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Reduced VAT on Home Improvements 11 December 2003

The Treasury's Customs and Excise Division advise that at a meeting today, 10th December, the European Commission has decided to propose a two year extension of the reduced rates on the labour intensive services experiment. It is through this experiment that the Island has introduced the temporary reduction of the rate of VAT on the repair and maintenance of private dwellings to 5%.

The Commission advise that the actual proposal to extend the use of the reduced rate will be presented to the Finance Ministers shortly for their consideration.

It is understood that at their last meeting, ECOFIN 24/25 November, the Finance Ministers indicated their unanimous backing to the tabling of such a proposal.

This being the case Isle of Man Customs & Excise are advising that they hope to be in a position shortly to announce that the reduced rate can continue to 31st December 2005.

Treasury Minister, Mr Allan Bell, MHK said:

"Whilst we are still not able to absolutely confirm that the reduced rate will continue, today's decision by the Commission is a huge step towards maintaining our rate of tax."

Denis Maxwell, Collector of Customs and Excise said:

"We will continue to monitor the position and will widely publicise the decision when it is made. At present there is no indication as to a date for the decision, but we are hopeful that it will be within the next week."

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