March 11, 2009

EU agrees to sales tax reductions

EU finance ministers agreed to allow member states to reduce sales taxes in some business sectors to as low as 5.5 percent.

The previous agreement set the value added tax at a minimum 15 percent, the EU Observer reported Wednesday.

The French government led the debate to lower taxes, especially in the restaurant sector, which was given the lower rate, the newspaper said.

Opposition for the reduction came heaviest from the Germans, the report said.

The agreement, however, allows service businesses that already enjoyed lower tax rates to maintain the rates beyond a previous 2010 deadline. These areas include bicycle repair, hairdressing and home renovations.

Some members argued that the separate rates for different businesses would result in widespread confusion but the agreements were a long time coming, EU Tax Commissioner Laszlo Kovacs said.

Some of the issues we solved today have been on the agenda for over 10 years, he said to the Observer.