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IFA SEMINAR

IFA SEMINAR. VAT – A SYSTEM OF INTERNATIONAL FISCAL COORDINATION K.P.E. Lasok QC Monckton Chambers 17 March 2011. THE TAX PROVISIONS IN THE EC TREATY.

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IFA SEMINAR

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  1. IFA SEMINAR VAT – A SYSTEM OF INTERNATIONAL FISCAL COORDINATION K.P.E. Lasok QC Monckton Chambers 17 March 2011

  2. THE TAX PROVISIONS IN THE EC TREATY • Prohibition of taxes and other levies incurred on the crossing of a frontier between Member States (part of the customs union provisions – see now TFEU 30) • Prohibition of discriminatory and protective internal taxation (now TFEU 110) • Border tax adjustments (now TFEU 111-112) • Harmonisation of indirect taxes (now TFEU 113)

  3. WHERE IS DIRECT TAXATION? • Title III of the General Programme for the abolition of restrictions on freedom to provide services (1962) • Title III of the General Programme for the abolition of restrictions on freedom of establishment (1962) • Arrangements for administrative cooperation

  4. VAT – the internal EU perspective • Progressive harmonisation of domestic turnover taxes • Initial focus on internal cross-frontier (transnational) transaction chains • From 1977 (Sixth VAT Directive) more intrusive – perceived need to harmonise tax base • Failure to resolve satisfactorily the problem of transnational chains (MTIC fraud)

  5. VAT – the external perspective • EU may authorise a Member State to conclude an agreement with a third country or an international body that derogates from the EU harmonised VAT system (Directive 2006/112, article 396) • Export transactions are in principle untaxed • Refund of VAT to taxable persons not established in the EU may be made subject to reciprocity (Directive 86/560, art 2(2))

  6. CONCLUSION • Two aspects to VAT as a form of international fiscal cooperation • First, the handling of the fiscal issues arising in the case of cross-frontier transactions • Secondly, the use of the system to eliminate or at least minimise deflections of trade • Not a complete success but not a bad attempt

  7. Thank You

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