Michael McGrath (Cork South Central, Fianna Fail)
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144. To ask the Minister for Finance further to Parliamentary Question No. 178 of 5 February 2019, if there is scope to reduce VAT on such non-alcoholic drinks in view of the fact that they are not beer; and if he will make a statement on the matter. [7678/19]

Paschal Donohoe (Dublin Central, Fine Gael)
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In replying to the Deputy’s Question No 178 of 5 February 2019, I stated that “there is no means under EU VAT law to apply a lower VAT rate to the supply of non-alcoholic beer”. I regret to inform the Deputy that this is incorrect. The position is that it is may be possible under Annex III of the VAT Directive for a reduced rate to be applied to non-alcoholic beverages.

I have no plans to reduce the VAT rate on non-alcoholic beverages. The majority of drinks, including soft drinks and bottled water, are charged to VAT at the 23% standard VAT rate in Ireland. Applying a reduced VAT rate to non-alcoholic beer and wine would necessarily involve the application of different VAT rates to supplies of non-alcoholic beverages. This would be difficult to administer and would be likely to provide considerable scope for manipulation of the VAT system and potential opportunities for tax avoidance.