Royal Mail to lose VAT advantage

Link: EC may ban VAT breaks for Royal Mail

The ruling is designed to end unfair competition between public sector bodies such as the post office, which is VAT-exempt, and private operators who are forced to pay VAT.

EU tax commissioner Fritz Bolkenstein claimed the ruling would make the VAT system fairer and said the cost would not have a significant effect on consumers.

However in anticipation of a consumer backlash, governments have the option to apply a reduced VAT rate on ‘standard postal services’ – addressed items weighing less than 2kgs.

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