Paschal Donohoe (Dublin Central, Fine Gael)
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VAT is governed by the EU VAT Directive, 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.

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.