Tuesday, 9 April 2019

Questions (165)

Pearse Doherty

Question:

165. Deputy Pearse Doherty asked the Minister for Finance if the change made in the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Act 2019, which increased to €175 the threshold required to avail of duty free shopping, will only come into force when the section is commenced; his plans in this regard; the reason the change was made; and if he will make a statement on the matter. [16696/19]

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Written answers (Question to Finance)

The Deputy appears to be referring to the VAT Retail Export Scheme in his question whilst conflating same with Duty Free Sales, post Brexit.

The UK’s status as a third country, post Brexit, has the consequence of Duty Free sales and the VAT Retail Export Scheme applying on passenger traffic between the UK and EU. It was hoped that such matters would form part of future relationship discussions, however in light of the Government decision to intensify its preparations for a ‘no deal’ exit, immediate action was considered necessary on the possible emergence of Duty Free sales and VAT Retail Export Scheme, in the context of a disorderly exit. The policy was driven by the potential impact on Exchequer receipts following the introduction of the schemes, the protection of health and welfare policies and the exposure for significant fraudulent abuse of the VAT Retail Export Scheme, considering the Common Travel Area and associated significant volumes of traffic between the two islands.

As the Deputy is aware, the Government introduced two committee stage amendments to the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2019. One related to Duty Free sales and the second amendment related to the application of the VAT Retail Export Scheme both in a post Brexit, ‘no deal’ scenario.

As outlined in my address to the Dáil on the proposed amendments, I indicated that the introduction of the measures will be dependent on the UK’s application of the VAT Retail Export and Duty Free Schemes. That is, if the UK apply Duty Free and VAT Retail Export Schemes to UK- Ireland passenger traffic, then Ireland will similarly apply the schemes without restriction, and in that instance will not commence the sections in the Act.

In the event that the UK restrict the application of the schemes on passenger traffic between the UK and Ireland then Ireland will reciprocate that approach by commencing the sections 58 and 67 in the Act.

The UK have not yet publically announced their intentions for the schemes in a ‘no deal’ Brexit context.