Seán Fleming (Laois-Offaly, Fianna Fail)
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Question 224: To ask the Minister for Finance if VAT is chargeable on domestic refuse disposal charges; and if this charge applies to the service being provided by local authorities and private operators alike; when same came into operation; and if he will make a statement on the matter. [7736/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am advised by the Revenue Commissioners they became aware in 2005 that VAT was being inconsistently applied in the private waste management sector. Indeed, compliant members of the trade wanted the Revenue Commissioners to ensure consistency of treatment across the industry. There was a lack of clarity on the part of some private operators about the application of VAT to the landfill levy. The legal position in relation to the VAT treatment is clear. In the case of privately operated landfill facilities, VAT is chargeable at 13.5% on the total consideration that the operator is entitled to receive, inclusive of the levy.

In June 2005, the Revenue Commissioners issued instructions to their staff confirming the legal position on the application of VAT in the private waste management sector and the necessity for consistency of treatment across the sector. The Commissioners subsequently published an article in their Tax Briefing publication, which explained the correct VAT treatment. Revenue officials also recently met with representatives from the Irish Waste Management Association to confirm the correct VAT treatment.

In so far as the application of VAT to local authorities engaged in the collection and disposal of waste is concerned, the legal position is that such authorities are exempt from VAT. This means they do not charge VAT on the services they provide nor can they claim VAT back on any of the inputs that go towards providing a service. Essentially, only VAT registered businesses that charge VAT can recover VAT. It is not possible for me to change the VAT treatment of waste disposal as this is dictated by EU law.