I am advised by Revenue that the VAT rating of goods and services is subject to the requirements of EU VAT law, with which Irish VAT law must comply. In general, the EU VAT Directive provides that all goods and services are liable to VAT at the standard rate, unless they fall within categories of goods and services specified in Annex III of the VAT Directive, in respect of which Member States may apply a lower rate from VAT. Within its rates structure, the EU VAT Directive also allows for historic VAT treatment to be maintained under certain conditions on certain goods and services not provided for in Annex III. Currently Ireland has a standard VAT rate of 23% and two reduced rates of 13.5% and 9%. Ireland also holds a number of derogations, under which is it permitted to retain some historic VAT arrangements, under strict conditions.
The Deputy is enquiring about the VAT rates applicable to certain categories of goods: food, fuel and fertiliser.
Under Article 110 of the EU VAT Directive, Member States are permitted to continue to apply zero or very low rates of VAT where they already had these in place at 1 January 1991. On this basis, Ireland continues to apply a zero rate of VAT to basic food products, but is not permitted to extend the scope of this derogation. Other food items are subject to either the reduced VAT rate of 13.5% or the standard rate of 23%.
Under another derogation, Ireland has retained its historic application of one of the reduced rates of VAT, 13.5%, to the supply of fuel, gas, oil and electricity services for both domestic and commercial use and under the Directive the rate applicable to such services cannot be reduced below 12%.
Under the EU VAT Directive and Irish VAT legislation the supply of motor fuel, specifically petrol and diesel, is liable to VAT at the standard rate, currently 23%. There is no discretion under the Directive for Ireland to remove these supplies from the standard rate.
As a further derogation related to historic arrangements, Ireland applies the zero rate of VAT to fertiliser, provided such fertiliser is supplied in units of not less than 10 kilos; otherwise, the standard rate of VAT applies.
I am advised by Revenue that VAT returns do not require traders to separately identify the VAT amount associated with their supply of specific products or services. Therefore, the information required to estimate the cost that would be associated with reducing the VAT rate on specific items (even were this legally possible) is not readily available.
Future tax changes are generally taken in the context of the Budget. Deputies will be aware that my officials prepare a series of papers containing tax options for the Tax Strategy Group to be considered in the context of the budgetary process, alongside a wide range of submissions from various stakeholders and lobby groups.
