Michael McGrath (Cork South Central, Fianna Fail)
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116. To ask the Minister for Finance the policy and practical issues that would arise if the VAT registration threshold was to be increased; and if he will make a statement on the matter. [26094/17]

Michael Noonan (Limerick City, Fine Gael)
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VAT is governed by the EU VAT Directive (Council Directive 2006/112/EC),with which Irish VAT law must comply. The thresholds for Ireland date from accession into the EU and the Directive only provides for the raising of those thresholds by Member States to maintain their value in real terms. That is, they may only be increased in line with inflation. The Irish VAT thresholds were increased to their current values on 1 May 2008. As Central Statistics Office figures show the consumer price index is below the level it reached in 2008, it is not possible to increase the thresholds.

I would point out that Ireland’s VAT registration threshold for small enterprises supplying services is the eighth highest in the EU while the goods threshold is the third highest.

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 threshold 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.