Dáil Éireann Debate, Wednesday - 13 January 2021
212. Deputy Jackie Cahill asked the Minister for Finance his plans to equally apply a standard rate of value added tax to all white candles used in churches to ensure a level playing field and avoid a situation in which some non-cylindrical shaped candles face a competitive disadvantage of being taxed at 23% while other non-cylindrical candles do not have this level of VAT applied; and if he will make a statement on the matter. [44768/20]
View answer231. Deputy Michael Lowry asked the Minister for Finance the position regarding VAT on church candles (details supplied); and if he will make a statement on the matter. [45137/20]
View answerI propose to take Questions Nos. 212 and 231 together.
I am advised by Revenue that the VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply. In general, the VAT Directive provides that all goods and services are liable to VAT at the standard rate unless they fall within Annex III of the Directive, in respect of which Member States may apply either one or two reduced rates of VAT. Ireland, in line with the VAT Directive, also maintains several standstill provisions and derogations that allows it to maintain reduced rates, zero rates and exemptions to certain supplies for historical reasons. These standstill provisions and derogations cannot be extended.
In accordance with one such standstill provision, white (including off-white and cream) cylindrical candles and night-lights are zero rated for VAT purposes. Other candles and night-lights, such as those that are decorated, spiralled, tapered or perfumed, are liable to VAT at the standard rate.
I introduced an amendment in Finance Bill 2020 to remove the application of the zero rate of VAT to a category of candles which will consequently provide for the taxation of all candles at the standard rate of VAT, currently 21%. Following discussions at Committee Stage of the Bill and having received numerous representations, I decided on a later date for implementing this change on the basis that this will allow the parties involved to amend their pricing and contracts which would already have been set based on the zero rate of VAT. The proposed amendment will come into effect on the 1 January 2022.
