The Institute of Chartered Accountants in England and Wales (ICAEW) has welcomed the European Commission’s (EC) proposal to introduce a standard VAT declaration for all businesses in the European Union (EU).

According to ICAEW international tax manager Ian Young the changes are "pro-business and pro-growth" and emphasised that the current EU VAT system is out-dated and no longer "fit for purpose".

The EU does have a common VAT system, however it works differently across EU member states and the EC’s proposal aims at standardising the tax system across all EU countries.

Young said the proposed reform should allow "businesses and EU tax administrators to increase efficiency", and allow businesses with operations in more than one EU country to "deal with the internal market as if it was exactly that; a true single internal market."

However the introduction of a standard VAT form across the EU will not solve all the issues overnight, Young noted. "Further changes are required to make the system simpler and more coherent," he said.

The ICAEW also said it is in favour of simplifying the rules for VAT compliance to ease trading within the single market, abolishing requirements to register and maintain a VAT registration in other member states than the home country, and reducing the complex set of VAT exemptions that currently exists.

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By GlobalData

Article by Sebastian Clark

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The Institute of Chartered Accountants in England and Wales