Brendan Griffin (Kerry South, Fine Gael)
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Question 63: To ask the Minister for Finance if he will consider a reduction on the VAT rate on products in periods of the year that record very low consumer sales; and if he will make a statement on the matter. [31360/12]

Michael Noonan (Limerick City, Fine Gael)
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VAT is governed by the EU VAT Directive, with which Irish VAT law must comply. The VAT Directive provides that the supply of goods and services by taxable persons is subject to VAT at rates specified in the VAT Directive. Member States must apply a standard VAT rate of between 15% and 25% to the majority of economic activity. In Ireland the standard rate is 23%, and under the VAT Directive any reduction in this rate would necessarily apply to all activity at that rate. It is also possible for Member States to apply up to two reduced rates of between 5% and 15% on goods and services as specified in the VAT Directive. Ireland applies two such reduced rates of 9% and 13.5%, however most of the activity at the 13.5% rate applies under a derogation of the VAT Directive that states they must apply at a rate of 12% or more. While it is possible within these rules to reduce the VAT rates for periods of low consumption, such a move would be very costly to the Exchequer and impractical from an administrative point of view.