The European Union and Poland edged away from a clash over VAT rates on Tuesday as Warsaw suggested it was ready to compromise in the first major row pitting old EU members against newcomers to the bloc, Reuters reported. All the other 24 EU countries have backed a proposal to extend by five years a now lapsed arrangement which allowed value-added tax on services in nine pre-enlargement member states to be kept below the minimum rate of 15 percent. The Czech Republic and Cyprus dropped objections at the weekend. But Poland's new conservative and euro-sceptic government has threatened to scupper the deal that would affect prices of some services for about 200 million EU citizens. Poland believes EU VAT rules treat new EU states unfairly because they allow old members to keep low rates on some products or services permanently but denies that to new members. Diplomats said Poland had until the end of Tuesday to change its mind before the EU executive Commission meets on Wednesday. That is when it will have to tell the nine "old" EU member states which apply reduced VAT levies to hike the tax to at least 15 percent if Poland continues to object to the deal which needs unanimity to pass. "Personally I am hopeful," Polish Finance Minister Zyta Gilowska told a news conference in Warsaw. On Monday she told Austria, currently EU president, she could not accept its compromise. --More 21 49 Local Time 18 49 GMT
