In the letter, dated Monday, the Tax Executives Institute praised the commission for suspending customs duties and VAT on protective equipment, testing kits and medical devices, but said additional relief was needed. For example, it recommended allowing all businesses to use the postponed accounting method for payment of import VAT rather than the deferred payment method, saying the latter often requires bank guarantees or other securities.
Most of the recommendations were aimed at simplifying VAT compliance, which has been made more difficult by the disruption of companies' supply chains caused by the pandemic.
"COVID-19 disruptions have required businesses to make significant changes to their supply chains," the institute said. "These unforeseeable changes have upset carefully structured operations, resulting in increased compliance costs from declaration and payment of import VAT."
The letter also called for simplified bad debt relief procedures. Some European Union countries require suppliers to wait until a company files for bankruptcy to begin these procedures, and it is also common for countries to place time limits on supplier claims for bad debt refunds. This requires meticulous monitoring so that bad debt claims can be submitted "within a precise window of opportunity," the group said.
A reasonable alternative would be to require suppliers to document that a payment is at least 90 days past due and that at least three unanswered payment reminders have been sent demanding payment, the letter said.
The institute also urged the commission not to limit VAT grouping — which permits related entities to file consolidated VAT returns — to locally established companies, to eliminate some of the obstacles countries have placed on companies requesting refunds and input VAT deductions.
The EU has suspended VAT on vaccines as well as on personal protective equipment and other items. Ireland announced last month that it would cut its tourism VAT, while the U.K. government recently came under criticism for ending its suspension of the 20% VAT on PPE.
--Editing by Neil Cohen.
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