Chaos reigns

The Financial Times reports that "Brussels" is trying to sort out the chaos caused by the new system it has tried to introduce in VAT calculations and, specifically, the refunds. Needless to say, warnings of the system's and its implication's inadequacy have been sounded for some time but, in keeping with past precedents, the EU creates chaos, watches "helplessly" as it gets worse, then wades in to show that it is the only organization that is capable of solving anything.

Brussels waded into the chaos that has surrounded the introduction of a new, EU-wide electronic value-added tax system on Thursday in an effort to get an estimated €8bn of annual VAT refund claims flowing more smoothly.

The European Commission announced plans to intervene in the design and technical operation of all 27 national web portals in an effort to get them running properly.

Because some taxpayers have not even been able to submit refund claims amid the technical mayhem, the commission said it would also extend the deadline for submitting 2009 expenses from September 2010 to March 2011.

A new VAT system, switching from a paper-based to an electronic system was meant to come into force in January and speed up VAT refunds across EU borders. But delays by some EU countries in launching their national web portals and technical glitches with others have caused severe financial problems for many European companies.

In the meantime, companies have been experiencing difficulties, particularly unwelcome, they say, in the current financial crisis, with getting money back.

Interestingly or predictably, there have been problems with member states working together, except for one or two.

A survey by the International VAT Association found that, by the electronic system’s January launch, only seven EU countries had fully working electronic refund systems. Fourteen either did not have working portals or only partially working ones, and it could not obtain information from a further six countries.

The association criticised the failure to conduct end-to-end testing of the IT system before it went live, and also the failure of countries to collaborate in building compatible portals – and cited Finland and Sweden as the only countries known to have worked together.

As a Swedish reader of this blog said: this has nothing to do with the EU but a result of certain historic developments. Go figure!