Niall Collins (Limerick County, Fianna Fail)
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123. To ask the Minister for Finance his views on a proposal by an organisation (details supplied). [14917/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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EU VAT law provides that supplies of goods and services outside the EU are zero-rated for VAT purposes. For exporting businesses this means they would be in a permanent repayment position when it comes to any VAT paid on their business inputs. To minimise the administrative burden and cash-flow loss for exporting business, EU and Irish VAT law allows for supplies made to exporting companies to be made free of VAT.

Section 56 of the VAT Consolidation Act 2010 provides that persons who supply goods and services to exporting businesses can zero rate those supplies provided the exporting business provides the suppliers with a copy of an authorisation issued by the Revenue Commissioners. A business can only qualify for this authorisation where they export 75% or more of their supplies.

Section 56 is designed to assist businesses that are engaged primarily in exporting. Reducing the qualifying threshold to 50% of turnover would represent a significant policy change in that it would bring businesses with 50% of their supplies in the domestic market within the scope of the scheme, affecting the competitiveness of other domestic operators who would not qualify. Reducing the export threshold to 50% would also greatly expand the volume of zero-rated invoices issued for domestic supplies of goods and services. This would involve an increased risk of abuse and necessitate increased controls and checks by Revenue. For these reasons I have no plans to change the Section 56 export threshold level.