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

Deputy Michael McGrath's question about definitions will be dealt with by guidance that will be issued by the Revenue Commissioners. That is the appropriate way to deal with it. If we were to look to define either a food or a food supplement by way of a legal definition, it would be a catalyst for this issue to continue to cause problems into the future. We can be certain that shortly after making any such definition in law, something would happen to raise issues or unintended problems. One of the many things I have learned in the drafting and implementation of law is that there can be a temptation to put too much into primary legislation. In this instance, it should and will be dealt with by way of the guidance that will issue from Revenue.

Deputy Michael McGrath asked whether there would be retrospective application in this matter. That will not be the case; instead, it will be dealt with on a going forward basis. I hope to provide further clarity as the provision is dealt with and changed within the legislation.

In response to Deputy Burton's questions, I emphasise that the key issue is the question of what is a food and what is a food supplement. The EU VAT directive that is relevant to the sector is very clear that a different rate needs to apply to food supplements. We have consulted the European Commission in the course of the debate we have had since this issue was first raised in the aftermath of last year's Finance Bill and it has affirmed our view that food supplements are not foods and that a different rate of taxation should, therefore, apply to this sector. That tax rate would have been 23%, but I have sought to get the balance right and reflect the importance of the sector for many citizens by setting it at the lower rate of 13.5%.

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