EU Scraps VAT and Duty on Medical Imports in Coronavirus Fight

 

Brussels will temporarily allow ventilators, testing kits and other crucial goods to enter the EU duty and VAT free in a bid to drive down the price of frontline equipment in the battle against coronavirus.  European Commission president Ursula von der Leyen said that the move could cut the final price of equipment flowing into the EU from countries such as China. Giving the example of Italy, she said that the final purchase price of masks imported into the country could fall by as much as a third.

The suspension will only apply to imports into the EU market, and will be backdated to the end of January. The commission said that it will last at least until the end of July. It will apply to imports by the public sector, notably hospitals, and by approved charities.

Noting that ventilators normally face an average VAT rate in the EU of 20 per cent, Ms von der Leyen said the suspension decision was “our contribution to easing the pressure on prices for medical and protective equipment”.

“We need a lot of this equipment, and it can be expensive,” she said. The step will have the side-effect of reducing funds flowing into national exchequers and to the EU. Some 80 per cent of customs duties collected by national governments are earmarked for the EU budget, which also claims a share of VAT receipts.

EU officials said that the commission informed national governments by letter on March 20 that the union’s customs code allowed for duties and taxes to be waived. All EU member states and the UK responded by requesting the move.

UK chancellor Rishi Sunak announced already on Tuesday that Britain would waive customs duty and import VAT on vital goods coming from outside the EU.  The Commission said on Friday that it had “swiftly approved requests received from all member states”. It said that the suspension would cover masks and protective equipment, as well as testing kits and ventilators.

The move is part of the EU’s two-pronged strategy of trying to source vital goods on the world market while also expanding domestic production. The EU has launched four joint procurement exercises on behalf of 25 countries covering protective gear and medical equipment.

The step is also the latest example of Brussels scrapping rules that risked impeding the fight against the pandemic. The EU has already relaxed its restrictions on state aid, suspended its rules on national deficits, and eased conditions for accessing the bloc’s regional aid funds.

 

 

 

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Post time: Aug-07-2020
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