VAT relief for bad debts
The Minister said Irish VAT law already provides full bad-debt relief, either through adjustments to VAT liabilities or cash-receipts accounting.
asked the Minister for Finance if he is aware of the EEC Sixth Directive on VAT which provides relief for bad debts; and the measures that are available in this country to provide for relief in such cases.
Comment on this
Full relief for bad debts is already provided under Irish VAT law by Regulation 8 of the VAT Regulations, 1972.
In general, the relief mentioned operates by way of appropriate reduction in a trader's VAT liability to the Revenue in respect of the VAT on bad debts which he has to write off after he has paid to the Revenue the VAT on the goods or services in question.
Some traders are allowed to account for VAT on the basis of cash receipts. These traders do not, of course, need to make any adjustment since that basis automatically takes account of bad debts.
While Article 11.C.1 of the EEC Sixth VAT Directive provides for relief for bad debts, it allows member states to derogate from this requirement. It is not my intention that Ireland should avail of this derogation. Our existing arrangements will, therefore, continue.