IMPALA Calls For VAT Reform

Indies music organisation IMPALA says the European Commission’s review of how its VAT system operates should focus on what a raw deal music is getting.

The Brussels-based independent music companies’ association issued a statement June 1 pointing out that some cultural goods are eligible for a reduced VAT rate while recorded music is not.

It also pointed out that some cultural goods benefit from a reduced VAT rate offline, while the standard VAT rate is applied online.

IMPALA reckons the current situation creates confusion for both consumers and businesses and undermines Europe’s competitiveness.

The group sets out a two-point plan to rectify the situation, beginning with making all cultural goods and services eligible for a reduced VAT rate within harmonised limits. At the very least, it says, the discrimination between music and books should be removed.

IMPALA suggests there should be a VAT moratorium in the European Union for online services to help European companies compete with the US.

Following the release of its Green Paper on the future of VAT earlier this year, the European Commission invited all interested parties to submit their contributions in response to a consultation on the issue.

The initial consultation deadline for responses was May 31. The EC will now collate the views it’s received and launch a debate on the current VAT system and possible ways to strengthen its coherence.

While VAT constitutes a major source of revenue for national budgets of the EU member states, IMPALA says its numerous shortcomings mean it’s not fully efficient and compatible with the requirements of a true single market.