Mr David Hardiman

Indirect Taxes

Office of the Revenue Commissioners

Dublin Castle

Dublin 2

16 June 2008

Re: EU Proposal to Increase of Frequency of VAT returns

Dear Mr Hardiman

I refer to the European Commission proposal for a Council Directive amending Directive 2006/112/EC on the common system of value added tax to combat tax evasion connected with intra-Community transactions; and for a Council Regulation amending Regulation (EC) No 1798/2003 to combat tax evasion connected with intra-Community transactions as provided in COM(2008) 147.

I understand the reason for the proposal is the perceived insufficiency of the system for the exchange of information on intra-Community supplies of goods under the transitional VAT arrangements, adopted when the single market was introduced, to combat tax evasion connected with intra-Community transactions and in particular intra-Community carousel fraud.

CCAB-I have concerns about one particular aspect of the proposal which relates to the submission of VAT returns monthly where the taxpayer is carrying out intra-Community acquisitions of goods and purchases of services from a supplier established in another Member State for an amount higher than €200,000 per calendar year. It would appear that such a proposal by the Commission is against the fundamental principle of subsidiarity.

Even if the measure is necessary, the current suggested threshold of €200,000 is trifling in the current economic environment. It is suggested in the Communication that the measure concerns a limited number of businesses-4% of businesses registered for VAT in the Community. We would like to see this claim substantiated. In determining the effect of the new measure on the businesses concerned, it would be more relevant to focus on the number of transactions and the amount of money involved rather than on the percentage of taxpayers affected, which one might argue could be considered a simplistic view of the position.

While the percentage of businesses affected by the measure may be considered low, it is important to emphasise that it is the largest businesses that are affected. In practical terms the new measure would double the compliance burden on those businesses, i.e. the largest businesses in the European Union (EU), thereby increasing their compliance costs. It is crucial to remember that the EU is an economic area which is competing with other areas for investment. Taxpayers 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.

In considering our suggestion, we would call on the European Commission to subject the planned measure to a complete impact assessment, which has not been done to date, before finalising the proposal.

If you wish to discuss any aspect of the above, please do not hesitate to contact me.

Kind regards

Yours sincerely,

Brian Keegan

Director of Taxation,

Institute of Chartered Accountants in Ireland