Asymmetric value added tax (VAT) exemptions for universal service providers (USP) have a series of distorting effects on competition. Based on the findings on the competitive and welfare effects of such exemptions of Dietl, Jaag, Lang, Lutzenberger and Trinkner (2011) 1, it will de outlined whether price regulation or compensation of the universal service obligation (USO) are suitable regulatory remedies to compensate for the detected competitive effects of VAT exemptions.
In line with Jaag (2010) it is concluded that the net cost concept as foreseen in Directive 2008/6/EC will mitigate some of the effects of asymmetric VAT treatment. Thereby, it will be important to consider a global approach to the net cost calculation as suggested by Jaag, Koller and Trinkner (2009) 2.
The VAT exemption is then to be treated as a benefit of the USO that is to be included in the (global) net cost calculation. Secondly, as shown by Jaag and Trinkner (2011) 3, it will be of great importance to include the financing mechanism into the net cost calculation in order to avoid under or over-compensation of the USP. 4
1 “Impact of VAT-Exemptions in the Postal Sector on Competition and Welfare”, em: M.A. Crew and P.R. Kleindorfer (eds.), Reinventing the Postal Sector in an Electronic Age. Edward Elgar. Working paper available at Competition and Welfare Effects of VAT Exemptionshttp://ideas.repec.org/p/chc/wpaper/0024.html.
2 "Calculating the Cost of the USO - The Need for a Global Approach”, em: M.A. Crew e P.R. Kleindorfer (eds.), “Progress in the Competitive Agenda in the Postal and Delivery Sector”, UK, Edward Elgar. Working paper available at Calculating the Cost of the Universal Service Obligation: The Need for a Global Approachhttp://ideas.repec.org/p/chc/wpaper/0010.html.
3 “The interaction between universal service costing and financing in the postal sector: a calibrated approach”, em: Journal of Regulatory Economics 39(1), 89-110. Working paper available at The interaction of universal service costing and financing in the postal sector: A calibrated approachhttp://ideas.repec.org/p/chc/wpaper/0019.html.
4 This text was written by the speaker and fall under his responsibility.
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