Indirect taxation is today more than third of fiscal receipts in most developed countries. In the European Union, early on, it was apparent that the implementation of the single market should lead to harmonisation of the tax rules of the Member States to facilitate the process of economic integration. The European Commission has implemented a transitional regime, binding on the number of rates and the composition of the bases, but leaving the choice of the level of rates to States. The transitional system allows countries to practice different rates and maintains the destination principle (in which transactions are taxed in the country where the purchaser resides). Eventually, the European Commission provides for establishing a "definitive" VAT system, harmonized, and in which the principle of origin would prevail, i.e. transactions are taxed in the country where resides the seller. Therefore, most of the changes in indirect taxation (VAT and excise duties) are often decided at national level to address macroeconomic and budgetary concerns, and do not follow harmonization concern. The purpose of this project is twofold. First, in the light of the theory of optimal taxation, we intent to analyze how, in the context of economic integration, Member States may want to design the composition of the base for indirect taxation and to set the level of the tax rates. Then, we also want to revisit the tax impact of indirect tax changes. Here, two aspects will receive our attention: (1) the difference in the incidence of the tax depending on whether it is ad valorem or specific; (2) in an open economy, how exporters of one country react to a VAT hike in a destination country. We also analyze the effect of VAT shocks on trade between the member states.