Thursday, 17 October 2019

Questions (85)

Brendan Griffin


85. Deputy Brendan Griffin asked the Minister for Finance his views on a matter (details supplied); and if he will make a statement on the matter. [42756/19]

View answer

Written answers (Question to Finance)

Finance Bill 2019, published today, provides for the application of the 13.5% rate of VAT on food supplements.

The Deputy will be aware that shortly after the introduction of VAT, Revenue applied a concessionary zero rating to certain vitamin, mineral and fish oil 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. The scope of the relatively narrow original zero rating of food supplement products permitted by Revenue broadened progressively over time to the point that 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. This caused difficulties for both Revenue and industry.

Following a comprehensive review of the VAT treatment of food supplements, Revenue concluded that the status quo was no longer sustainable. Following this review, Revenue engaged with the Department of Finance concerning policy options that might be considered in the context of Finance Bill 2018. The relevant legislation was not changed in Finance Bill 2018 and therefore Revenue 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, Revenue delayed the withdrawal of its concessionary zero rating of the food supplement products concerned until 1 November 2019. This allowed time for the my Department to carry out a public consultation on the taxation of food supplement products. The public consultation sought input from a wide range of interested parties, including from health and nutrition experts and the Minister for Health to ensure that any legislative changes brought forward was evidence based. The results of the consultation were included in the 2019 VAT Tax Strategy Group paper as part of the Budget 2020 process.

The implementation of a 13.5% rate will provide certainty to industry in respect of food supplement products and will apply prospectively. It is important to clarify that certain products will not be impacted by the change introduced in this Finance Bill (e.g. foods for specific groups, vitamins and minerals such as folic acid licensed as medicines by the HPRA, and fortified foods). These products will continue to benefit from the zero rating for VAT purposes.