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u-turn
VAT on vitamins and supplements won't jump to 23% - at least until November
An increased rate on some food supplements was due to kick in on Friday.
LAST UPDATE | Feb 26th 2019, 6:11 PM
THE VAT RATE on food supplements will remain unchanged until 1 November 2019, it has been confirmed.
A 23% VAT rate, the standard rate, on food supplements was due to kick in on Friday, 1 March.
More than 60,000 people have signed a petition urging the government not to follow through with the plans.
The idea to add the tax has been criticised by a number of opposition parties including Sinn Féin and Labour.
There has been a mixed reaction from healthcare professionals as some products would have been exempted and continued to enjoy a 0% VAT rate. The exemptions included folic acid and other vitamins and minerals licenced by the Health Products Regulatory Authority.
In a statement released today Revenue noted that it undertook a comprehensive review on the VAT treatment of food supplements “following growing concerns of industry representative bodies about the difficulties” in rating such products, before announcing the changes.
On Monday, the Minister for Finance and Public Expenditure Paschal Donohoe wrote to Niall Cody, Chairman of the Revenue Commissioners, outlining that in the course of the Committee Stage debate on the Finance Bill last November he “gave a commitment to address the matter by means of a specific paper to the tax strategy group during the summer period”.
Revenue noted that, in the letter, Donohoe proposed a public consultation “seeking engagement from all parties on the issue and to consult with my colleague, the Minister for Health, to ascertain his views on the use of food supplements” in order to “ensure that this policy review will be effective”.
Donohoe added that he was “of the view that this approach provides a way of bringing forward the necessary analysis and information to facilitate my consideration of options regarding the legislative provisions concerning the VAT treatment of products in this sector”.
A spokesperson for Revenue said the organisation was delaying implementation of the increased rate until November “in support of the Minister’s proposed process of review, and to allow time for the enactment of any legislative changes (if any) as a result thereof in Budget 2020″.
Jobs at risk
The Irish Health Trade Association (IHTA) has said it “sincerely welcomes” the decision to defer the proposal.
“The Minister has made the right call on this urgent issue and we look forward to engaging constructively with him in the months ahead to seek a permanent solution,” a spokesperson said.
The organisation has warned that the proposed rate would threaten 250 local businesses with closure and put 1,800 jobs at risk.
“We are in a very dangerous position in our industry with imminent job losses and the people reliant on supplements having to face the harsh reality of a 23% increase,” IHTA spokesman Alan Martin said.
For the past 40 years, food supplements have been sold at the 0% rate, including products such as Vitamin C, Omega 3, Probiotics, Lutein and Glucosamine.
“The 23% VAT rate needs to be urgently revisited by the Minister for Finance as it will have a major effect on the old, the elderly and the sick,” Martin said.
With reporting by Garreth MacNamee
