Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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126. To ask the Minister for Public Expenditure and Reform if he has considered the impact of the introduction of tendering of school supplies on small and medium enterprises in Ireland vis a vis UK suppliers and the fact that they do not pay VAT here; and if he will make a statement on the matter. [24579/13]

Brian Hayes (Dublin South West, Fine Gael)
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The National Procurement Service (NPS) is cognisant of the needs of Small and Medium Enterprises and the fact that they are a very important part of the national economy. It is also recognised that public procurement can be an important source of business for SMEs.

However, when the value of a contract exceeds the threshold for publication in the Official Journal of the European Communities all public bodies are obliged to adhere to EU procurement law and must abide by the fundamental principles of transparency, equal treatment, proportionality and mutual recognition which are the basis for our membership of the EU.

This means that we must treat all companies tendering equally and show no preference to national industry. These laws apply equally to other countries within the EU and also enable Irish companies to compete for public procurement opportunities abroad.

Under EU law, tenderers can only submit tender prices exclusive of VAT, as rates can vary in each jurisdiction. This ensures a level playing field for companies from different countries and therefore no competitive advantage or disadvantage should arise from the correct application of VAT rules.

If a company from another European country is successful in winning a publicly tendered competition here in Ireland they will have to register with the Revenue Commissioners for VAT where they are supplying taxable goods within the State. Where they register for VAT in Ireland they will then apply VAT in the same manner to that of an Irish company. In addition, if a company established in another EU Member State supplies goods from that other EU Member State to non-VAT registered customers in Ireland the company will register and account for VAT in Ireland where the value of goods supplied exceeds €35,000 in a 12 month period. However, where a company established in another EU Member State supplies goods from that other EU Member State to VAT registered customers in Ireland the company will zero rate the supplies and the Irish customer will self-account for the supplies at the appropriate Irish VAT rate.