Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

We have had a discussion on this topic for the past couple of hours. It is very important that all of the views would be discussed but this is one issue on which we have not arrived at a consensus. The Bill before us contains approximately 120 sections and 50% of them relate to the Department of Finance. The entire essence of everything we have done relates to various arrangements between Ireland and Northern Ireland as a result of the protocol and between Ireland and the UK, which is no longer a member state of the European Union, and different rules and regulations regarding VAT for services and goods to and from Northern Ireland.

We have had many Brexit-specific debates. The essence of this section is to make a change in respect of the United Kingdom regarding the particular scheme before us today. As I said, the original proposal was €175. As a result of the Second Stage debate and the comments of everybody during that debate, both inside and outside the House, it was agreed to reduce it to €75. Having listened to the debate we agreed that this matter needed to be examined in further detail. I indicated on behalf of the Government that we would accept the amendment from Deputies Brendan Howlin and Nash on the 12-month review of the operation of the amendments and that that would come back before the Oireachtas in 12 months' time once the legislation is enacted. We felt that was a fair and reasonable move to accommodate a proper analysis of what might happen when the scheme is actually up and running.

We also felt it was necessary that we need this in respect of the UK because, as I mentioned earlier, the volume of traffic between Ireland and the UK is very high because of the close proximity. The number of transactions that would be involved is very high because of the proximity and the number of people who travel between Ireland and the rest of the UK. As a result of the arrangements the UK has for claiming back VAT - they do not have to prove payment up to a figure of €440 - the very likely scenario is that if we do not make the change in respect of the UK in this legislation people will get the VAT back here as well as in the UK. To use a phrase that I am told was one of the first times it was used, it would result in double non-taxation. We do not want a side effect of this legislation to allow a situation where there is double non-taxation in terms of people getting VAT back twice on the same transaction. I do not believe anybody would think that is a good idea.

Britain has made its decision to withdraw from the EU. That is its right and we will respect that when it happens but I do not believe anybody would agree that there should be a double non-taxation or a practicality in many cases that no VAT at all would be paid anywhere on these transactions. Not only would someone get the VAT back once but they would get it back a second time possibly in the UK also. I do not think people have considered what would happen if we do not have this particular section in the legislation. If there is a scheme to allow people get VAT back, that is fine. There should not, however, be an opportunity for a person, on foot of Brexit, to claim VAT back twice on the same transaction and make a financial gain as a result of us not dealing with this issue. It is incumbent on us to deal with this issue in order to ensure that there are not double VAT reclaims or double non-taxation. Nobody would support a regime that was designed to facilitate double VAT reclaims on the one transaction in two different jurisdictions. That is the reason that is in the legislation.

The other suggestion made was that part of the legislation as drafted will affect people in other countries, whether it is the United States, China or whatever the place of origin of tourists coming to Ireland. It has been suggested here in the past hour or so that we should make different arrangements for the other countries and do for them what we are doing in regard to the UK and that we could have a different situation but Ireland has decided to be a fully fledged member of the EU. Britain has decided the opposite. When a country is a member of the EU we are obliged to follow all the EU VAT directives and those directives do not allow for separate thresholds for different countries. We cannot have one arrangement in respect of VAT on a transaction here with England, which will be a third country, and a different arrangement for a tourist who comes here from the United States. That would almost be a tariff on one or the other tourist depending on their country of origin and EU legislation and the VAT directives do not allow that. The Minister is being asked to make a change to that to exclude the other countries from this legislation but to do so would be in complete breach of EU directives on VAT. Ireland has always supported the common agreements we have in respect of VAT and we cannot unilaterally change VAT arrangements for different people visiting the EU depending on their country of origin. I hope people understand that we cannot separate that particular sentence in the original section of the Bill from the rest of the section, which is necessary to deal with the UK's decision to withdraw from the EU.

What we have said so far is that this came in at €175.

People have asked to meet somewhere in the middle. The Government has more than done that. We have come down 60% of the way from €175 to €75. We did not just halve it.

We have come a long way in, unusually, accepting an amendment from the Opposition to include a report. Normally at this point, a Minister would commit to produce a report within 12 months, but we are going a step further than would normally be the case and we are agreeing to amend the legislation to include the report. That is not normal but we are going that extra step. This legislation may not be completed tomorrow or it could be completed this evening. I do not know if there is any procedure to skip this section and move on. I doubt if there is and I would not like to ask to establish a precedent on that if it is not normal. Another point that was raised was that it can perhaps be looked at in the Seanad. That is still a possibility. I am not in a position to say that the Government will table an amendment in the Seanad but I think that everybody knows the reality, that if people feel it is definitely necessary, it is possible. Considering that we have moved from €175 to €75 and stitched a commitment for a 12-month review into the legislation, I have gone as far as I feel I can on behalf of the Government.

I am in a position to accept amendment No. 11 in Deputy Howlin's name, amendment No. 10 is from the Government, but I am not in a position to accept amendment No. 9 from the Opposition. There may be opportunities for the matter to be looked at again in the Seanad, to reiterate what other Members have said, but I am not in a position to give a commitment that the Government will table an amendment. I have gone as far as I can.

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