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Poland
applies a reduced rate of 7 percent value-added tax on
clothing and clothing accessories for infants and on
children's shoes but has no power to do so under EU law.
The
minimum VAT rate in the 27-country EU is 15 percent.
"The
conclusion is that by applying a reduced VAT in these
cases, Poland is in breach of community law," the
Commission, executive arm of the EU, said in a
statement.
Poland
has two months to respond. The European Court of Justice
could eventually fine it and force it to change its
rules.
"The
Commission understands the political motivation that has
led to the Polish legislation in force. However, the
Commission recalls that the VAT directive was adopted by
unanimity of the member states," the statement
added.
Poland
has other ways of achieving the same ends, such as
subsidies, the Commission said.
The
EU executive also told Poland to end its VAT exemption
on supplies of buildings.
Source
: Guardian Unlimited - UK, dated
31/01/2008
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