Tuesday, 21 May 2013

Questions (147)

Andrew Doyle

Question:

147. Deputy Andrew Doyle asked the Minister for Finance if he will outline all goods that have VAT exemptions; and if he will make a statement on the matter. [23673/13]

View answer

Written answers (Question to Finance)

I am advised by the Revenue Commissioners that the goods and services that are exempt from VAT are set out in Schedule 1 to the Value-Added Tax Consolidation Act 2010, as a series of paragraphs that describe these categories of goods and services. The vast majority of the paragraphs relate to services. There are just five references to goods that are exempt in Schedule 1. These include the supply of dentures or other dental prostheses; the supply or importation of human organs, human blood and human milk; the supply of water by a local authority, the importation of goods by certain international bodies, and the supply of goods that were used for business purposes by a person who did not have VAT deductibility. A business engaged in the supply of VAT exempt goods does not charge VAT on those supplies and is not entitled to deductibility for VAT incurred on goods or services used in the supply of those goods.

It is important to distinguish between supplies of goods that are exempt from VAT and those that are zero rated. A business engaged in the supply of zero rated goods does not charge VAT on those sales but is entitled to deductibility for VAT incurred on goods or services used in connection with those sales. A wide range of goods is liable to VAT at the zero rate. These include most food and drink of a kind for human consumption, oral medicines, children’s clothing, certain books and certain medical equipment and appliances.

I would point out that the exemptions and zero rating in Irish VAT legislation must comply with the exemptions and conditions on VAT rating laid down in the EU VAT Directive. Ireland is unable to introduce or apply exemptions or to vary VAT rates in a manner that is not in accordance with this Directive.