Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I thank the Senator for raising this important issue this morning. I listened carefully to everything she said. The Senator seems to be knowledgeable of VAT regulations in Ireland and the UK and I want to thank her for the excellent presentation of the case. However, as the Senator may be aware, Ireland is the only country in the EU that applies a 0% VAT rate to period products such as tampons and sanitary towels. This rate was applied in 1991 and we have been able to maintain this rate under the provisions of the VAT directive that allow for a 0% rate to be maintained if it applied in 1991. I am sure the Senator is aware of that.

A number of new products have come on the market since then, which have attracted a standard rate of VAT. The period poverty working group lead by the Department of Health as part of the national strategy for women and girls published a report on period poverty on 8 February 2021. It recommended a reduced VAT rate be applied to certain newer period products in circumstances in which a 0% VAT rate cannot be applied. It also recommended that Ireland continue negotiations at EU level to allow for a 0% VAT rate to apply to all period products.

I am pleased to say that following the passage of the Finance Bill, new period products in question have had a reduced VAT rate applied to them as of 1 January 2021. The VAT rate directive provides for the application of a reduced of VAT to such products in paragraph 3 of annexe 1. I understand that before introducing the change officials ensured that the reduced rate applying to newer period products would not risk the 0% VAT rate on tampons and sanitary towels, which are far more common, and have attracted the 0% rate because it applied in 1991 and that still holds. I can confirm that Ireland and a number of other EU member states are looking for greater flexibility in the VAT directive to allow a zero rate to be applied to these new period products. That is essentially where we are. These discussions are connected to a wider VAT rate debate. Any agreement on VAT rates must be agreed by every member state because it is a taxation issue. We are seeking greater flexibility on this. A number of other states are assisting but it will have to be agreed by every member state.