Enlargement of the European union - transitional guidance.

Letter Submitted by TEI International President David L. Bernard on October 10, 2006, to Alexander Wiedow, Director of Indirect Taxation and Tax Administration of the European Commission.

On behalf of Tax Executives Institute, I am pleased to provide comments from a tax perspective on the practical implications of the accession of Romania and Bulgaria into the European Union. I am also writing to recommend that the European Commission (EC) take steps to ameliorate the significant administrative burdens enlargement will impose on businesses during the transitional period preceding and following the accession.

TEI Background

Tax Executives Institute was founded in 1944 to serve the professional needs of business tax professionals. Today, the organization has 53 chapters in North America, Europe and Asia. As the pre-eminent international association of business tax professionals, TEI has a significant interest in promoting tax policy, as well as in the fair and efficient administration of the tax laws, at all levels of government. Our 6,000 members represent 2,800 of the largest companies in the United States, Canada, Europe, and Asia. In 1999, TEI chartered a chapter in Europe, which today encompasses a cross-section of European and multinational companies. TEI members are accountants, lawyers, and other corporate and business employees responsible for the tax affairs of their employers in an executive, administrative, or managerial capacity. The Institute espouses organisational values and goals that include integrity, effectiveness and efficiency, and dedication to improving the tax system for the benefit of taxpayers and tax administrators alike.

Accession of Bulgaria and Romania

On 26 September 2006, the President of the European Commission announced the accession of Bulgaria and Romania to the European Union effective 1 January 2007. Although only two countries are joining the EU (as opposed to the ten that joined on 1 May 2004), multinational businesses face significant challenges in accommodating the enlargement, for example by making myriad changes to their information and recordkeeping systems. The magnitude of the task is especially daunting inasmuch as there are only 67 working days, including the Christmas holiday period when many employees take leave, between the announcement and the date of accession.

The challenge faced by businesses should not be underestimated: They must assess the effect of the enlargement and the...