Dáil Éireann debate -
Thursday, 2 Jun 1994

Vol. 443 No. 6

Written Answers. - VAT/Excise Charges.

Noel Ahern

Question:

44 Mr. N. Ahern asked the Minister for Finance if he will give details of the EU proposals to reduce or abolish the system whereby non-EU visitors to this country can obtain a refund of VAT/excise charges on their purchases here; if he is resisting the proposals; and if he will make a statement on the matter in view of the fact that it is causing concern to many sales outlets.

Minister for Finance (Mr. B. Ahern)

The Commission proposal to which the Deputy refers is one of a number of items relating to the operation of the Single Market VAT regime which, in the Commission's opinion, require clarification or simplification in the light of their operation during the last year or so. The proposal concerning purchases made by non-EU residents in normal retail outlets is being tabled in response to a specific commitment to bring forward proposals for harmonised rules which was given by the Commission when the transitional Single Market VAT regime was being adopted. Duty-free shopping is not affected by the proposal.

The Commission propose that the present arrangements which allow VAT relief in respect of purchases by non-EU residents should be restricted to purchases which exceed 175 ECU in value, roughly the equivalent of IR£140. They also propose the introduction of harmonised rules relating to the documentation which will be required to effect the relief, basically the normal retail receipt or invoice, and that the goods should be removed from the Community within three months of being purchased.

While I have no difficulties with the documentation and time limit proposals, I have very serious reservations about the proposed threshold. In the first place, I do not see the need for a harmonised threshold limit: I believe that the present arrangements which left this issue to the discretion of member states has worked well and that the Commission has not proven its case for a change. In any event, I am resolutely opposed to the proposed limit of 175 ECUs. Besides the fact that it is contrary to the general principle in EU VAT law that VAT is not chargeable on goods leaving the Union, it simply does not accord with the reality of tourist purchasing patterns in this country or, indeed, within the EU generally. While tourists buy a large volume of quality Irish manufactured goods here, in most cases the cost of the individual items purchased would be considerably less than £140. I am fully conscious of the importance of retail shopping by tourists for many retailers and manufacturers, and indeed that a number of sectors of traditional indigenous manufacturing such as the knitwear, clothing, glass and the various craft sectors are heavily orientated towards servicing the tourist market. I am concerned that any curtailment of the present VAT relief would discourage tourists from shopping here for the very simple reason that the items purchased would cost more.

While the matter has not yet been considered at ministerial level by the Council, my strong reservations on it have been conveyed by my officials during working group discussions. I am simply unable to accept the proposal as it currently stands.