Local governments likely to rejoice at 0% VAT rate on EU-backed projects

Companies and local governments, which plan to begin investments co-financed with EU funds, should put their projects on hold, as Rzeczpospolita has learnt that they might be exempt from VAT. The decision of the Finance Minister on this issue should come into force within a few weeks. According to the current regulations, VAT paid on the share of the investments covered from own capital is not repaid, while VAT on the share financed from EU funds was paid back after two months. This means that the new regulations will substantially lower investment costs, as local governments will have the right to use 0% VAT rate on the full value of the investment. This new rate will be applied to all money spent on a project. Companies or local governments will have to register their contracts signed with contractors with the European Integration Committee Office (UKIE). (Rzeczpospolita, pp. A1, B3) M.M.