Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

To ask the Minister for Finance in view of the deliberations in Budget 2013, if he will quantify the amount of potential lost revenue to the State by the selling of alcohol in supermarket outlets at prices below the cost that the supermarkets bought the product at; and if he will quantify the amount paid by the State as a VAT rebate in 2011 in respect of alcohol pricing by supermarkets and other multiples; and if he will make a statement on the matter. [57553/12]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

With regard to the VAT treatment of below cost selling, 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 case, 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. As regards calculating the VAT impact of below cost sales of alcohol, separate figures are not available for input VAT on goods that were subsequently sold at a discount because traders’ VAT returns show only the total input VAT and the total output VAT for the period covered by the return.