Dáil Éireann Debate, Thursday - 30 September 2021
166. Deputy Cormac Devlin asked the Minister for Finance if his attention has been drawn to a Budget 2022 submission by an organisation (details supplied) which calls for a number of measures to tackle costs in the childcare sector including the introduction of a 0% VAT rate for the early years sector; if he will consider the submission in Budget 2022; and if he will make a statement on the matter. [47359/21]
View answerAs the Deputy will be aware, it is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.
However, for clarity, it is important to note that the VAT Consolidation Tax Act 2010 (VATCA) on Schedule 1 Paragraphs (1) (2) and (3), provides for crèche and nursery services exemption for VAT. This exemption also applies to childminding, childcare and child protection/ education services. The exemption applies to childcare provided on a non-profit basis and also to childcare regulated by Parts (VII) or (VIII) of the Child Care Act 1991 even where provided on a profit-making basis. Exemption also covers the provision of related goods.
With regards to the possibility of deducting VAT for the early years sector, Value Added Tax (VAT) is an input tax incurred by an accountable person on purchases made during the course of business. The legislative basis for VAT deductibility is section 59 of the VATCA 2010. Section 59 of the VATCA 2010 sets out conditions required before input VAT may be deducted. To note, section 59 (2) provides that VAT may only be deductible insofar as the goods and services are used for taxable supplies. Only persons making taxable supplies of goods and services or qualifying activities can reclaim VAT charged on goods and services used for the purpose of their taxable trade.
