Quito, July 12, 2004. In an open meeting, the Commission and the Advisory Council of Ministers of the Economy or Finance, Central Banks and bodies responsible for Economic Planning in the Andean Community, provided an important boost to the process of fiscal integration, by approving today a Community norm which harmonizes substantial and procedural aspects related to Value Added Tax (VAT).

This Community norm, which is the only one of its kind in the hemisphere, just comparable with those implemented in the European Union, will make it possible to reinforce the Andean fiscal system, since VAT is the main tax and chief source of revenues in the countries of the Andean Community.

According to the approved Decision, the harmonization of value added type of taxes must be seen as a gradual process, which must be administered by each member within the terms defined in this Community norm.

Its stipulations include a clause prescribing that "value added type taxes will bear a general rate, which cannot exceed 19%, including any and all surcharges or additions, which are not considered excise tax".

" Member countries may fix a single preferential rate, which may not be less than 30% of the general rate, applicable to goods and services which are excluded as of the effective date of the Decision".

The Community norm does not change the tax systems currently in place in Bolivia, Colombia, Ecuador, Peru and Venezuela, since it set a floor and a ceiling, granting the Andean countries a term of ten years to adapt their laws to these norms.

The Advisory Council also engaged itself in the analysis of other subjects, such as trade and financial service liberalization, the harmonization of criteria and prudential principles and the follow up on Macroeconomic Convergence Action Plans.