Bernard Allen
Question:191 Mr. Allen asked the Minister for Finance if he will increase the VAT exemption for hairdressing salons. [6682/02]
Written Answers. - Tax Reliefs.
Hairdressing is not exempt from VAT. Like any other taxable business it can benefit from the registration thresholds. This means that the business does not have to charge VAT provided it remains at or under the relevant threshold, but it also means that it cannot recover any VAT charged on the inputs that it uses in the course of its business activities.
The registration thresholds for VAT were last increased in 1994 and are currently €25,500 for services and €51,000 for goods. Ireland has the second highest registration threshold for goods and services in the EU, and some member states have no registration threshold for goods and services and require all taxable persons to register irrespective of their turnover.
EU VAT law, with which Irish VAT law must comply, determines the rules in respect of any change in the thresholds. This requires that it is possible to increase the thresholds but only in line with maintaining their real value. In effect, there fore, it would only be possible to increase the threshold to €30,000 for services and €60,000 for goods. Any increases beyond that amount would require EU approval.
It would not be possible to increase the thresholds for hairdressing salons only. Any increase in the thresholds would have to apply to all taxable persons. I have no plans to change the existing registration thresholds. Any change in the thresholds would have a significant Exchequer cost.