. These recommendations included taking account of data protection legislation and principles such as proportionality, unanimity, compliance with the subsidiarity principle and giving full respect for the respective competences of the Union and the Member States. The Ministers also requested the Commission to further clarify the legal status of the information, as well as content, form, roles and responsibilities in connection with the proposed EU VAT web portal and recommended that Member States should collaborate on the design of such a portal.

For full details of ECOFIN's comments and proposals on the Commission's VAT communication see http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/130268.pdf