"Viva VIVAT!"


In Keen and Smith (1996) and Keen (2000) we set out a proposal for reforming the value added tax treatment of goods and services traded between businesses located in different member states of the European Union (EU). At present, such sales are zero-rated (i.e. no tax is charged on output, and the seller can recover the VAT charged on inputs). The proposed scheme—the VIVAT—would establish a uniform Union-wide rate of VAT for all intermediate purchases (that is, for sales between registered traders). This would be applied both to transactions within a member state and to sales between member states (thus continuing the VAT chain across intra-EU borders). Member states would retain the right to determine the rate of VAT on sales to final consumers. This note responds to comments on the VIVAT by McLure and by Bird and Gendron.

Reference:  Michael Keen and Stephen Smith (2000) "Viva VIVAT!", International Tax and Public Finance, Vol 7, No 6, pp 741 - 751, 2000 (ISSN 0927-5940) (DOI: 10.1023/A:1008737628336)

.pdf file at SpringerLink

VIVAT Summary A short summary of the VIVAT mechanism proposed by Michael Keen and Stephen Smith in Economic Policy volume 23, (October 1996).

A discussion of VIVAT by Richard Baldwin on VoxEU (18 June 2007)

Some papers discussing VIVAT - a proposal for the reform of VAT in the EU

Keen, Michael and Stephen Smith. (1996). “The Future of the Value Added Tax in the European Union.” Economic Policy 23, 375–471 and 419–420.

Keen, Michael. (2000). “VIVAT, CVAT and All That.” Canadian Tax Journal 48, 409–424.

Ian Crawford, Michael Keen and Stephen Smith (2009, forthcoming) "VAT and Excises". London: Institute for Fiscal Studies. Paper commissioned for the Mirrlees Review "Reforming the Tax System for the 21st Century. Pre-publication version available on the IFS website.

Bird, Richard and Pierre Pascal Gendron. (2000). “CVAT, VIVAT and Dual VAT: Vertical “Sharing” and Interstate trade,” International Tax and Public Finance 7(6), 753–761.

McLure, Charles. (2000). “Implementing sub-national value added taxes on internal trade: the compensating VAT (CVAT),” International Tax and Public Finance 7(6), 732–740.