EU finance ministers agree on reduced VAT

BRUSSELS, March 10 (Chinese media) -- After lengthy

discussions, finance ministers from the 27-nation European Union forged an

agreement to allow governments to lower value-added tax (VAT) on labor-intensive

services.

The ministers agreed at their monthly meeting that

services, including restaurant services, homecare, footwear repairment, could be

subject to reduced VAT rates.

The agreement gave more flexibility to governments of

member states, EU Tax Commissioner Laszlo Kovacs told a press conference after

the meeting.

The agreement came after Germany, Sweden and Malta

softened opposition, ending months of brows over the issue.

Germany has long been unconvinced by the proposal to

streamline and make permanent a system of reduced rates that expires in 2010.

"We see no advantage in reduced VAT tax rates,"

German Finance Minister Peer Steinbrueck said here on Tuesday before meeting his

EU colleagues.

"But nevertheless we try to be helpful, but only to a

very limited extent," he said, adding that his government won't reduce VAT rates

in Germany.

France preferred rates below the standard 15 percent

on restaurant meals to fulfill an election pledge by President Nicolas Sarkozy,

who has pushed for the tax to be cut in France to 5.5 percent from 19.6 percent.

Goods and services sold in the EU are normally levied

a rate of at least 15 percent, but member states can apply reduced rates in

certain cases.

The discussion was extremely difficult as major EU

members were divided. Taxation matters require unanimity by all 27 members of

the EU.