Dáil Éireann Debate, Tuesday - 4 December 2012
155. Deputy Pearse Doherty asked the Minister for Finance the revenue that would be raised for the Exchequer if the practice of below cost selling of alcohol was outlawed, a practice which sees VAT lost to the State. [54086/12]
Amharc ar fhreagraWith regard to the VAT treatment of below cost selling, VAT is a tax on the value added to a supply, and the collection and recovery of VAT takes place at each stage of the chain of supply from manufacturing to retailer. Under EU and domestic VAT rules traders who are registered for VAT collect VAT on the goods and services that they sell. In turn such traders are entitled to recover the VAT they incur on their business inputs used in the purchase or production of goods or delivery of services. Consequently, if there is a decrease in value at any stage in the process the trader is entitled to a refund of the excess of VAT incurred over that collected. In this case, where a retailer is in a situation of net VAT gain as a result of below cost selling, this is not a loss to the Exchequer or an additional benefit to the retailer, it is merely how VAT is charged.
As regards calculating the VAT impact of below cost sales of alcohol, separate figures are not available for input VAT on goods that were subsequently sold at a discount as traders’ VAT returns show only the total input VAT and the total output VAT for the period covered by the return.
