Government dismisses calls to delay sugar tax until July

By Geoff Percival

Tax advisory giant Deloitte has called on the Government to further delay the introduction of its new sugar tax until July to allow beverage companies time to ready themselves.

While it has welcomed the tax, Deloitte said introducing the levy in three weeks’ time doesn’t allow businesses sufficient time to prepare for its consequences.

The levy will apply to sugar-sweetened drinks with a sugar content of between five and eight grams per 100ml, at a rate of 20c per litre, and 30c per litre for anything over eight grams. 

It will likely increase the cost of a can of soft drink by 10c and bring in €40m per year for the exchequer.

It was first flagged a couple of years ago before being formally included in Budget 2018 proposals last October.

The levy was supposed to come into being yesterday, but was recently delayed until May 1 pending formal EU approval and satisfaction that it doesn’t break state aid laws.

The Department of Finance is confident of getting the formal EU go-ahead in the coming weeks and introducing the levy next month.

The UK, which introduced its sugar tax yesterday, doesn’t require the same approval from Brussels.

The department has also rubbished suggestions the tax has been rushed, saying guidance from both it and Revenue has been available to companies for some time. Deloitte, however, claims guidance has only been available since late last month.

“This presents businesses with a very short timeline to get to grips with the tax and understand, not alone the rules that apply to the tax, but also the commercial implications for their business,” said Deloitte’s director of tax John Stewart.

There are a number of administrative processes businesses will now have to go through including registering for the tax as a supplier, identifying all the products that will be subject to the tax... and determining the rate that applies to those products, in addition to... completing additional tax returns every two months and submitting separate claims for refunds of sugar tax on exports.

Deloitte wants the deadline for claiming refunds on the tax extended from six months to four years.

Some businesses have already said they will largely be unaffected by the introduction of the new levy.

Earlier this week, Tesco Ireland said it will not need to increase the price of its own-label carbonated soft drinks as all have already been reformulated to have their sugar content reduced in readiness for the introduction of the tax.

The migration towards lower-sugar content means that 75% of Britvic Ireland —which owns the likes of Club and MiWadi — product will not be liable for the tax.

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