Thomas Pringle (Donegal South West, Independent)
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Question 47: To ask the Minister for Finance his plans to end the process in which large multiple retailers are profiting from VAT refunds on the below cost sale of alcohol when they reclaim the difference between the invoice price VAT and the sale price VAT levied; and if he will make a statement on the matter. [38887/11]

Michael Noonan (Limerick City, Fine Gael)
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VAT is a tax on the value added to a supply and the collection and recovery of VAT takes place at each stage of the chain of supply from manufacturing to retailer. Under EU and domestic VAT rules traders who are registered for VAT collect VAT on the goods and services that they sell. In turn such traders are entitled to recover the VAT they incur on their business inputs used in the purchase or production of goods or delivery of services. Consequently, if there is a decrease in value at any stage in the process the trader is entitled to a refund of the excess of VAT incurred over that collected. In this regard, where a retailer is in a situation of net VAT gain as a result of below cost selling, this is not a loss to the Exchequer or an additional benefit to the retailer, it is merely how VAT is charged.