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Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2019: Committee Stage (Continued)

Tuesday, 5 March 2019

Dáil Éireann Debate
Vol. 980 No. 4

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  Sections 24 to 52, inclusive, agreed to.


An Ceann Comhairle: Information on Seán Ó Fearghaíl Zoom on Seán Ó Fearghaíl Amendments Nos. 41 and 42 are related and will be discussed together.

Deputy Paschal Donohoe: Information on Paschal Donohoe Zoom on Paschal Donohoe I move amendment No. 41:

In page 35, between lines 3 and 4, to insert the following:
“Amendment of section 58 of Act of 2010

53. Section 58(2) of the Act of 2010 is amended—
(a) by the substitution of the following paragraph for paragraph (a):
“(a) the supply of a traveller’s qualifying goods, where the total value of that supply of goods, including tax, is more than €175, and”,

(b) by the insertion of the following paragraph after paragraph (iii):
“(iiia) has, in respect of a traveller whose domicile or habitual residence is in the United Kingdom, proof that—
(I) the goods have been imported into the United Kingdom by or on behalf of the traveller, and

(II) value-added tax and duties of customs and excise, chargeable by virtue of the law of the United Kingdom, have been paid on the importation of those goods,”.”.

This amendment amends section 58 of the Value Added Tax Consolidation Act which relates to the retail export scheme. Two amendments are proposed. The first amendment provides that the value of qualifying goods must exceed €175 in order to be eligible for a refund under the scheme. This monetary limit will apply in respect of all third country travellers who apply for a refund under the scheme post the commencement of the section.

  The second amendment introduces a new requirement of proof of importation of the goods into the UK and the associated proof of purchase, where applicable, of relevant UK VAT and duties for the goods purchased under the scheme. The retail export scheme enables travellers who are resident outside the EU to benefit from VAT relief on goods purchased in Ireland and subsequently exported outside the EU. The UK's status as a third country will render UK residents eligible for VAT refunds on purchases of qualifying goods under the scheme post Brexit.

  The purpose of the amendments to the operation of the scheme is to provide a legal basis to control and minimise the scope for abuse and also to minimise the possibility of diversion in retail consumption from Ireland to the UK post Brexit. This is as a result of the volumes of passenger traffic between the UK and Ireland.

  To date the UK has not publicly confirmed its intentions on the availability of a VAT retail export scheme to EU passenger traffic post Brexit. The amendment to the Bill is, therefore, a precautionary measure which will be subject to a commencement order. The amendments provide Ireland with the legislative basis to trigger a reciprocal protectionary measure should the UK publicly commit to not applying a VAT retail export scheme in the coming weeks. If the UK proceeds with applying a VAT retail export scheme to UK-EU passenger traffic, then Ireland will not commence the sections.

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath I thank the Minister for these amendments. On amendment No. 42 on duty free, as I understand it, if the Minister did not bring in this amendment then the default position would be that duty free would be reintroduced if and when the UK leaves the European Union at the end of March. The Minister is, therefore, bringing forward this amendment which, if enacted, allows him by commencement order to have no duty free between Ireland and the UK. I would like to clarify the Government's policy position. Is it the Government's policy position that if the UK does not introduce duty free in that scenario, Ireland will not do so either but, conversely, if it does - I understand the UK is saying it will make its intentions known after the meaningful vote next week, depending on how that goes - we will do likewise? Is the position of the Government that we will be acting in concert with the UK Government on the question of duty free? If that is the case, how will the Minister address the point that has been made by some of our airports and ports that this scenario could put them at a disadvantage vis-à-vis other European airports and ports? If duty free was introduced in those countries, Irish ports and airports would be at a disadvantage.

  Is there an agreed European position on this? We know what the default legal position is. If the UK leaves the European Union, duty free applies. Has this been the subject of discussion with other countries at EU level, that an agreed position would be arrived at? Could it be the case that Ireland and the UK do not introduce duty free, but that other countries have duty free? What would be the consequences of that?

  Can the Minister clarify the situation on cross-Border shopping if duty free was to be introduced by the Government or if it were to happen by default by the Government not bringing in this amendment, or not signing the commencement order? What would be the practice on the ground for consumers and what would be the implications for the Exchequer?

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty Many of the points I wished to raise were covered by the Deputy McGrath. If I understand the Minister correctly, he is saying that he is not aware of what the British Government is planning to do in this regard. Could the Minister outline his engagements with his counterpart and where they are at this point in time in relation to this issue? This issue would also affect the North of Ireland and it has a major potential implication. It is surprising, given the focus on the Border on the island of Ireland, that we still do not know if the British authorities are going to reciprocate in this regard. That would mean the status quo would remain. If that is not the case, there would be changes and questions on how this would be monitored and supervised.

  Will the Minister outline the engagements he has had with his counterpart, where they are at and when the UK is likely to make a determination on this issue? If the UK decides not to reciprocate, this will not be commenced. What will be the impact on the island of Ireland in that scenario?

Deputy Paschal Donohoe: Information on Paschal Donohoe Zoom on Paschal Donohoe On a point of order, most of the questions the Deputies put to me refer to amendment No. 42 to section 61, which is the following amendment, but I can answer the questions-----

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath The amendments are grouped.

An Ceann Comhairle: Information on Seán Ó Fearghaíl Zoom on Seán Ó Fearghaíl Amendments Nos. 41 and 42 are grouped.

Deputy Paschal Donohoe: Information on Paschal Donohoe Zoom on Paschal Donohoe On the questions put to me, Deputy Michael McGrath's interpretation of the amendment is correct. We will be making a decision and triggering what we are going to do when we are clear on what the United Kingdom is actually going to do. On Deputy Pearse Doherty's question, what the UK has said publicly so far is that it is not planning to bring in a duty free scheme.

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