Value Added Tax (VAT) is a tax on consumer spending. It was introduced to Ireland when we joined the EU in 1972.
Entities (individuals, partnerships and limited companies) registered for VAT can offset the VAT on their purchases against the VAT on their sales.
The difference is paid to Revenue bimonthly,trice yearly,half yearly or annually.
The final consumer who is not registered for VAT does not get any relief – VAT forms part of their purchase price.
Exempt entities cannot reclaim VAT on purchases,
eg: doctors,dentists,funeral undertakers,insurance brokers,buses and taxis.
Zero rated entities, however,can reclaim VAT on purchases, eg:booksellers,butchers,greengrocers,fishmongers,children’s footwear and clothing
Entities whose turnover exceeds the following thresholds are obliged to register for VAT:
- Supply of Services turnover threshold €37,500
- Supply of Goods turnover thresholds €75,000.
Once an entity registers for Vat in respect of one activity, it must account for Vat on all its activities.
The main rates of VAT are:
- Flat-rate farmers : 5.4%
- Livestock sales : 4.8%
Records to be kept are set out in various legislation:
Taxes Consolidated Acts – applies to all business
Companies Acts – applies to limited companies
VAT regulations – applies to VAT registered business
Revenue have brought in new regulations for cash businesses.
Takings must be supported by till rolls and cash register readings.
Local revenue are doing on the spot inspections of cash registers and till rolls.