Preparatory documents a) NOU 2003:3 (2) In 2002, the Norwegian authorities appointed an expert committee (3) to consider solutions for making the VAT system neutral for public authorities in relation to procurement of goods and services. The Rattsø Committee recommended introducing a compensation scheme for all input tax incurred by local and regional authorities when buying goods and services. The Rattsø Committee outlined in its report possible new distortions of competition resulting from the proposed general input tax compensation scheme. According to the Rattsø Committee, a general input tax compensation scheme may imply new significant distortions of competition between municipalities xxxx- xxxx out economic activity and private undertakings when the activities carried out fall outside the scope of the VAT Act. This may apply, in the view of the Rattsø Committee, to the provision of services such as health and education. This means that entities falling within the scope of Article 2 of the VAT Compensa- tion Act (4) are compensated for the input tax paid on all their purchases of goods and services whereas private undertakings providing the same services are not. The Rattsø Committee made an assessment in Section 11.2.8 of its report on the proposed input tax compensation scheme in relation to the State aid rules of the EEA Agreement. The Rattsø Committee pointed out some concerns as to whether the compensation of input tax provided for in Article 3 of the VAT Compensation Act could constitute State aid within the meaning of Article 61(1) of the EEA Agree- ment (5).
