TaxCorporate TaxEC may ban VAT breaks for Royal Mail

EC may ban VAT breaks for Royal Mail

The Royal Mail could be forced to raise the price of stamps if European Commission plans, aimed at fostering competition in the postal sector, are adopted.

Link: Royal Mail stirs up concern

Along with other state-owned postal services such as Deutsche Post, under the proposals, the Royal Mail would be forced to charge value-added tax in the same way as their private sector rivals.

The move is expected to raise prices in the short-term although the commission said that a VAT rate of up to 10% would be offset by other tax breaks for these companies and should not lead to price rises in the long term.

The commission believes the VAT exemption for public postal services gives them an advantage over the private sector as it allows them to charge less.

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