Michael Kitt (Galway East, Fianna Fail)
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Question 107: To ask the Minister for Finance if there are any rebates of taxes in place for outlets of sale of alcoholic drinks at supermarkets, off-licences and so on; the amount of such rebates in the past five years; and if he will make a statement on the matter. [17928/12]

Michael Noonan (Limerick City, Fine Gael)
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There are no specific rebates of taxes in place in respect of outlets which sell alcohol such as supermarkets and off-licences. However, the VAT system, as governed by the EU VAT Directive, operates a system of rebates of VAT paid for persons registered for VAT and it is possible that a retailer of alcohol can be 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.

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.