John O'Mahony (Mayo, Fine Gael)
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Question 85: To ask the Minister for Finance his plans to exempt community and voluntary groups from paying VAT in providing facilities for their communities; and if he will make a statement on the matter. [12642/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Charities and non-profit groups engaged in non-commercial activity are exempt from VAT under the EU VAT Directive, with which Irish VAT law must comply. This means they do not charge VAT on the services they provide and cannot recover VAT incurred on goods and services that they purchase. Essentially only VAT registered businesses which charge VAT are able to recover VAT. Accordingly, it is not possible under EU law to change the current VAT treatment of charities.

Even if funds were available for grant-aiding charities and other voluntary groups, it is not clear that the most appropriate use of Exchequer funds would be to relieve VAT as opposed to supporting their activities using other criteria, as is already being done, which provides a more focused approach.

The tax code already provides considerable assistance to charities through exemption from income tax, corporation tax, capital gains tax, deposit interest retention tax, capital acquisitions tax, stamp duty, probate tax and dividend withholding tax.