Gov't negotiates extension on lower VAT rates with EU

Apart from that, all transition periods for lowered tax rates were prolonged until the end of 2010. The most pressing problem of housing construction was solved by the European Commission by extending the definition of social housing that, according to Appendix H VI of the Directive on Taxes, can make use of the lowered VAT rate without any time limits. The effects of the agreement will be seen in 2006, but they will not reflect in lower apartment prices but will rather just help stabilize the present demand. "Maintaining the 7% VAT rate will, on the one hand, let us avoid price increases in 2007 (that would have taken place if the 22% VAT rate had been introduced) and, on the other hand, increase the housing market's stability. The situation in the sector can only be improved by limiting bureaucracy and solving problems connected with sites to build on," said Marek Poddany, Sedno construction company president. There is still a lot to do when it comes to housing construction in Poland. In the EU there are on average 450 apartments per every 1,000 people while in Poland the ratio is only 320. (Puls Biznesu, p. 5) D.W.