VAT reform on the cards

BANKS, insurance companies and fund managers would be allowed reclaim VAT under proposals from the European Commission.

Tax Commissioner Laszlo Kovacs hosted a conference in Brussels yesterday on plans to modernise the VAT system, possibly as early as 2008.

Current legislation exempts financial and insurance services from reclaiming VAT and as a result they cannot deduct input VAT on services or goods supplied to them. This in turn increases the cost of their services to business customers.