Revision in Value Added Tax to combat tax evasion

The Economic and Financial Affairs Council of 9th June reached a political agreement on a directive  tightening the rules for exemption from VAT on importation that is currently subject to abuse through fraud. This directive is one of the 2 measures of the action plan to better combat VAT fraud, adopted by the Commission in December 2008.

Currently the importation of goods is exempt from value added tax (VAT) if followed by a supply or transfer of those goods to a taxable person in another Member State. The conditions under which that exemption is granted are laid down by Member States. Experience, however, shows that divergences in application are exploited by traders to avoid payment of Vat on goods imported under those circumstances. n order to prevent that exploitation it is necessary to specify, for particular transactions at community level a set of minimum conditions under which this exemption applies.

Since, for those reasons, the objectives of the proposed action with a view to address the problem of VAT evasion, cannot be sufficiently achieved by Member States themselves and can therefore be better achieved at Community level, the Community may adapt in accordance with the principle of subsidiarity.

GRTU is currently being consulted by the Ministry for Finance the Economy and Investment on this directive. GRTU has a summary document on what the changes would actually consist of. This is obtainable from Abigail Mamo on 21232881/3 or .

The new regulation provides for a further reduction in call charges and an extension of pricing limits to cover SMS and data services. The new rules will ensure that the price paid by users of mobile communication networks for community-wide roaming services is not unjustifiably higher than the price paid for making or receiving a call, sending and receiving an SMS message and transferring data in their country of origin.

The regulation lays down new measures to improve the transparency of retail prices for data roaming services, and to provide roaming customers with the tools they need to monitor and control their expenditure on these services.

The cost of mobile roaming calls: currently at EUR 0.46 for calls made and EUR 0.22 for calls received abroad, the caps will go down to EUR 0.43 for calls made and EUR 0.19 for calls received abroad on 1 July 2009, to EUR 0.39 and EUR 0.15 on 1 July 2010 and to EUR 0.35 and EUR 0.11 by 1 July 2011 (excluding VAT).

The new roaming rules introduce an SMS price cap for sending a text message while abroad at EUR 0.11 (excluding VAT). It also reduces data roaming charges by introducing a wholesale cap of EUR 1 per megabyte download as from 1 July 2009, which will fall to EUR 0.80 in 2010 and to EUR 0.50 in 2011. In addition, the principle of per second billing is introduced after first 30 seconds for calls made and from the first second for calls received while abroad.

Source: MEUSAC Sectoral Committee Update