Since the introduction of VAT in 1972, Ireland has operated a block on VAT deductibility thereby not allowing businesses recover VAT incurred on cars, petrol, meals, hotel accommodation (except when associated with a business conference) and entertainment expenses. The block was introduced to limit revenue loss and tax avoidance. The cost to the Exchequer of removing this block would be significant.
In addition, removing the block on leasing while maintaining a block on the purchasing of business cars would not be feasible as it would introduce distortion of competition whereby leasing companies would enjoy a significant advantage over companies selling cars to the business community. Concerns also arise in controlling the measure given the potential for abuse.