Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

The Minister said Revenue has encountered abuse of the treatment of these products from a VAT perspective. Will the Minister provide more detail on this? It seems from looking at the background to this that it is open to Revenue to continue to apply a zero rate to food supplements. Even if I look at the wrap up speech by the Minister of State, Deputy D'Arcy, on Second Stage of the Finance Bill, when he said Article 110 of the EU VAT directive is the basis for the zero rate for food in Irish VAT law. Under that article, member states that on 1 January 1991 were applying reduced rates of VAT, lower than the minimum rate of 5%, may continue to apply those rates. Revenue's practice up to that point was, and has been for many years since, to have a zero rate for food supplements. What we have to deal with here is a Revenue decision because as I see it, and I ask the Minister to contradict me if I am wrong, based on the position that applied prior to the introduction of the EU VAT directive the zero rating of food supplements can legally continue. The Minister of State also said in his wrap up speech that while the legislative provision for food and drink was in place on 1 January 1991, there was no legislative provision for food supplement products and as such legally they cannot have a zero rate. I take this to mean the Minister cannot now put into legislation that they will have a zero rate. It seems the practice prior to 1991 and for many years since has been to apply a zero rate to food supplements. I ask the Minister to deal with this issue.

The Minister did not mention among the options using the 9% VAT rate that is still in our VAT code. There is not much left in the 9% basket at this stage but it is still in law. Was this considered?