Tuesday, 9 July 2019

Questions (317)

Catherine Murphy


317. Deputy Catherine Murphy asked the Minister for Business, Enterprise and Innovation if she has consulted with the Department of Finance regarding aspects of e-commerce and its potential impact on high street retailers; her plans to establish a working group on e-commerce and high street retail in the context of impacts of one on the other; and if she will make a statement on the matter. [29271/19]

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Written answers (Question to Business)

My Department has responsibility for the E-Commerce Directive (2000/31/EC) and the Statutory Instrument that transposed the Directive – European Communities (Directive 2000/31/EC) Regulations 2003 (SI No 68 of 2003). The E-Commerce Act 2000 is dealt with by the Department of Communications, Climate Action and Environment.

The Digital Single Market (DSM) agenda, led by my Department, is a whole of government approach coordinated across Government. The Interdepartmental Committee (IDC) on the Digital Single Market, is chaired by my colleague Pat Breen TD, Minister of State for Trade, Employment, Business, EU Digital Single Market and Data Protection. The key focus of the IDC is on ensuring effective whole-of-Government engagement with the EU DSM agenda. The Department of Finance/Public Expenditure and Reform is represented on the IDC.

The Department of Finance has responsibility for the Modernisation of VAT regimes for eCommerce. In January 2021 new changes will come into effect on the existing VAT regime which will have a significant impact for E-commerce and high street retailers in general. The main change will be the removal of the existing VAT exemption for goods from outside the EU with a value less than €22. This will mean that vendors (or online platforms facilitating the vendor) must charge the rate of VAT applicable in the country they are selling into. This should address the cost advantages that non-EU vendors currently benefit from.

Additionally, the one-stop shop for VAT registration of distance sales will be extended. This will mean that online traders will no longer have to register for VAT for business-to-consumer transactions in each of the member states in which they sell, thereby reducing costs. This will be a significant simplification and easing of the administrative processes involved in selling across the EU. Together these changes should level the playing field for Irish companies and help them better compete both online and in the High Street.

As set out in Future Jobs Ireland 2019, all businesses, regardless of size or sector, in today’s digital environment need to focus on building competitive online capability. It is clear that the retail sector is undergoing an exciting but also challenging transformation as the digital economy provides a different retail experience for consumers across Ireland and beyond. Digitalisation has increased the scope for competition in the retail sector, as reflected in the growth in online shopping and changing consumer preferences in terms of how people are shopping in town centres. Sustaining physical retail outlets requires adaptation: many retailers now offer multiple sales channels to sell their goods, from physical stores, to social media, mobile apps and websites.

The Retail Consultation Forum (RCF), which I chair, was established in 2014 to provide a platform for engagement between retail representative bodies, retailers and the public sector on key concerns for the retail sector. The Department of Finance is represented on the RCF.

As part of the Forum’s work, the 'Framework for Town Centre Renewal' was launched in April 2017. The Framework supports towns and villages through their Local Authorities to address the challenges of creating a vibrant and viable town centre. It sets out the key characteristics of a successful town centre and identifies existing supports and best practice examples from around the country. The Framework also serves as a support document for towns and villages applying for funding streams under Project 2040 including; the €2 billion Urban Regeneration and Development Fund and the €1 billion Rural Regeneration and Development Fund which can be leveraged to support the regeneration and viability of town centres.

As Chair of the RCF, I have prioritised supporting the retail sector to develop their online capability and enhance their competitiveness. In support of this, and through the Forum, I have introduced a new Online Retail Scheme administered by Enterprise Ireland. The Online Retail Scheme supports retail businesses of 10 employees or more who are ready to strategically grow their online capability, with grants of between €10,000 and €25,000 on a 50 percent match fund basis. The second call for the Online Retail Scheme opened on 19th June and will close on 31st July this year.

A sub-group of the RCF focusing on skills has worked to identify the key skills challenges facing retailers today and to identify practical proposals to address those challenges. Digital skills were identified as a critical requirement along with marketing and logistics. Forum member, Retail Ireland Skillnet, has since developed a retail specific digital course and will also, in September 2019, launch the first Apprenticeship in Retail Supervision.

The agencies of my Department offer a range of supports to assist businesses with aspects of e-commerce. Of particular relevance to the retail sector, the LEOs nationwide actively promote the Trading Online Voucher Scheme (TOVS) on behalf of the Department of Communications, Climate Action and Environment. The TOVS offers matched financial assistance of up to €2,500, along with training and advice, to micro companies (10 or less employees) who want to establish an online presence for the first time, or who wish to expand a basic existing website to incorporate a more substantive online trading capacity. The LEOs also offer a wide range of short training programmes which are available to high street retailers to support their clients in building their online presence and to compete in the online marketplace.

In light of the continuing work of the Retail Consultation Forum and its focus on the current and future developmental needs of the retail sector, the ongoing whole of Government engagement on the DSM agenda, as well as the 2019 commitment under Future Jobs Ireland for my Department to commence a study to understand the full extent and impact of digital transformation on retail business models, I have no plans at present to establish a working group on e-commerce and high-street retail.