EU TAXATION OF U.S. ASSISTANCE

UNCLAS BRATISLAVA 000598 SIPDIS E.O. 12958: N/A TAGS: KSCA TSPL PREL EAID LO EUN SUBJECT: EU TAXATION OF U.S. ASSISTANCE REF: STATE 129219 ON JUNE 16, ECONOFF SPOKE WITH THE MINISTRY OF FINANCE'S DIRECTOR GENERAL FOR TAXES AND CUSTOMS, BRANISLAV DURAJKA, AND THE DIRECTOR FOR INDIRECT TAXES, ADRIAN BELANIK, PER REFTEL. OUR DISCUSSION SHOWED THAT THIS SUBJECT HAD NOT YET BEEN BROUGHT TO THE ATTENTION OF THE GOS, BUT DURAJKA SAID THE SLOVAKS WOULD ENGAGE THE EUROPEAN COMMISSION ON THIS SUBJECT. HE EMPHASIZED THAT A DECISION MUST BE MADE ON A EUROPE-WIDE BASIS, BUT THAT LAWS COULD BE CHANGED. HE DEFENDED THE PHILOSOPHY THAT IF ASSISTANCE FUNDS COULD ENTER A COUNTRY FREE OF VAT, BUT THE GOODS THEY BOUGHT WOULD BE CHARGED VAT, THEN THERE EXISTED A RATIONALE FOR CHARGING VAT FOR COMMODITIES GIVEN AS ASSISTANCE. HOWEVER, HE SUGGESTED AN EXCLUSIVE U.S.-EU AGREEMENT COULD POSSIBLY BE ARRANGED TO AVOID CHARGES ON ALL FORMS OF ASSISTANCE. WEISER NNNN