BUDAPEST, Oct. 3 (Xinhua) -- The European Parliament backed a reform of the VAT (Value Added Tax) system in the European Union (EU), proposing a maximum rate of 25 percent by adopting the Szanyi report on Wednesday, Hungarian rapporteur Tibor Szanyi said here in a statement.
"At today's plenary session, the European Parliament adopted the Szanyi report on the VAT rates in the framework of the final VAT system by a large majority (536 yes, 87 against, 41 abstentions)," Szanyi declared in the statement.
According to studies, EU countries lose up to 50 billion euros (57 billion U.S. dollars) to cross-border value-added tax fraud every year, the European Parliament announced on its official site.
"Through the voting, Members of European Parliament (MEP) supported drive of the European Commission, while proposing to establish a maximum VAT rate of 25 percent, dispute resolution mechanisms, a system to automatically notify changes to VAT rules in different member states, and an information portal through which to quickly obtain accurate information on VAT rates across the EU," read a European Parliament statement.
According to the statement, during the debate which preceded the vote, rapporteur Jeppe Kofod (S&D, DK) said, "We currently have a patchwork of VAT systems in Europe full of loopholes and black holes. This has led to a growing loss of VAT revenue (VAT gap). With the reforms on the table, we can reduce the VAT gap by 41 billion euros (46 billion U.S. dollars) per year and ease the administrative costs for companies by 1 billion euros (1,15 billion U.S. dollars) per year."
The statement quoted rapporteur Tibor Szanyi (S&D, HU) as saying that "completing the reform of the VAT system is fundamental for supporting EU business. The current system is simply not fit for the globalized world of today. The reforms reduce discrimination between member states while maintaining flexibility, promote SMEs, and support the social and environmental dimensions."
Szanyi also underlined: "The Hungarian system with 27 percent is quite unfair because high taxation leads to poorer consumers contributing disproportionately much more to the budget, spending a relatively higher portion of their income on daily consumer goods."
The proposed improvements to the Commission's proposals will now be passed on to the Council, which will then be tasked with adopting the legislation.
