Dáil Éireann Debate, Tuesday - 19 May 2015
115. Deputy John McGuinness asked the Minister for Finance if he has explored the possibility of offering a rebate on value added tax as paid by the public service; and if he will make a statement on the matter. [19265/15]
View answerGenerally, activities engaged in by public bodies are outside the scope of VAT and therefore they have no entitlement to VAT deductibility on their inputs and do not account for VAT on their supplies. Where their activities fall within the scope of VAT, for example, where their services are in competition with similar services provided by taxable private sector entities, they are required to register and account for VAT.
The provision of a VAT rebate scheme in relation to non-taxable services provided by public bodies would confer no benefit on the exchequer in that any cost reduction for a public body would be matched by an equivalent reduction in net tax revenues. In addition, competition between public and private sector bodies would be distorted as public bodies engaged in the provision of non-taxable services would have a cost advantage over private sector bodies engaged in the provision of similar non-taxable services.
The VAT treatment of public bodies generally is a complex policy issue, which is being examined currently at EU level. I look forward to considering whatever proposal emerges.
