The EU has more than a hand in VAT. Whilst it does not specifically sets the exact rate - the amount of control it has is signficant - setting the minimum rates and other rules around it. It is the EU that prevents the removal of VAT on Sanitary products for women. It is the EU that insists on a minimum 5% vat on electric and gas bills. The EU wants us to implement VAT on food and childrens clothes. The EU generates revenue as a percentage of VAT receipts and therefore refuses the removal of VAT from these items and continues to apply pressure for VAT on other None VAT items to raise more and more money from member states to fund it. EU rules mean the UK cannot reduce VAT on goods and services below 15%, the standard rate of VAT in the EU. The standard rate of VAT in the UK is 20%, so the government could reduce it by up to 5% today if it wanted. Domestic fuel is on a special list of pre-approved goods and services that are subject to lower VAT rates and it would require the agreement of ALL OTHER EU members to reduce it further. EU countries have been co-ordinating their VAT rates since 1992. Under EU rules, countries must apply a minimum standard VAT rate of 15%. They have an option of applying one or two reduced rates, no lower than 5%, to certain specified goods on a pre-approved list. Lower VAT rates, including to 0%, are also allowed but only for the goods which were taxed at that rate before 1991 and since then. Once they move away from the pre 1991 rate the new rate and rules apply and you cannot go back - as we see with domestic and industrial power supplies. Changes to the VAT rules require unanimous agreement of all 28 EU countries.