Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

Yes. The Deputy's amendments are relevant to section 54. This section amends Schedule 3 of the Value-Added Tax Consolidation Act 2010 to provide that food supplements are subject to VAT at the reduced rate of 13.5% from 1 January 2020. This amendment is being made to clarify the position regarding the VAT rating of food supplements. Under the Value-Added Tax Consolidation Act 2010, food supplement products are subject to VAT at 23%. However, Revenue has, on a concessionary basis, provided that certain food supplement products are subject to the zero rate of VAT.

Significant difficulties have arisen in recent years regarding the application of the zero rate. This has led to the incorrect application of the zero rate to certain products; disagreement between traders and Revenue regarding the VAT rate that should be applied; unfair competition between compliant and non-compliant traders; and a a loss of revenue to the Exchequer. Following complaints by the Irish Health Trade Association, Revenue conducted a comprehensive review of the treatment of food supplements, including commissioning an expert report and, on the basis of that review, it concluded that the status quowas no longer sustainable and indicated its intention to remove the concessionary zero rating of certain food supplement products from 1 March 2019.

Following representations from the industry and the public, I wrote to Revenue outlining my plans to examine the policy and legislative options for the taxation of food supplement products in the context of the Finance Bill. Revenue responded by delaying the withdrawal of its concessionary zero rating of the food supplement products concerned until 1 November 2019. The Department carried out a public consultation on the taxation of food supplement products this year. Details of this are contained in the 2019 report of the tax strategy group. I considered the options and policy considerations that apply, and weighed up the submissions from industry and the Department of Health, before deciding that the best solution is to apply the reduced rate of VAT to all food supplement products. This means that from 1 January 2020, food supplement products that are currently liable to the standard rate of VAT of 23% will become liable to the reduced rate of 13.5%. Products that are currently zero-rated on a concessional basis will also become liable to the reduced rate on that date. It is important to clarify that foods for specific groups, including infant follow-on formula and infant foods, foods for special medical purposes and specially formulated foods, such as total diet replacement for weight control, will continue to be zero-rated because these well established and defined categories of food are essential for vulnerable groups of the population. Fortified foods, such as yoghurts and cereals fortified with vitamins and minerals, will continue to be zero-rated because they are food. Folic acid, vitamin and mineral human oral products that are licensed or authorised as medicines by the Health Products Regulatory Authority, HPRA, will continue to be zero-rated under a different VAT provision for human oral medicines.