Tax concession for vitamins is applied too widely, say Revenue

Revenue has reviewed its stance on the zero Vat rate applied to food supplements. Some traders are “exploiting” the concession by applying it to products that should be paying the standard rate.

However, a body representing pharmacists has warned that a change could hit those on lower incomes, who need supplements for health reasons.

As it stands, Revenue has provided a longstanding concession, allowing a zero Vat rating of vitamins, minerals, and fish oils. However, this has been reviewed.

Revenue said: “The operation of the current concession has become extremely problematic, because of efforts by elements in the industry to exploit the concession to extend zero rating way beyond the scope permitted by Revenue.

“These elements consistently challenge Revenue guidance and Revenue decisions on the Vat rating of products, and Revenue is very concerned that this action is resulting in confusion and inconsistency generally in the sector, with compliant businesses applying correct Vat rates to their product ranges, while others apply the zero rate to products that are liable to the standard rate.”

The Irish Pharmacy Union has warned against any changes. “Up until now, the majority of food supplements supplied by pharmacies in Ireland have been exempt from Vat, on the basis that they encourage the maintenance of health, through the sustenance derived from a normal, healthy diet, ie vitamins, minerals, and fish oil products,” said a spokesperson.

“The IPU is concerned that applying a 23% Vat rate, across the board, on all these food supplements, will negatively impact their affordability for less well-off people, the elderly, or those with ongoing health issues, who are trying to maintain their health.”

Revenue said it received a submission from the Irish Health Trade Association (IHTA) about the distinction between food supplements that were liable to zero Vat and those liable at the standard rate. Revenue then began its review.

“As part of this review, an expert in the field of food science was engaged to produce a report on the definition of food and the relationship of food supplements to food,” Revenue said.

“The review also included an invitation to the IHTA to make a further submission on this matter. The expert report formed the basis for further consultation with the IHTA and ultimately led to consultations between Revenue and the Department of Finance, concerning policy options that might be considered in the context of Finance Bill 2018. No legislative changes have been introduced at this time.

“Revenue will now consider how to proceed on the basis of the existing legislation, including whether any change to our guidance is necessary. The existing guidance on this matter will continue to apply until such time as Revenue issues revised guidance.”

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