Slow adoption of VAT plan angers businesses

Member states criticised for not implementing refund procedure.

Businesses have sharply criticised EU member states for failing to act on an emergency proposal concerning refunds for value-added tax (VAT).

Businesses said that by failing to speedily adopt the proposal, presented by the European Commission on 15 July, governments had endangered companies’ cash flow at a time of economic crisis. The Commission proposed a six-month postponement to the deadline for businesses to submit refund requests for VAT incurred in 2009.

The Commission, and businesses, said that the postponement was essential because an EU-wide online system for filing VAT refund requests, launched on 1 January, was not working properly. The malfunctions have been attributed to poor and divergent implementation of the system by member states. The postponement, from 30 September to 31 March 2011, would have provided breathing space to fix the system, and ensured that businesses are paid what they are owed.

The Council of Ministers will discuss the proposal in detail on 20 September, with agreement to potentially follow before the end of the month.

Taking risks

The Council’s timetable has robbed the proposal of value, said Henk Wildeboer, the head of the VAT working group at BusinessEurope, the European employers’ organisation.

Businesses “could not take the risk” of waiting to see if member states accepted the Commission’s proposal, in case they then did not manage to get their refund requests in on time. As a result, he said, the “majority” of businesses will submit their claims before the end of September, so further overloading the malfunctioning electronic system.