Written answers

Tuesday, 3 November 2020

Photo of Gerald NashGerald Nash (Louth, Labour)
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412. To ask the Minister for Finance if his attention has been drawn to an independent report (details supplied) detailing the benefit of the existing retail export scheme on supporting tourism in Ireland; if his attention has been further drawn to the fact that other EU countries such as Spain and France have been reducing their thresholds for comparable retail export schemes in recent years to better position them to attract shoppers to their markets; his views on whether the proposed changes to the retail export scheme threshold rate in the Brexit (Omnibus) Act will severely diminish the competitiveness of tourist focused retailers nationwide, but particularly those in the tourism regions throughout Ireland with a high dependency on returning the United States, Canadian, Chinese and other established tourists; and if he will make a statement on the matter. [32653/20]

Photo of Gerald NashGerald Nash (Louth, Labour)
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413. To ask the Minister for Finance if he will refrain from signing the commencement order of the Brexit (Omnibus) Act in order to provide an opportunity to review the amendments relating to the retail export scheme and make the necessary adjustments to minimise the impact on the existing tourist base whilst still addressing the concerns raised surrounding UK usage of the scheme; if he will retain the current threshold level at €0.01; and if he will make a statement on the matter. [32654/20]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 412 and 413 together.

I have previously outlined the rationale for the changes proposed to the VAT Retail Export Scheme. This scheme enables visitors that are resident outside the EU to benefit from VAT relief on goods purchased in Ireland and subsequently taken outside of the EU. If the scheme applies to UK visitors post-Brexit without changes UK visitors will be able to buy goods VAT free in Ireland.

This could give rise to a considerable displacement of consumer purchases, resulting in significant VAT revenue losses, as purchases by UK visitors in Ireland would not produce any VAT revenues. Due to the volume of passenger movements between the UK and Ireland, the volume of refund applications is likely to significantly increase which simultaneously heightens the risk of abuse of the Retail Export Scheme post Brexit.

As I have previously advised, the measures in the Bill are precautionary and aim both to minimise the potential for abuse of the scheme and to reduce the possibility of diversion in retail consumption from Ireland to the UK, post Brexit.

The amended legislation proposed in the General Scheme of the Brexit Omnibus Bill 2020 provides for two elements to restrict the scheme. The first is a new requirement of proof of importation of the goods into the UK and the associated proof of payment, where applicable, of relevant UK VAT and duties, for the goods purchased under the scheme in order to qualify for a refund. The second is to provide that the value of qualifying goods must exceed €175 in value in order to be eligible for a refund under the scheme. This change is fully compatible with EU law and is in line with the EU VAT Directive. The monetary limit will apply in respect of all third country travellers who apply for a refund under the scheme, post commencement of the relevant sections.

The Ireland/Northern Ireland Protocol ensures that there will be no VAT Retail Export Scheme between Ireland and Northern Ireland. Any changes to the operation of the scheme will of course be kept under review by Revenue.

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