Seán Haughey
Ceist:189 Mr. Haughey asked the Minister for Finance if he will abolish VAT on school equipment purchased by schools with the use of EU funds; and if he will make a statement on the matter. [20581/97]
Written Answers. - VAT on School Equipment.
The position is that the VAT treatment of schools is governed by EU VAT law with which Irish law must comply. Under the EU Sixth VAT Directive, schools and universities education is deemed to be exempt for VAT purposes. This means that such bodies do not charge VAT on the services they supply but, as a necessary corollary, they are unable to recover the VAT they bear on the goods and services that they purchase in the course of their activities. Generally speaking, VAT can only be recovered by registered businesses.
In addition, it would not be legally possible to apply a zero rate to supplies of school equipment, whether purchased with EU funds or otherwise. Under EU VAT law, member states may retain the zero rates that they had in place on 1 January 1991, but they are prohibited from introducing new zero rates. As school equipment was not zero rated at that time, it is not now open to the Government to apply such a rate. Indeed, the introduction of new zero rates has been prohibited for some time.