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Tax Code.

Dáil Éireann Debate, Wednesday - 17 November 2004

Wednesday, 17 November 2004

Questions (153)

Richard Bruton

Question:

193 Mr. R. Bruton asked the Minister for Finance the threshold for registration for VAT in manufacturing and in the service sector; when these thresholds were set; the amount they would need to be increased in order to keep pace with the index of consumer prices in the intervening period; his estimate of the cost to the Exchequer of doubling these thresholds; and if he will make a statement on the matter. [28939/04]

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Written answers

Traders making supplies in the State are obliged to register for VAT where certain turnover thresholds are exceeded or are likely to be exceeded in any continuous period of 12 months. The current threshold, which was enacted by the Finance Act 1994 with effect from 1 July 1994, is €25,500 in the case of a person supplying services. This threshold also applies to persons supplying a combination of goods and services or goods chargeable at the 13.5% or 21% VAT rates which are produced from zero-rated materials; the threshold is €51,000 for persons supplying goods. Businesses with turnover below these thresholds can of course register for VAT and those in the service sector in particular frequently choose to do so for business reasons.

If thresholds were increased in line with the consumer price index since 1994, the €25,500 threshold would need to be increased by €15,515 to €41,015 and the €51,000 threshold would need to be increased by €31,030 to €82,030.

With regard to the estimated cost of doubling the current thresholds, the position is that under the EU sixth VAT directive, with which Irish VAT law must comply, member states may only increase thresholds in line with inflation.

It is not customary for me to comment on any possible changes to thresholds which may, or may not, arise in the context of the forthcoming budget.

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