asked the Minister for Industry and Energy if he will examine the situation whereby IDA grant moneys are being spent abroad by foreign firms to purchase capital equipment to be used in this country by them; and if he will state: (a) if such firms are paying VAT on these imports and (b) if he will proceed to rationalise this area in order to prevent huge losses in revenue to this country in the future.
Ceisteanna — Questions. Oral Answers. - Purchase of Capital Equipment.
12.
I am informed that the Industrial Development Authority encourage the companies to which they give grant assistance to procure as much of their capital equipment requirements as possible in Ireland. However, as a high proportion of the capital goods required by manufacturing industry are not produced in this country, many companies have to purchase their capital equipment abroad.
At present, companies importing capital equipment pay VAT at the point of entry. This is offset against the companies' normal VAT payments. The Deputy will appreciate that the administration of the VAT system is not within my responsibility.
Would the Minister accept that because of the provisions of the last budget firms exporting 75 per cent of their produce are exempt from VAT?
That is a separate question.
This is the issue I raised. Some firms are exempt. This is placing manufacturers for the domestic market at an extreme disadvantage.
The question relates to purchasing capital equipment used by those companies in Ireland.
In relation to the specific area which the Minister mentioned, would he accept that while capital equipment manufactured abroad has to be purchased by someone, there is a big loss to the Irish economy and to the work experience of the service industries if the agents here are by-passed? Would he approach the IDA and remind them that German manufacturers subsidise capital equipment and that it is possible for foreign firms coming in here, grant-aided by the IDA, to purchase capital equipment here as competitively priced as in Germany?
The Industrial Development Authority give every encouragement to companies to which they give grant assistance to procure as much of their capital equipment as is possible in Ireland. Deputies will be aware that we do not have a highly developed capital equipment industry here and some must be purchased abroad.
While I accept what the Minister said, could I ask him to make representations to the IDA to remind them to be more vigilant when inviting foreign firms to come here because indications and reports suggest——
A question, please, Deputy.
——that foreign firms bring in all their capital equipment on the basis of deals that are made outside this country? Revenue that could be made available to agents in terms of servicing and other related areas is being spent outside. Would the Minister agree that this is so?
I reject part of the Deputy's statement, but I am satisfied that the Industrial Development Authority are very much aware of the need to buy capital equipment in this country where it is available.
Before I call the next question, might I point out to the Members of the House that all my predecessors have stated that speeches, statements, argument and debates are out of order at Question Time? I would ask Deputies to please bear that in mind.