Denis Naughten
Question:428 Mr. Naughten asked the Minister for Finance if he will review the current legislation to allow charities to reclaim VAT; and if he will make a statement on the matter. [16631/02]
Written Answers. - Tax Code.
I am aware of the relevant legislative provisions which deal with the tax treatment of charities. The Irish Charities Tax Reform Group is currently running a campaign to seek a refund of all the VAT incurred by them. The current VAT treatment of charitable organisations is based on EU VAT law, with which Irish law must comply. Under the Sixth VAT Directive, a wide range of charitable and voluntary activities are deemed to be exempt for VAT purposes. This means that the organisations involved do not charge VAT on their services but, as a necessary corollary, they are unable to recover the VAT they bear on the goods and services that they purchase in the course of their activities. There are no provisions for refund orders under the EU Sixth VAT Directive.
I would point out, however, that charities already enjoy relief from most taxes. Furthermore, in Finance Act, 2001, I provided for a new scheme of tax relief for donations to charities. This is a generous scheme which has, I understand, already been of significant benefit to them. Even if VAT relief were possible, the cost to the Exchequer would be substantial, especially in the light of the existing valuable tax concessions to such charities.