I move amendment No. 140:
In page 103, to delete lines 21 to 24 and substitute the following:
"(8) Where an authorised person is in receipt of a service in respect of which, had the provisions of paragraph (via) of the Second Schedule not applied, tax would have been chargeable at a rate other than the rate specified in section 11 (1) (b) and all or part of such tax would not have been deductible by him under section 12, then the authorised person shall, in relation to such service, be liable to pay tax as if he himself had supplied the service for consideration in the course or furtherance of his business to a person who is not an authorised person.
(9) For the purposes of this section, and subject to the direction and control of the Revenue Commissioners, any power, function or duty conferred or imposed on them may be exercised or performed on their behalf by an officer of the Revenue Commissioners.'.".
Section 81 provides a new mechanism whereby supplies to exporting companies can be zero-rated. The amendment is necessary to ensure the correct VAT treatment where there is a supply of a service to a company authorised under the new section. The amendment provides that the authorised person must pay VAT on the cost of certain services if he would not normally be entitled to claim input credit in respect of such services.
The VAT charged on services is normally deductible provided the services are for the purposes of the taxable person's supplies. Deductibility is not given if the services relate to exempt supplies or are for a non-business use. In addition, deductibility is not allowed for certain specific services such as entertainment, accommodation, etc. Subsection (1) of the new section 13A provides that the new zero-rating mechanism cannot apply to these latter services. However, under the new rules, all other services to an authorised person will be zero-rated.
The amendment provides that, where an authorised person receives a VAT-free service which relates to either non-taxable or exempt activity, he is liable to VAT on that service. The VAT is paid by him, on the cost of that service, through his VAT return. This is to take account of the situation that, had VAT not been charged, the recipient would not have been entitled to deductibility in respect of the service.