The background to the issue is that VAT legislation does not apply the zero rate of VAT to food supplements but shortly after the introduction of VAT the Revenue Commissioners applied a concessionary zero rating to certain vitamin, mineral and fish oil food supplement products. As the market developed this treatment resulted in the zero rating by the Revenue Commissioners of further similar products. 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.
After undertaking a comprehensive review of the VAT treatment of food supplements, including commissioning an expert report on the definition of food for the purposes of the VAT Consolidation Act, the Revenue Commissioners concluded that the status quo was no longer sustainable and issued new guidance in December 2018 which removed the concessionary zero rating of various food supplement products with effect from 1 March 2019.
Following representation from Deputies and from the industry I wrote to the Revenue Commissioners outlining my plans to examine the policy and legislative options for the taxation of food supplement products in the context of Finance Bill 2019. The Revenue Commissioners responded by delaying the withdrawal of its concessionary zero rating of the food supplement products concerned until 1 November 2019. This will allow time for the enactment of any legislative changes in the context of Budget 2020.
I 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 Group papers later this year. Input is being sought 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.
The public consultation began on 18 April 2019 and will end 24 May 2019, and can be found here: