Loophole allows travellers to bring in unlimited drink and cigarettes
Chair of the Revenue Commissioners Josephine Feehily admitted the limits it set for personal use were ineffective if a person had already paid duty in another European country.
She said while it tried to impose an 800-cigarette cap on travellers, in reality people could bring in thousands of cigarettes unchecked.
Revenue confirmed the same clause also applied to alcohol purchases from other EU countries.
“In the context of our membership of the European Union people can bring duty-paid tobacco from other member states for their personal use.
“And while we have an indicative guideline of 800 cigarettes it is only indicative. And what the law says is you can bring in tobacco for your personal use.
“And there is very significant case law in the European Courts and indeed domestically that suggests that the burden of us establishing that cigarettes are not for personal use is very high. So people can bring in many, many thousands legally legitimately into the country for their own use,” he said.
Ms Feehily outlined to the Dáil Public Account’s Committee the growing problem with cigarette smuggling.
She said there were three main ways untaxed cigarettes were getting into the country and the first was people bringing them in legally for personal use.
The second method was ant smuggling, where groups of people pack suitcases on planes and fly the goods in. This is illegal.
However, the most problematic was through container ports and Ms Feehily said there had been a number of seizures in this regard.
She said illegal cigarette sales were a significant problem because Ireland was now seen as a lucrative market by international criminals.
Whereas in the past the small size of the market was considered a protection, because the profits did not justify the smuggling risks.
Ms Feehily said the efforts crime gangs were putting into counterfeit Irish-specific packaging was evidence there was now enough of an indigenous demand to support the trade.
Last year the number of convictions for cigarette smuggling rose from 80 to 146. There €60,000 in fines and 31 jail sentences were handed down.
Ms Feehily also used her appearance before the PAC to appeal to businesses not to let tax debts fester.
She said Revenue had no desire to get heavy with the “innocent victims of the recession”.
And where possible her officials will work with businesses to avoid a situation where debt problems become unsurmountable.
Ms Feehily also outlined how in the past year it wrote off €3.4m in unpaid tax due from one company in liquidation.
This company closed last February with the loss of 618 jobs owing at least 18 months worth of tax.
In another case Revenue knocked on the door of a lotto winner who previously had his tax liability written off.
She said when the Revenue learned he had won enough money to settle his debts it moved on his winnings.
