TaxCorporate TaxRoyal Mail to lose VAT advantage

Royal Mail to lose VAT advantage

VAT could soon be charged on postage stamps and other postal services provided by the Royal Mail following a European Commission ruling on Tuesday.

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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