TEI Responds to European Commission's Public Consultation Regarding the Reform of VAT Rates.

• Position: Tax Executives Institute, value added tax

We write in response to the European Commissions (Commission) Public Consultation on the Reform of VAT Rates (Consultation). Tax Executives Institute (TEI) appreciates the Commissions interest to balance the need for harmoniation against Member States' autonomy in setting VAT rates and supports the Commission's efforts to revise the rules contained in Council Directive 2006/112/EC (Common System of Value Added Tax). We welcome the opportunity to speak with you regarding the comments and recommendations contained in this letter.

About Tax Executives Institute

TEI is the preeminent association of in-house tax professionals worldwide and was founded in 1944 to serve the professional needs of business tax professionals. TEI espouses organizational values and goals that include integrity, effectiveness, efficiency, and dedication to improving the tax system for the benefit of taxpayers and tax administrators.

TEI's approximately 7,000 professionals manage the tax affairs of over 2,800 companies across all industry sectors around the world. TEI's 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, and continually monitor consumption tax developments around the world. Many of these members' companies have a business presence and/or sell into all 28 EU Member States.

TEI believes it is critical to maintain a dialogue between businesses and revenue authorities when developing VAT rules to ensure such rules are workable and not overly burdensome for business or tax authorities. Moreover, TEI supports the Commission's efforts to protect the neutrality, simplicity, and workability of the VAT system.

Comments and Recommendations

TEI represents a wide variety of business sectors with diverse interests. TEI thus seeks to provide an explanation for its position on VAT rate reform rather than responding to the specific questions posed in the Consultation.

TEI agrees with the Commission that the current system of VAT rates requires reform. Businesses face challenges when trading in more than one Member State, as the rules for rates vary, e.g., a supply may qualify for a reduced rate in one Member State but be taxable at the standard rate in another. This variation creates uncertainty for businesses and increases administrative costs to ensure that supplies are properly taxed. TEI thus welcomes simplification of the current...