Brian Walsh (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

90. To ask the Minister for Public Expenditure and Reform further to recent representations from the Vintners Federation of Ireland, if he will consider the introduction of a rates system based on trading data; and if he will make a statement on the matter. [26729/15]

Brendan Howlin (Wexford, Labour)
Link to this: Individually | In context | Oireachtas source

The levying of rates on commercial property by reference to turnover or profit rather than net annual value/rental value would be a significant change and a departure from the long-standing practice of levying rates by reference to property values.  There are already taxes in place which are levied on business turnover/profit, i.e. VAT and income/corporation taxes.

The basis of rateable valuation for all rateable property is Net Annual Value as set out in Section 48 of the Valuation Acts, 2001-2015. Net Annual Value is the rent for which one year with another, the building might, in its actual state, be reasonably expected to let from year to year, on the assumption that the probable average annual cost of repairs, insurance and other expenses (if any) that would be necessary to maintain the property in that state, and all rates and other taxes in respect of the property, are borne by the tenant of the property.

In accordance with well-established valuation principles and case law, various methodologies may be used in estimating the net annual value (NAV/rental value) of a building. The most common methodology used is the comparative method, which as the name implies, makes direct comparisons with other similar buildings in the same rating area.

In the absence of direct comparative evidence of value a method of valuation known as the Receipts and Expenditure method of valuation, where trading accounts are analysed to arrive at the Net Annual Value of the property, may be used. This method of valuation or a variation on this method is frequently used in the valuation of licensed property for rating purposes. In practice therefore trading data is used by the Valuation Office in deriving the value of a property.