Pádraic McCormack (Galway West, Fine Gael)
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Question 110: To ask the Minister for Finance his proposals in the Finance Bill 2007 to provide exemption to non-profit making cultural organisations from VAT on the fees of visiting artists from outside Ireland; and if he will make a statement on the matter. [3331/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I should explain that not-for-profit organisations are exempt from VAT under the EU VAT Directive with which Irish law must comply. The means that non-profit making organisations do not charge VAT on their services and cannot recover VAT on goods and services which they purchase. Essentially only VAT registered businesses which charge VAT are able to recover VAT.

The VAT Act lists a range of activities that are exempt from VAT. Included in this list is the promotion of and admissions to live theatrical or musical performances. This very broad exemption is allowed under Article 132 of the EU VAT Directive. In effect, this means that the promoter realises the full value of admission fee as no VAT is applied to admission fees. In this regard, the current exemption is already very generous covering a broad range of actives accessible to the wider public.

In addition, one of the basic tenets of EU VAT law relates to the proper functioning of the internal market. This means that it is not possible to use VAT law to favour artists not resident in this state over artists that are resident in the state.

In relation to providing a VAT exemption for performance fees charged by musical or theatrical performers to not-for-profit arts organisations, the position is that the VAT treatment of a particular good or service is determined by the nature of the good or service, and not by the status of the customer. There is no provision in European VAT law that would allow for an exemption from VAT on supplies by non-resident artists when they perform for not-for-profit cultural organisations as such an exemption would have to apply to all such performers. It is estimated that this would cost in excess of €20 million. All performance fees are therefore liable to VAT at the standard rate of 21 per cent.

Willie Penrose (Westmeath, Labour)
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Question 111: To ask the Minister for Finance if Section 23 relief is available for particular areas which might be suffering adverse economic circumstances in large urban areas; if, in this context, an application were to come in from Athlone Town Council for the utilisation of such reliefs on the west side of town, if same would be considered; and if he will make a statement on the matter. [3332/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I take it the Deputy is referring to the tax incentives, including the Section 23 relief for rented residential accommodation, that are currently provided under the 1999 Urban Renewal Scheme. There are 49 urban areas designated for a range of reliefs under the 1999 Urban Renewal Scheme. Athlone is among the 49 urban areas designated for tax relief under this scheme and in all 5 sub-areas are designated for tax relief in Athlone, including 2 sub-areas in the west side of the town at Patrick Street and at Connaught Street. In addition, I should also point out that parts of Athlone were also designated in 1988 and 1994 under the 1986 and 1994 Urban Renewal Schemes.

The designation and selection of areas for tax relief under the 1999 Urban Renewal Scheme is a matter for the Minister for the Environment, Heritage and Local Government in the first instance. I have been informed by that Minister that designations of areas and sites for tax relief under the scheme were based on Integrated Area Plans (IAPs) submitted by local authorities and were in line with recommendations made by the independent Expert Advisory Panel on Urban Renewal, which was established to assess all of the plans submitted. This panel exercised an independent role in assessing the plans submitted and in making recommendations on the sites to be designated. The recommendations made by the panel were accepted in full, and are the basis on which the scheme is now implemented. There are no proposals to make further designations or extensions to existing designations under the scheme. In any event, the 2006 Finance Act provided for the phasing out of the Urban Renewal Scheme throughout the State by 31 July 2008.