Things you might not know about the Sugar-Sweetened Drinks Tax

Mar 26, 2018
By Deirdre Lavery

Have you heard about the introduction of a new tax in Ireland in the coming weeks? It will apply to certain beverages with a sugar content of 5g or more per 100ml and will take the form of an excise. While it may have fallen below the radar for many, it is expected to take effect from 6 April 2018.

Does it matter to me? 

This tax may be of relevance to importers, producers, bottlers, distributors, wholesalers, retailers and also certain companies making self-supplies of sugar-sweetened drinks to employees. This effectively means anyone who is making a supply, on a commercial basis, of sugar-sweetened drinks in the Republic of Ireland.

Unlike a similar tax which is being introduced in the UK, the importation or production of relevant beverages is not a taxable event. In Ireland, it is the first supply within the State which triggers the tax point, unless that sale is between related parties. In that case, it is the next supply in the chain which must be considered for Sugar-Sweetened Drinks Tax (SSDT) purposes.

But what if you don’t supply within the Republic of Ireland and simply export? If you supply beverages outside the State, which have been sourced in the Republic of Ireland, you may be eligible for an export refund. You don’t need to be the person who incurred the tax in order to make a refund claim. What you do need to demonstrate, however, is that you sourced the products in Ireland and that you supplied them on a commercial basis outside Ireland.

What kind of drinks are we talking about? 

It is not only pre-made, ready to consume beverages which are within scope. We also need to look at pre-packed concentrates which require further preparation with water, ice, carbon dioxide, or a combination of these, before consumption. This preparation can be either domestic (e.g. bottled squashes, cordials, flavoured syrups) or at a commercial level (e.g. post-mix concentrates supplied to restaurants, theatres, etc.) Beverages which have already been prepared from concentrates and are ready to consume are also within scope, such as the beverage prepared in a bar or restaurant from the post-mix concentrate. Remember, though, that the tax will only apply once on any particular product.

In the case of concentrates, it is the characteristics of the made-up beverage which must be considered to determine whether the product is within scope.

Let’s look at this in a bit more detail – what drinks are in?

  • Fruit and vegetable juices containing added sugar added. If there is any added sugar, the total sugar content is assessed and if there is 5g or more per 100ml, the product is within scope; and
  • Water-based drinks containing added sugar. This includes minerals and fizzy drinks with 5g or more of sugar per 100ml.

So, what drinks are out?

  • Fruit and vegetable juices containing only natural sugar;
  • Alcoholic drinks;
  • Non-alcoholic beer and wine;
  • Soya, nut, cereal or seed based “milk substitute” drinks;
  • Drinks containing milk fats;
  • Certain food supplements which meet specific criteria; and
  • Drinks specifically exempt from food labelling obligations based on small scale production and local distribution. 

How much will the tax be? 

Two bands apply:

  • €0.1626 per litre for drinks with a sugar content of 5g or more but less than 8g of sugar per 100ml; and
  • €0.2439 per litre for drinks with a sugar content of 8g or more per 100ml.

What do I do next? 

You should review both your supply chain and product portfolio to determine whether you will be impacted. Both suppliers and exporters are required to register with Revenue before making a relevant supply/export.

Registration via ROS is now active for both sugar-sweetened drinks suppliers and sugar sweetened drinks exporters. The accounting period is bi-monthly and payment and returns are due within 30 days of the end of an accounting period.

Deirdre Lavery is Global Trade & Customs Senior Manager at PwC.