Zero-rated tax remains for some foods

Food supplements — with a range of exceptions — will, after all, be taxed at the rate of 13.5% for Vat, the Department of Finance has said, a move that has surprised industry groups that had long campaigned against removing their zero-rated tax benefits.

The unexpected move is one of the few measures that the Department of Finance said will be included in the Finance Bill which had not been announced in last week’s budget.

The department said that following an extensive review that a long list of vitamins and minerals, including folic acid medicines and fortified foods will continue to be zero-rated for Vat.

“Foods for specific groups are well established and defined categories of food that are essential for vulnerable groups of the population. These products include infant formula, baby food, food for special medical purposes and total diet replacement for weight control,” the department said.

Fortified foods include certain types of cereals and yoghurts, it said.

“The implementation of a 13.5% rate will provide certainty to industry in respect of food supplement products and will apply prospectively,” it said.

At 13.5%, Ireland has the fourth highest reduced Vat rate in Europe, but applies reduced rates to a wide range of goods, the department said in this year’s so-called Tax Strategy Group documents published in July.

Brian Keegan, director of public affairs at Chartered Accountants Ireland, said that in the past that Ireland’s range of Vat rates had come under scrutiny from the European Commission.