Richard Bruton
Ceist:387 Mr. R. Bruton asked the Minister for Finance if his attention has been drawn to the fact that charities pay up to ?63 million in VAT; and if he will arrange for a refund mechanism for charities. [15382/02]
Written Answers. - Tax Rebates.
I am aware of the campaign for a VAT refund currently being run by the Irish Charities Tax Reform Group. The current VAT treatment of charitable organisations is based on EU VAT law, with which Irish law must comply. Under the sixth VAT directive, a wide range of charitable and voluntary activities are deemed to be exempt for VAT purposes. This means that the organisations involved do not charge VAT on their services 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. There is no provision in EU VAT law for any refund of VAT to exempt bodies such as those represented by the Irish Charities Tax Reform Group.
I would add however that charities already enjoy relief from most taxes. Furthermore, in the 2001 Finance Act, I provided for a new scheme of tax relief for donations to charities. I understand that this has already been of significant benefit to them. Even if VAT relief were possible, the cost to the Exchequer would be substantial, especially in the light of the existing valuable tax concessions to such charities.