Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Question 92: To ask the Minister for Finance his views on whether the current VAT threshold is in need of change; and if he will make a statement on the matter. [37864/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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This is an issue that has been raised on a number of occasions in recent years. When this issue arose on Committee Stage of the Finance Bill 2005, I undertook to examine it in the context of this year's budget and Finance Bill.

In my Budget Statement, I announced changes to the current VAT registration thresholds for small businesses. These thresholds are being increased from €25,500 to €27,500 in the case of services and from €51,000 to €55,000 in the case of goods. This represents an increase of almost 8% to the current thresholds and will remove 2,200 businesses from the VAT net. These increases will be introduced in the Finance Bill and will take effect from 1 May 2006. This initiative will cost €6 million in 2006 and €12 million a full year.

The effect of this increase will be to relieve small traders of the burden of compliance with the requirements of the VAT system. Increasing the thresholds would also free up Revenue resources to deal with larger cases. Following this increase, Ireland will have the third highest registration threshold for goods and the fifth highest threshold for services in the EU. Some member states have no registration threshold for goods or services and require all firms to register irrespective of their turnover.