Michael Ring
Ceist:160 Mr. Ring asked the Minister for Finance the plans he has to legislate for a fairer VAT refund mechanism for charities, to enable them to reclaim their VAT similar to businesses. [29066/03]
Written Answers. - VAT Refund for Charities.
Joe Higgins
Ceist:163 Mr. J. Higgins asked the Minister for Finance his plans to change the situation whereby charities, unlike businesses, are not entitled to claim their VAT back. [29123/03]
I propose to take Questions Nos. 160 and 163 together.
VAT registered businesses and charitable and voluntary organisations are subject to different treatment under EU and Irish VAT law. Registered businesses are allowed to recover input VAT since they generally charge VAT on their onward sales to their customers. Charities and not-for-profit bodies on the other hand are exempt and do not charge VAT for the services they provide and therefore are unable to recover VAT incurred on their inputs.
The State already provides significant resources to fund the operation of charities and not-for-profit bodies. Charities enjoy relief from most taxes and I provided in the Finance Act 2001 for a scheme of tax relief on donations to charities. This is a scheme which has been of significant benefit to them. Any such scheme as outlined by the Deputies would be expensive, much more so than has been indicated by the charity sector. This is because a wider group who could benefit from charitable status would be likely to seek access to any such payments. In addition I would be concerned that there would be pressure to have similar grant or subsidy schemes replicated for other areas that incur VAT. I have no plans to introduce any mechanism outlined by the Deputies.