Select Committee on European Union Fortieth Report

INDIRECT TAX (16112/05)

Letter from the Chairman to Rt Hon Dawn Primarolo MP, Paymaster General, HM Treasury to the Chairman

  Thank you for your letter of 31 January [16]updating the Committee on progress made on indirect taxation dossiers during the UK Presidency. Sub-Committee A considered this at their meeting on 14 March together with your Supplementary Explanatory Memorandum 16112/05 dated 10 January.

15 March 2006

Letter from the Rt Hon Dawn Primarolo MP to the Chairman

  On 31 January 2006, I provided you with updates on progress made on indirect tax dossiers during the UK Presidency. This included a brief update on the package of VAT simplification measures designed to ease the burden of VAT compliance, primarily for businesses involved in cross-border trade (Explanatory Memorandum 14248/04). Your reply of 15 March let me know that the scrutiny reserve had been lifted, but also asked that you be kept up to date on the progress of this dossier.

  You will recall that the package as a whole consists of Proposals for two Council Directives and a Council Regulation (which covers the administrative arrangements for the two Directives).

  The Austrian Presidency has now held five Working Group meetings on the package (with two of those meetings covering two days). The two most recent meetings have focused solely on the proposed Council Directive to reform the cross-border refund procedure. Technical work on that Proposal is more advanced than is the case with the Proposal for Council Directive to simplify value added tax obligations.

  The Presidency has now schedule the package as a whole for discussion at ECOFIN on 5 May. The Presidency will suggest splitting the package up to make it more manageable and to enable reform of the cross-border refund procedure to go ahead to a slightly quicker timescale, if at all possible. The Austrian Presidency hopes that the legislative technical discussions on that part of the package could be concluded either during its term, or during the Finnish Presidency. In principle, that would then enable the legislative text for that Proposal to be agreed separately and earlier than the Proposal for a Council Directive to simplify value added tax obligations. Work on the Proposal for a Council Directive to simplify value added tax obligations would continue in parallel, but that work is likely to take longer to conclude.

  The Government would not object to such an approach if raised at ECOFIN. It would enable work on both Proposals to continue in parallel, but would also allow for the possibility of completing the work and reaching agreement on the refund procedure in quicker time. Indeed, UK businesses have been pressing for genuine improvements to the current system, which the proposed electronic system would offer. I will keep you informed of progress on these issues.

  I hope you find this information helpful.

Undated: May 2006

16   Correspondence with Minister, 45th Report of Session 2005-06, HL Paper 243, p 83 Back

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