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

On the substantive issue, we seem to be in a grey area. The current system of VAT on food supplements is riven with disputes. There is a distinct lack of clarity. I would go as far as to say it is dysfunctional. Some people may be regarded by Revenue as compliant, while others may be regarded as not compliant. People often do not know whether they are compliant with the application of VAT law in this area.

On Committee Stage, the Minister stated that a Revenue concession allowing the zero VAT rate to be applied to certain types of food supplements such as vitamins, minerals and fish oils was no longer tenable. He explained that Revenue is carrying out a review and may issue some guidance in the coming period. It is clear that the Minister was considering legislative change in the Finance Bill to provide clarity to the sector but opted not to do so based on consultation with the Department of Health. I am not sure in which direction he intended to move the legislation, but there is now no legislative provision in place, which means we must rely on Revenue's guidance and interpretation. I accept that the food supplements and nutrition sectors are evolving and changing rapidly and it is not easy for Revenue to keep pace with them and apply law consistently because many of the products are composites of different components. However there is a distinct lack of clarity. The Minister says that vitamins, minerals and fish oils have a zero VAT rate. I have seen Revenue declarations confirming that other food supplements are also zero rated but they were not named by the Minister. There is a distinct lack of clarity and an inconsistency. People could be building up liabilities in the system of which they are not even aware.

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