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Andorran Opposition Proposes VAT Law Changes

by Ulrika Lomas, Lowtax.net, Brussels
08 May, 2014

Parliamentary group chairman of Andorra's Opposition Social Democrat (PS) party, David Rios, has submitted amendments to the Government's proposed general indirect tax (IGI) revisions, which are aimed at further increasing revenue flowing from the financial sector through the special tax on banks.

The party wants to cap the IGI tax deduction, accorded to financial institutions, at 1 percent of taxable transaction costs, instead of 10 percent as suggested by the Government.

Meanwhile, the party has recommended extending the 2.5 percent reduced IGI rate, newly granted to cable transport within the framework of the IGI bill, to passenger transport, cultural activities, and art and antique trading.

Earlier this year, the ruling Democrats of Andorra (DA) reported a EUR20m (USD28m) IGI bank tax shortfall in 2013, compared with 2012 levels. The Government attributed the dip in income to shortcomings arising from the transition from indirect service tax (ISI) to value-added tax comparable IGI, which entered into force on January 1, 2013, and is currently levied at a general rate of 4.5 percent.

Although the Government has sought to narrow the revenue gap through the latest IGI bill, the PS refused to back the draft legislation on April 3, insisting that the proposed measures do not go far enough. At the time, the party pledged to work with the Government to resolve contentious issues in the text.

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