Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Question 31: To ask the Minister for Finance the number of persons who claim to be non-resident for tax purposes. [24836/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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There are no precise details on the numbers claiming such status although it is considered that the numbers are relatively small. The Revenue Commissioners audited nine such claims in 2005 and found nothing amiss.

The Revenue Commissioners tell me that a fuller picture of such claims will be available from October next when information on non-residence now required on tax forms since 2002 will be captured electronically.

Olwyn Enright (Laois-Offaly, Fine Gael)
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Question 32: To ask the Minister for Finance his views on the merits of a proposal to remove VAT from business tourism costs; and if he will make a statement on the matter. [24892/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The issue of allowing businesses to deduct VAT on conference related business expenses has been raised on a number of occasions in recent years. The Government's tourism action plan implementation group has recommended a change in the VAT rules to allow for the deductibility of VAT incurred by businesses on conference related expenditure, that is, hotel accommodation and meals. In this regard, its proposal distinguishes between routine business travel which is non-discretionary and a subset of business travel known as MICE — meetings, incentives, conferences and events — which would be discretionary. The main argument put forward in favour of the proposal is that it would allow Irish hotels to compete more favourably with their European counterparts for conference related business.

We do not currently allow businesses to recover VAT incurred in respect of hotel accommodation and meals. There is a similar block on deductibility for business cars and petrol. These restrictions were put in place to limit revenue loss and tax avoidance. EU VAT law allows such restrictions.

While it would, in theory, be possible to remove or reduce these restrictions, it would not then be possible under EU law to reinstate them in the future if we wished to do so. In addition, any scheme designed to remove or reduce these restrictions would have significant cost implications for the Exchequer. The Revenue Commissioners have estimated that if full deductibility was allowed on accommodation it could cost the Exchequer €90 million in VAT forgone in a full year. Allowing deductibility for meals and drink associated with business travel would vastly increase this figure. Furthermore, Article 17(6) of the Sixth VAT Directive limits the type of deductibility allowable to business expenses. This means there is no provision in EU law that would permit expenditure on entertainment to be allowable. Therefore, any scheme that would allow businesses to deduct VAT on accommodation and meals would have to take account of this fact.

The Revenue Commissioners have also raised concerns regarding potential abuse, and it is clear the design of a scheme that would allow businesses to deduct VAT on such expenses, even in a limited form, is complex.

However, as the Deputy will be aware from recent replies to similar questions on this issue, I want to make sure any such relief can work and does not open up the VAT system to other very costly demands. The examination of the matter is ongoing and in this regard my officials are in consultation with industry representatives. I will consider the matter in the context of next year's Budget.