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Proposed amendments in Finance Bill 2023

Indirect Tax Matters | May 2023

Finance Bill 2023 is currently working its way through the various committee stages in Dáil Éireann and Seanad Éireann prior to being signed into law by the President. Whilst some provisions may change slightly change before becoming law, the following updates are currently included or announced for inclusion.

VAT rate changes for certain supplies

Section 46(1)(caa) of the VAT Consolidation Act 2010 will be amended to extend the 9% VAT rate on the supply of electricity and gas until 31 October 2023.

Section 46(1)(cb) of the VAT Consolidation Act 2010 will extend the 9% VAT rate on the supply of certain goods and services which primarily relate to hospitality and tourism until 31 August 2023. This extension relates to applies to supplies of restaurant and catering services, guest and holiday accommodation, various entertainment services such as admissions to cinemas, theatres, museums, fairgrounds and amusement parks. The government has stated that this will be the last extension to the temporary application of the 9% rate to supplies in question.

Paragraph 11(5), Schedule 2, VAT Consolidation Act 2010, puts the continuation of the zero VAT rate on the supply of Covid-19 testing kits on a statutory footing with effect from 1 January 2023.

An additional measure in relation to solar panels has been proposed although the legislative wording has not yet been released. This measure is possible due to amendments made to Annex III of the VAT Directive in 2022, which added a number of new categories to which Member States can apply a zero or reduced rate of VAT. The Directive provides the option to amend the rate applicable to certain supplies, one of which is to apply a zero rate for the ‘Supply and installation of solar panels on and adjacent to public and other buildings used for activities in the public interest, housing and private dwellings’.

Increases to Mineral Oil Tax

Previous reductions to the rates of Mineral Oil Tax (MOT) were due to expire on 28 February 2023. The bill provides for an extension to these reductions with an incremental restoration of the full rates, to 31 October 2023. The effect of this is that excise on petrol, diesel and MGO did not increase as planned on 1 March. However, on 1 June the rates will be restored by 6 cent for petrol, 5 cent for diesel and 1 cent on MGO. These rates will be in place until 1 September, when the rates will increase by a further 7 cent, 5 cent and 1 cent per litre for each of petrol, diesel and MGO respectively. The remaining balance of the reductions, amounting to 8 cent for petrol, 6 cent for diesel and 3.4 cent for MGO will be restored on 31 October.

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