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Brexit Preparations

Dáil Éireann Debate, Thursday - 5 November 2020

Thursday, 5 November 2020

Ceisteanna (103)

Catherine Murphy

Ceist:

103. Deputy Catherine Murphy asked the Minister for Finance if he and-or the Revenue Commissioners have conducted an impact assessment in the context of the retail export scheme post-Brexit; and if he and or the Revenue Commissioners have a documented forecasting and or model of the way in which sectors will be effected post-Brexit that fall under the scheme. [34487/20]

Amharc ar fhreagra

Freagraí scríofa

The Retail Export Scheme enables visitors that are resident outside the EU benefit from VAT relief on goods purchased in Ireland and subsequently taken outside of the EU. Under existing rules, when the UK becomes a third country, visitors from Britain will be able to avail of the scheme. No minimum threshold currently applies in respect of expenditure on which VAT relief may be claimed.

If the scheme applies to visitors from Britain post-Brexit and if the UK were to operate a similar scheme for EU visitors, Irish consumers would be able to buy goods VAT free in Britain and visitors from Britain would be able to buy goods VAT free in Ireland. This could give rise to a considerable displacement of consumer purchases in both directions, resulting in significant VAT revenue losses; purchases by UK visitors in Ireland would not produce any VAT revenues and collecting VAT on goods in excess of personal importation allowances brought into Ireland by consumers would be extremely difficult. The UK has announced its intention to exclude EU visitors from their Retail Export Scheme. It was always my intention to adopt reciprocal measures in Ireland to the greatest extent possible if the UK adopted such restrictions and that remains my position. These restrictions, in Ireland and Britain, will help avoid tax driven displacement of consumer spending and protect tax revenues. Revenue has also advised that with the volume of travel normally between Britain and Ireland, and the volume of Retail Export Scheme claims that would be likely to arise, there would be significant scope for abuse, with purchases of goods for use in Ireland presented as being for export.

The measures contained in the Brexit Bill do not eliminate the use of the VAT Retail Export Scheme for UK residents, post Brexit. Instead, they provide a legal basis to control and minimise the scope for abuse of the scheme. The amended legislation provides that the value of qualifying goods must exceed €175 in order to be eligible for a refund under the scheme. This change is fully compatible with EU law and is in line with the EU VAT Directive. I also intend to introduce a requirement of proof of importation of the goods into the UK and the associated proof of payment, where applicable, of relevant UK VAT and duties, for the goods purchased under the scheme in order to qualify for a refund.

No study of the kind referred to by the Deputy has been undertaken by my Department or by Revenue, but the risks are clear. I am sure the Deputy will appreciate that any development that would weaken our tax base at this time is highly undesirable.

Question No. 104 answered with Question No. 88.
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