THE FORTHCOMING increase in the standard VAT rate will not come into effect before January 1st, the Minister for Finance said yesterday.
Responding to questions ahead of his address to the American Chamber of Commerce in Dublin yesterday, the Minister confirmed that the changes, which will see the standard rate of VAT increase from 21 to 23 per cent, will not be implemented on budget night.
Earlier, the Irish Tax Institute had called for clarity in relation to the timing of the VAT changes, warning of an “administrative nightmare” if the changes were introduced in the middle of a VAT period.
Approximately half of all goods and services in the State will be affected by the new rate, according to the institute.
The Minister reiterated the Government’s commitment not to increase the standard VAT rate past 23 per cent during its tenure. “That’s an absolute commitment,” he said in his speech to delegates.
Addressing business leaders at the chamber’s 50th anniversary Thanksgiving lunch, Mr Noonan thanked the US business community for its investment in Ireland.
He acknowledged that the US is the largest single source of foreign direct investment in Ireland, employing about 100,000 people directly.
Highlighting the fact Ireland’s economic situation was increasingly intertwined with that of the euro zone, he said there were “misunderstandings” about the euro.
“The euro is a great currency. The euro is going to be one of the leading world reserve currencies, ” he said.
He added that, since the introduction of the euro 12 years ago, European trade has increased and inflation has been kept under 2 per cent.
“That’s lower than the deutschmark kept inflation in Germany in the previous 12 years,” he said.
The fact that Switzerland had chosen to benchmark its currency against the euro was a “great vote of confidence” in the euro, he continued.
Mr Noonan also paid tribute to his predecessor, the late Brian Lenihan, who addressed the annual lunch in November 2010, at the height of the EU-International Monetary Fund bailout crisis.
“He had a most difficult task this time last year.
“The loss of sovereignty came very quickly.
“The government was falling apart and he was forced to bring in a budget which made a correction of €6 billion – the first to do so.”
Mr Noonan underlined Ireland’s commitment to retaining the corporate rate of tax.
“Not only will it remain but we will try to tweak it and nuance it a bit better if that’s possible.”
