October 21, 2010

Spain rejects VAT proposal on fish

Spanish Secretary of State for Finance and Budgets has rejected the demands put forward by fisheries and the aquaculture sector to lower the rates for value added tax (VAT), from 8% to 4%.

Producers and traders argue in defense of his order, that fish is a staple food which is essential, so it should be taxed just like bread, milk or eggs. But government authorities believe that a reduction in VAT would not help the sector to recover by way of consumption at a lower price.

"The difficult economic situation that we are facing, the recent entry into force of the general rise in interest rates and the reduction in value added tax, has resulting in Spain already taking virtually full potential of the EU law in this regard as fish is already taxed at a reduced rate, completely discourages us to undertake at present the proposed cuts," explained the secretariat.

The official added that the Council Directive 2006/112 on the common VAT system, allows Member States to adopt reduced rates for cases referred to in the annex, among which are products that are covered by its application. Therefore, EU rules allow, in principle, to apply super-reduced rates of VAT to the supply of fish, which currently is taxed at 8%.

The majority of associations for producers and marketers of fresh, frozen and canned fish contend that this constitutes "a non-basic food type, but which is still absolutely necessary for proper human nutrition," according to reports.