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VAT Rate Application

Dáil Éireann Debate, Tuesday - 22 January 2019

Tuesday, 22 January 2019

Questions (117)

Michael McGrath

Question:

117. Deputy Michael McGrath asked the Minister for Finance if there will be a change in VAT applied to food supplements from 1 March 2019; if so, the number of food supplement products impacted; the type of food supplements impacted; the expected revenue from the change; and if he will make a statement on the matter. [2435/19]

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Written answers

Under the VAT Consolidation Act 2010, the standard rate of VAT applies to all food supplements, which are not foods in the ordinary and everyday meaning of the word.  A long-standing concession provided for in Revenue Commissioners guidance permitted the zero rating of certain types of food supplements (vitamins, minerals and fish oils).  New guidance was published on 27 December 2018 concerning the rate of VAT that applies to food supplements. The new guidance withdraws the concessionary application of the zero rate to certain food supplements, and outlines that these products will be liable at the standard rate from 1 March 2019. Products, including folic acid and vitamin products, licensed by the Health Products Regulatory Agency (HPRA), will continue to be liable at the zero rate.

The operation of the concession became extremely problematic as a result of efforts by certain businesses in the industry to extend the concession beyond the scope permitted. Consistent challenges to Revenue guidance and decisions on the VAT rating of products gave rise to serious concerns about compliance within the industry and unfair competition between compliant and non-compliant businesses.

Traders are not required to separately identify the yield generated from a particular activity or product type on their VAT return. Therefore, it is not possible to provide an estimate of the yield from an increase of the VAT rate for the food supplement products affected, but it is expected that the additional yield will not be substantial. For the same reason, it is not possible to identify the number of products impacted. 

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