Dáil Éireann Debate, Tuesday - 26 March 2019
188. Deputy Michael Healy-Rae asked the Minister for Finance further to Parliamentary Question No. 141 of 14 November 2018, the reason this is the case in view of information (details supplied) on the website of the Revenue Commissioners; and if he will make a statement on the matter. [12900/19]
View answer189. Deputy Michael Healy-Rae asked the Minister for Finance further to Parliamentary Question No. 141 of 14 November 2018, the reason this is the case in view of previous replies to Parliamentary Questions (details supplied); and if he will make a statement on the matter. [12901/19]
View answer196. Deputy Robert Troy asked the Minister for Finance if the Revenue Commissioners and his officials will discuss with the relevant stakeholders and consult with the best international research in the fields of cardiology and oncology regarding the positive impact vitamin supplements, such as magnesium and vitamin K2, have on mortality and morbidity rates; and if so, if such research will feed into deliberations in relation to the application of VAT to such products. [13324/19]
View answerI propose to take Questions Nos. 188, 189 and 196 together.
The background to this issue is that VAT legislation does not apply the zero rate of VAT to food supplements but shortly after the introduction of VAT Revenue applied a concessionary zero rating to certain vitamin, mineral and fish oil food supplement products. As the market developed over the years this treatment resulted in the zero rating by Revenue of further similar products, including products other than vitamins, minerals and fish oils, and these rulings were published in Revenue’s VAT rates database. The evolution of the scope of the concessionary treatment of certain types of food supplements was well understood by the industry and by agents representing clients in the food supplements sector. However it had become increasingly difficult to maintain an effective distinction between food supplements that could benefit from the zero rate and those that were standard rated, resulting in a situation in which elements in the industry and certain agents aggressively pursued zero rating of all kinds of products, including products claiming to enhance male fertility, promote hair growth, boost tanning, avoid a hangover, build muscle and reduce stress. These businesses consistently challenged Revenue guidance and Revenue decisions on the VAT rating of products giving rise to serious concerns about compliance within the industry and unfair competition between compliant and non-compliant businesses.
The industry’s representative body, the Irish Health Trade Association (IHTA), raised concerns with Revenue about the difficulties in distinguishing between food supplement products which could be zero rated and those which should be standard rated. In response to the issues raised by the IHTA, Revenue undertook a comprehensive review of the VAT treatment of food supplements and engaged an expert to advise on the definition of food for the purposes of the VAT Consolidation Act, 2010. Based on the expert advice and its own legal analysis, Revenue concluded that the status quo was no longer sustainable and engaged with my Department concerning policy options that might be considered in the context of Finance Bill 2018. I decided not to introduce any legislative changes at that time but as the Deputy may be aware I have committed to putting in place a consultation process to help me identify the policy options in relation to VAT on food supplements and will publish the conclusions in the Tax Strategy Papers later this year. I envisage seeking input from a wide range of interested parties, including from health and nutrition experts, to ensure that any legislative changes I bring forward are evidence based, and I will consult with my colleague the Minister for Health in this regard.
Details on the public consultation will be announced shortly.
