Terence Flanagan (Dublin North East, Independent)
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39. To ask the Minister for Finance his plans to change the current threshold for VAT which is pricing new small businesses out of the market; and if he will make a statement on the matter. [26502/14]

Michael Noonan (Limerick City, Fine Gael)
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VAT registration thresholds provide a mechanism for exempting business with a low turnover from having to register for VAT.  This reduces the administrative burden on both small businesses often at the developmental stage and on the Revenue Commissioners.  The VAT registration thresholds for small businesses are currently €37,500 in the case of a person supplying services and €75,000 in the case of person supplying goods. These thresholds were last increased in Budget 2008 from €35,500 and €70,000 with effect from the 1 May 2008.

With regard to increasing the thresholds, I would point out that Ireland already operates the third highest registration threshold for goods and the fourth highest threshold for services in the EU. Indeed, some Member States do not operate any VAT registration threshold, requiring all businesses to register for VAT irrespective of their level of turnover.  While the registration thresholds are designed to reduce the administrative burden on businesses and Revenue, registration thresholds are not intended as a means of keeping small businesses permanently outside the VAT system. Therefore in setting registration thresholds levels, the objective is to strike an appropriate balance between the desirability of reducing the administrative burden on small businesses and the need to avoid undermining tax compliance or causing competitive distortions relative to registered firms.