Poland Wants To Reopen EU Negotiating Chapter On VAT

by Ulrika Lomas, Tax-News.com, Brussels

03 May 2002

It emerged this week that, despite having closed the EU negotiating chapter on taxes just over a month ago, the Polish government now wants to reopen negotiations on VAT in the construction industry.

The Polish authorities had previously agreed to implement a 22% VAT rate in the construction sector immediately upon accession to the European Union. However, according to reports, the government has now changed its mind, a move which is likely to annoy many of of the EU's current member states.

Speaking to the Polish News Bulletin on Thursday, Infrastructure Minister, Marek Pol explained that high unemployment and low accommodation levels per 1,000 citizens (currently only 306 flats per 1,000), coupled with declining output from the construction industry, were behind the decision to ask for the chapter to be reopened.

'We are asking for a transition period on similar terms to Slovenia and the Czech Republic, which have been granted such periods,' the Infrastructure Minister explained.

Although, according to the Polish news service, the negotiating chapter on taxation was only closed 'tentatively', the Polish government is likely to be forced to make concessions in other areas of negotiation, such as in the financial package which deals with farming subsidies and regional aid, in order to get its own way on this issue.

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