Niamh Smyth (Cavan-Monaghan, Fianna Fail)
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235. To ask the Minister for Finance further to Parliamentary Question No. 94 of 21 July 2016, his plans to lower the VAT rate on specifically organic products (details supplied) that have no added sugar and are free of pesticides and fertilisers; and his further plans to differentiate between this product and others which contain sugar. [24920/16]

Michael Noonan (Limerick City, Fine Gael)
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All fruit juices, soft drinks and bottled water have been subject to the standard rate with effect from November 1992. The standard rate is the VAT rate applied to such products in the majority of EU Member States.

Some years ago, the Revenue Commissioners Appeal Commissioner ruled in relation to a specific vegetable juice product, that the product in question was food/drink but not a beverage and accordingly should not be excluded from the zero-rate.  The ruling led to uncertainty in relation to the VAT treatment of other drinkable products made from fruit and vegetables. In this regard, it should be noted that fruit and vegetables are also the main ingredients of most soft drinks which are also subject to the standard VAT rate.

In order to clarify this position, Finance Act 2007 provided that the supply of fruit juices and vegetable juices would continue to be taxable at the standard VAT rate of 21% (now 23%).  Not ensuring that the supply of fruit and vegetable juices continued to be taxable at the standard VAT rate would have resulted in a possible distortion of competition between producers of what could be considered similar products. It was necessary to re-establish a level playing field in this market to ensure that a more favourable tax treatment does not apply to one product.