Deadline set for EU states to sign up to VAT deal

26th January 2006, Comments 0 comments

DAVOS, Switzerland, Jan 25, 2006 (AFP) - French Finance Minister Thierry Breton said the three countries that have so far refused to accept a compromise deal on reducing value-added tax rates in the EU have until Monday to give their response.

DAVOS, Switzerland, Jan 25, 2006 (AFP) - French Finance Minister Thierry Breton said the three countries that have so far refused to accept a compromise deal on reducing value-added tax rates in the EU have until Monday to give their response.

EU finance ministers attempted Tuesday to broker a deal that would extend reduced VAT in nine countries until 2010, while also launching a study into new labour-intensive sectors that could qualify for lower VAT rates.

But the Czech Republic, Cyprus and Poland refused to go along with the compromise deal, in an attempt to have additional sectors added to the list of those that would see a reduced VAT extension.

"Twenty-two countries have decided that it was totally acceptable," Breton told reporters on the sidelines of the World Economic Forum in this Swiss Alpine town.

"We have an offer on the table," and the three remaining countries have until Monday morning to accept it, he said.

All decisions on VAT rates require a unanimous decision from EU members.

The independent study on additional VAT reductions will be completed in mid-2007 and will focus on sectors, including restaurants, "that could benefit from a low VAT rate if this doesn't create an adverse impact for other countries, and of course if this stimulates the economy and creates jobs," Breton said.

France has long been pushing, without success, for a reduction in the VAT for restaurants to 5.5 percent from 19.6 percent currently, an election promise made by President Jacques Chirac in 2002.

Austrian finance minister Karl-Heinz Grasser said Tuesday in Brussels that the Czech Republic, Cyprus and Poland had until the end of the week to decide on the compromise, saying it was a "take it or leave it" deal.

Austria currently holds the rotating presidency of the EU.

Poland on Wednesday said it would reconsider its opposition to the compromise VAT deal.

When candidates such as Cyprus, the Czech Republic and Poland joined the EU in 2004, they pledged to align their tax rates with those within the 25-member bloc by the end of this year.

Exceptions aside, EU rules do not allow a minimum VAT rate of less than 15 percent.

Copyright AFP

Subject: French news

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