Written answers

Thursday, 27 October 2005

5:00 pm

Photo of John PerryJohn Perry (Sligo-Leitrim, Fine Gael)
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Question 137: To ask the Minister for Finance his plans to increase the VAT threshold of €25,500 for bed and breakfasts as it has remained at this level for 15 years and does not the seem to have been reviewed to keep in line with inflation; and if he will make a statement on the matter. [31085/05]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The position is that traders making supplies in the State are obliged to register for VAT where certain turnover thresholds are exceeded or are likely to be exceeded in any continuous period of 12 months. The current VAT registration threshold of €25,500 for suppliers of services, referred to by the Deputy, has been in place since 1994. Businesses with a turnover below this threshold can of course register for VAT and those in the service sector in particular frequently choose to do so for business reasons.

On the question of increasing the current thresholds, the position is that, under the EU sixth VAT directive, with which Irish VAT law must comply, member states may only increase thresholds in line with inflation. However, if the services threshold were increased in line with the consumer price index since 1994, the €25,500 threshold would need to be increased to approximately €35,000. The cost involved would be €20 million in a full year.

It is not customary for me to comment on any possible changes to thresholds that may, or may not, arise in the context of the forthcoming budget.

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