Written answers

Thursday, 23 January 2014

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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50. To ask the Minister for Finance if he will provide the differential regarding diesel excise rebates North and South; the differential regarding diesel fuel VAT rebates North and South; if he will quantify the loss of trade by southern coach firms due to these differentials; and if he will to seek to equalise these rebates in order to create fair competition. [3284/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The diesel rebate scheme introduced by me under the Finance Act 2013 enables qualifying transport operators, including coach operators, to claim a repayment of part of the mineral oil tax paid on auto-diesel purchased in the State for use in qualifying vehicles in the course of business. There is no equivalent scheme in Northern Ireland. Under the rebate scheme, the amount of the repayment will vary in accordance with the average price at which auto-diesel is available for purchase in the State during a repayment period, subject to a maximum of 7.5 cents per litre. The rebate rate applicable for the current repayment period is 6.2 cents per litre.

The scheme is available to qualifying road transport operators established in the State and in the EU who are tax compliant and properly licensed and who purchase diesel in the State for use in a qualifying vehicle. Qualifying vehicles, in the case of passenger vehicles, are vehicles that conform to certain classifications under EU law and that are engaged in the lawful carriage of persons, including buses, coaches and certain minibuses.

The auto-diesel for rebate must have been purchased by the qualifying road transport operators either in bulk (a quantity of 2,000 litres or more), or by means of a fuel card approved by Revenue for that purpose.  Purchases in bulk must be made from a licensed mineral oil trader, and delivered to a premises or place that is under the control of a qualifying road transport operator.  These purchasing restrictions are necessary for the management and control of the repayment scheme by Revenue, to minimize the risk of abuse. In addition to the diesel rebate scheme, it should also be borne in mind that the rate of mineral oil tax on auto-diesel in Ireland is considerably lower than in Northern Ireland; €479.02 per 1,000 litres compared with €695.93 in Northern Ireland at the current exchange rate.

I am advised by the Revenue Commissioners that the transport of passengers and their accompanying baggage is exempt from VAT in Ireland under paragraph 14(3) of Schedule 1 to the VAT Consolidation Act 2010. In this respect, services provided by the coach and bus sector are exempt from VAT. This means that a person who provides a bus or coach service does not register for VAT and does not charge VAT on the supply of their services. This also includes the hiring of a bus or coach with a driver.  Persons who are exempt from VAT cannot recover VAT incurred on goods and services, such as fuel, that are used for the purposes of the person's coach and bus service.

An Irish coach or bus service operator may be entitled to a VAT deduction when that operator engages in the transport outside the State of passengers and their accompanying baggage. This is defined as qualifying activities in section 59 of the Value-Added Tax Act 2010. For example, an Irish coach operator who incurs Irish VAT on diesel that is used in the transport of passengers in Northern Ireland will be entitled to a deduction for the portion of the VAT that relates to transport in Northern Ireland. A Northern Ireland coach operator who is engaged in the transport within this State of passengers and their accompanying baggage will be entitled to claim a deduction for UK VAT on diesel purchases, since transport services there are zero rated, but is not entitled to any refund of Irish VAT incurred on the purchase of diesel in the State.

I would point out that VAT law in Ireland and the UK must comply with the EU VAT Directive. As passenger transport was exempt in Ireland on 1 January 1978, it is possible under the VAT Directive to continue to apply that exemption. As passenger transport services were charged at the zero rate in the UK on 1 January 1991, the UK are entitled to continue to apply a zero rate to passenger transport services. It is not possible under EU law for Ireland to apply a zero rate to such services as we did not apply a zero rate to them in 1991. Given the lower mineral oil tax on auto-diesel in the State and the diesel rebate scheme, I am satisfied that operators in the State are not at a competitive disadvantage compared with operators based in Northern Ireland.

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