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Tax Code.

Dáil Éireann Debate, Tuesday - 4 July 2006

Tuesday, 4 July 2006

Questions (305, 306)

Damien English

Question:

318 Mr. English asked the Minister for Finance his plans to introduce a tax break scheme that would encourage the provision of community facilities, by individuals or business entities for voluntary community groups; and if he will make a statement on the matter. [26289/06]

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Written answers

I have no plans to introduce a new tax break for the provision of community facilities. As I have indicated previously, while I am a supporter of properly focused, clearly defined specific tax reliefs, reliefs narrow the tax base. A broad tax base is the price that must be paid to keep tax rates low. Any proposal for new tax reliefs would have to be considered in this context. Nonetheless, a current relief that may be suitable depending on the circumstances and nature of a proposal is a scheme of tax relief on donations made by either individuals or corporate bodies to eligible charities and other approved bodies including first and second level schools and third level institutions including universities. Tax relief is also available on donations to certain sports bodies for the funding of capital projects. Full details of the schemes are available on the Revenue Commissioners website.

Damien English

Question:

319 Mr. English asked the Minister for Finance his plans to allow VAT exemption for voluntary group, community group and charities; and if he will make a statement on the matter. [26290/06]

View answer

I would like to explain that charities and non-profit groups engaged in non-commercial activity are exempt from VAT under the EU Sixth VAT Directive, with which Irish VAT law must comply. This means they do not charge VAT on the services they provide and cannot recover VAT incurred on goods and services that they purchase. Essentially only VAT registered businesses which charge VAT are able to recover VAT. Accordingly, it is not possible under EU law to change the current VAT treatment of charities.

I presume that the Deputy is proposing the introduction of a VAT refund order for voluntary group, community group and charities. Refund Orders have in the past been used in a limited way to provide refunds of VAT on certain aids and appliances for the disabled and on medical equipment donated voluntarily to hospitals. These orders are focused and are designed to target particular sectors. However, it is no longer possible under EU law to introduce new schemes which would allow for VAT refunds to exempt bodies or non-taxable persons. However, I would add that the tax code currently provides exemption for charities from Income Tax, Corporation Tax, Capital Gains Tax, Deposit Interest Retention Tax, Capital Acquisitions Tax, Stamp Duty, Probate Tax and Dividend Withholding Tax.

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