VAT change faces delay : THE ECONOMY

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The Independent Online
THE European Federation of Auditors has called on the European Commission to postpone the 1997 deadline for changing the VAT payment system. The likely delay represents a setback for Germany, which as the European Union's biggest manufacturer has the most to gain from the change.

Under the new regime, scheduled to take effect on 1 January 1997, VAT would be collected in the country where goods are made instead of where they are ultimately consumed, as is currently the case.

Importing countries are worried they will lose control of VAT revenue, the biggest indirect tax resource, once it is collected in the countries of production.

Under the planned change, tax revenues will still ultimately reach the coffers of the state where goods are consumed, but only after they have been redistributed by a clearing house. The arrangements for this process have yet to be worked out.