Vol. 397 No. 1
71 Tomás Mac Giolla asked the Minister for Finance if he will outline the latest position in regard to the EC tax harmonisation proposals, especially in light of the outcome of the meeting of Finance Ministers in December 1989; the measures which have been agreed to deal with the difficulties likely to face this country; and if he will make a statement on the matter.
The main item settled by EC Finance Ministers during the French Presidency in the second half of last year was the outline of arrangements for payment and receipt of VAT in intra-community trade after 1992. Under the consensus reached, exports will continue to be zero-rated for VAT purposes during a transitional period and VAT will be charged in the country where consumption of goods takes place. The Commission are now preparing detailed proposals to give effect to these arrangements in a situation where border controls would not apply.
While agreement on VAT rates has not yet been reached, it was agreed last December that member states whose standard rate already falls within the range 14 to 20 per cent should not move out of that range between now and 1 January 1993; and that member states whose standard rate is outside that range should not diverge further. Timetables were set last December for the further decisions necessary on the format and level of the proposed standard VAT rate, on the scope and levels of the reduced rates and on the products which may continue to be zero-rated from 1 January.
While the post-1992 VAT position is beginning to take shape, much remains to be debated and decided. The Irish Presidency is trying to maintain the momentum of progress. We are pressing the Commission to bring forward quickly the detailed proposals now required. We have also initiated an examination by a Council ad hoc group of the classification of items for the different VAT rates.
Progress in regard to excises has been slower than in the case of VAT. We have initiated examination of the proposals at working group level under our Presidency in an effort to advance matters.
In response to the case that I made at the Council of Finance Ministers, the Commission has now launched a study of the problems which approximation of indirect taxes will pose for Ireland and of possible measures to help deal with these problems. Deputies will be aware also that, when he was in Dublin recently, President Delors acknowledged the possible need for assistance to countries such as Ireland.
