Construction sector escapes planned increases in VAT due to fears of abuse

The government has decided to scrap its plan for introducing 22% VAT in the construction sector. As a result, next year construction materials and services will be charged at 7% VAT, just as they are at present. However, there will be a change in VAT policy for newly sold apartments, with a 7% rate being charged instead of 0%. "This decision was taken on my initiative and with my support," Finance Minister Marek Belka told journalists yesterday. Rzeczpospolita reports that Prime Minister Leszek Miller and Finance Minister Belka decided to cancel the tax increases because the planned system was open to possible abuse. (Rzeczpospolita, p. A1) M.T.