The Irish Charities Tax Reform Group has launched a campaign to obtain VAT compensation for charitable organisations.
The "Abolish VAT on Giving" campaign calls on the Government to introduce a grant scheme to compensate charities for VAT they pay on goods and services.
"Businesses are able to reclaim the VAT that they pay on inputs when they sell it on," said Richard Dixon, chairman of the tax reform group. "They either charge the VAT on or they reclaim it back. Charities can't do that."
The reform group, which represents 140 charities, says the VAT it pays on capital expenditure, fundraising and equipment greatly affects its work.
The Department of Finance said charities already receive a number of tax exemptions. In addition, under the Finance Act 2001, tax relief is allowed on personal donations above an annual threshold of €250 to domestic charities, based on the taxpayer's marginal rate. However, the group believes abolishing VAT would help it improve its services.
John McCormack, chief executive of the Irish Cancer Society, said the €300,000 VAT bill paid annually by his organisation would run its cancer information service for a year. The tax group says the EU Commission has said a change of law would not be required to refund charities.