An analysis of the progress towards a single harmonised system for VAT in the EC

Abstract

The thesis discusses the progress towards the single harmonised system of VAT in the European Community. First it lays down the constitutional background of VAT legislation in the EC. Then it analyses chronologically the progress that has taken place prior to the introduction of the internal market in 1993. It discusses the nature and reasons for a Transitional Regime and concludes that the introduction of the transitional arrangements was necessary for the abolition of fiscal frontiers until a definitive system of VAT is eventually adopted. The discussion then moves to analyse the important concepts that have been harmonised in EC VAT law from the point of view of the Transitional Regime and in the light of the eventual Definitive VAT Regime. Having analysed the concepts, reference is made to· the particular case of Malta as a candidate country on the doorstep of membership. The VAT concepts previously discussed are compared with current Maltese VAT legislation and an analysis is made of what Malta is doing to align its VAT law with the acquis communautaire. The thesis concludes that a complete overhaul is necessary prior to membership and another eventual overhaul may be necessary in the wake of the Definitive Regime. The very important argument on whether the Definitive System of VAT should be based on the 'Destination Principle' or the 'Origin Principle' is next discussed. The conclusion is that, a VAT system based on the origin system suits better the needs of a real internal market. However, the discussion is expanded further to include analysis of other alternatives including a federal system of VAT and a VAT-ring option. The discussion then moves to analyse what has been actually proposed by the Commission and what has been actually achieved from these proposals. The thesis then concludes by an analysis of the form of Definitive System of what the author thinks will be the eventual system of VAT, and by the conclusion that this will take place when the political, economic and legal environment will necessitate such a change.