No ‘anti-Polish’ tax action, says Commission

By Peter Chapman

Date: 20/055/04

THE European Commission has rebutted claims it is unfairly attacking Poland's taxation, as the EU's biggest new member tries to shed its bad-boy image.

Polish citizens have written to Commission President Romano Prodi complaining that their country has been unfairly singled out - citing the potential legal action over its low-VAT regime for internet services.

But senior VAT official Stephen Bill told the Poles that the Commission has no regrets - and that it would have "no other choice than to open an infringement procedure" if the government fails to put matters right. "The Commission must ensure that all member states receive an equal treatment and respect the same rules. This has nothing to do with an 'anti-Polish action'," said Bill.

"If all member states ignore the community law, the situation of the EU would become very chaotic. Each member state knows that the benefits of the EU for the citizens and business can only be achieved if everybody respects the common rules laid down by community law," he added.

Under its internet regime, the Poles charge a reduced rate of the tax instead of the normal rate in Poland of 22%. Bill said this would give Polish companies supplying services on the internet an unfair advantage over foreign competitors.

The European Commission argues it is not singling out Poland in its call to get the country to change its low VAT regime for internet services.