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Value Added Tax

Dáil Éireann Debate, Tuesday - 10 November 2020

Tuesday, 10 November 2020

Questions (303, 317, 324, 329)

Jim O'Callaghan

Question:

303. Deputy Jim O'Callaghan asked the Minister for Finance if the proposed changes to the retail export scheme can be postponed in view of the difficulties caused by the ongoing restrictions to small businesses that avail of the scheme; and if he will make a statement on the matter. [34594/20]

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Michael Creed

Question:

317. Deputy Michael Creed asked the Minister for Finance the changes proposed to the operation of the retail export scheme; the reason for the proposed expenditure threshold of €175 impact which the UK departure from the EU will have on the scheme; and if he will make a statement on the matter. [34932/20]

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Michael Creed

Question:

324. Deputy Michael Creed asked the Minister for Finance his views on the operation of the retail export scheme from 1 January 2021 when UK visitors to the European Union will be eligible to participate in the scheme; his further views that the changes proposed in the scheme will impact on retail sales from those countries that have previously been eligible to participate in the scheme; the reason for the raised spending threshold before an entitlement to a VAT refund commences; and if he will make a statement on the matter. [35246/20]

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Niall Collins

Question:

329. Deputy Niall Collins asked the Minister for Finance his views on correspondence from a person (details supplied) in relation to the retail export scheme; and if he will make a statement on the matter. [35328/20]

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Written answers

I propose to take Questions Nos. 303, 317, 324 and 329 together.

The Retail Export Scheme enables visitors that are resident outside the EU benefit from VAT relief on goods purchased in Ireland and subsequently taken outside of the EU. Under existing rules, when the UK becomes a third country, visitors from Britain will be able to avail of the scheme. No minimum threshold currently applies in respect of expenditure on which VAT relief may be claimed.

If the scheme applies to visitors from Britain post-Brexit and if the UK were to operate a similar scheme for EU visitors, Irish consumers would be able to buy goods VAT free in Britain and visitors from Britain would be able to buy goods VAT free in Ireland. This could give rise to a considerable displacement of consumer purchases in both directions, resulting in significant VAT revenue losses; purchases by UK visitors in Ireland would not produce any VAT revenues and collecting VAT on goods in excess of personal importation allowances brought into Ireland by consumers would be extremely difficult. The UK has announced its intention to exclude EU visitors from their Retail Export Scheme. It was always my intention to adopt reciprocal measures in Ireland to the greatest extent possible if the UK adopted such restrictions and that remains my position. These restrictions, in Ireland and Britain, will help avoid tax driven displacement of consumer spending and protect tax revenues. Revenue has also advised that with the volume of travel normally between Britain and Ireland, and the volume of Retail Export Scheme claims that would be likely to arise, there would be significant scope for abuse, with purchases of goods for use in Ireland presented as being for export.

The measures contained in the Brexit Bill do not eliminate the use of the VAT Retail Export Scheme for UK residents, post Brexit. Instead, they provide a legal basis to control and minimise the scope for abuse of the scheme. The amended legislation provides that the value of qualifying goods must exceed €175 in order to be eligible for a refund under the scheme. This change is fully compatible with EU law and is in line with the EU VAT Directive. I also intend to introduce a requirement of proof of importation of the goods into the UK and the associated proof of payment, where applicable, of relevant UK VAT and duties, for the goods purchased under the scheme in order to qualify for a refund.

Question No. 304 answered with Question No. 294.
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