Call to halt VAT rate of 23 % on health food supplements

IT seems incredible that the Minister for Finance is sitting on his hands while a Revenue Commissioners’ decision threatens the jobs and livelihoods of those involved in the health food store industry, Labour Party leader Brendan Howlin told the Dáil.

Ireland, he said, has a range of value added tax, VAT, rates which include the zero rate applied to food.

‘Historically, Revenue has applied the zero rate of VAT to food supplements, except those associated with sport, slimming and certain cosmetics,’ he said. ‘However, it has recently announced a new interpretation of the VAT rules applied to food supplements and that it intends to apply the 23% VAT rate to food supplements from March 1. This will happen just four weeks before Brexit for an industry that is already very exposed to the UK market for imports and its supply chain. How does this represent helping business to prepare for Brexit? There are 3,600 jobs at stake in the industry.’

In response, Taoiseach Leo Varadkar said there are different VAT rates for different foods, for example, fresh foods which are, of course, the healthiest to eat. ‘ There is also a zero VAT rate for oral medicines, but VAT is applied to injectable medicines because there is value added,’ he said.

‘VAT is also applied to processed foods. It is a Revenue interpretation in deciding the appropriate rate to be applied in different circumstances. It is not a political decision, or a decision of the Government or the Houses of the Oireachtas. It was not part of the Finance Act 2018 or the Budget. It is a Revenue decision and it is for Revenue to interpret the rules and laws appropriately.’

The Minister for Finance has made contact with Revenue to see what can be done, he said but it would not be appropriate for him to direct the Revenue Commissioners on the rate they should apply to different products.