The original signatories to the Treaty establishing the EEC committed themselves and future signatories to establishing an internal market free of customs duties and restrictions with a common customs tariff on trade with third countries. They also committed the EEC to the harmonisation of laws relating to turnover taxes, excise duties and other forms of indirect taxation necessary for the functioning of an internal market.

By 1967, when the member states of the (then) EEC adopted the First Directive and the Second Directive on turnover taxes, only France had introduced a recognisable VAT system. Today, the members of the much enlarged EU have each adopted a system of VAT more or less conforming to the broad principles set out in what is now the Principal VAT Directive and are committed to a programme of approximation of their own internal VAT systems to a common structure.

The experience of the EU nations has led to the adoption of VAT systems by countries across the globe and debate continues in others about its introduction.

VAT is therefore no longer a primarily European tax. It has become a truly international tax.

Customs duties have, of course, a much longer history than VAT. They have probably existed in one form or another since nations first started drawing boundaries and carrying out international trade. As far as customs duties are concerned, the EEC became a single market long before the principle started to apply to VAT.

Indirect taxes are increasingly important as a source of national revenues. Receipts of Customs and Excise Duties in the year 1990/91 accounted for nearly 40% of revenues raised from all taxes in the United Kingdom. It was against this background of the growing importance of indirect taxes in historical terms and their impact on national and international trade and revenues that The Institute considered that all those with an interest in this field should come together as a single professional body. This interest may come from many sources: for example, from those engaged in the practice of Indirect Tax in Industry, the Professions and HMRC. Similarly it may take the form of academic research and teaching. Whatever the source, the aims and objectives of interested bodies are united and served by The Institute.