Pearse Doherty (Donegal, Sinn Fein)
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145. To ask the Minister for Finance if the European Union proposal to ensure certain products always attract a VAT rate of 15% will require changes in an Irish context such as on gambling; and if he will make a statement on the matter. [5808/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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On 18 January 2018 the European Commission published a proposal on the Simplification of VAT rates, which allows greater freedom for Member States in setting VAT rates in line with the move to the definitive destination based system of VAT.  The proposal provides that Member States would continue to apply a standard VAT rate of at least 15% as well as the option to operate two reduced VAT rates of 5% or more. The new proposal also makes provision for any Member States to apply a zero rate of VAT and a VAT rate of less than 5%. Ireland already operates such VAT rating under historic derogations from the existing VAT rating rules. 

They also propose that a list of products to which a reduced or zero rate cannot be applied would be contained in the legislative change to ensure that products such as alcohol, weapons and tobacco will always be taxable at the standard rate as well as allowing Member States to apply tax to certain services that are currently exempted such as financial services and gambling.  Within these parameters, Member States would be free to set the level of VAT rating so long as the average VAT rate applied across the board is no less than 12%.

The proposal will be discussed at European Council and must be agreed unanimously by all Member States before being adopted.  It is expected that discussions on the proposal will be robust and it is likely that the final agreed text will be the subject of many compromised amendments.

In the context of changes to Irish VAT law being required, no legislative change is required upon the publication of a proposal. However, once adopted by Council and when the proposal is made law, Ireland will be required to transpose the changes contained in the legislation within a given timeframe.  At that point, the Value-Added Tax Consolidation Act 2010 will be updated, as necessary, to reflect any changes to EU VAT law on VAT rating.