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With the introduction of the Sugar Sweetened Dinks Tax (SSDT), which is to take effect from 6 April 2018, some wholesale businesses, suppliers will be required to make the necessary arrangements in order to be compliant.
SSDT will apply on the first supply of Sugar Sweetened Drinks in the State meaning that it is the supplier making the first supply in the State that will be liable for accounting for and paying the tax.
- The tax will apply to water and juice based drinks which have added sugar and a total sugar content of 5 grams or more per 100 millilitres.
- Drinks liable to SSDT may be in ready to consume or in concentrated form.
- The tax will operate as an excise duty and will be administered on a self-assessment basis.
- Suppliers will be required to register with Revenue in advance of making a first supply of Sugar Sweetened Drinks in the State and must file returns within one month after the end of the accounting period during which the supplies were made.
Where the Sugar Sweetened Drinks sourced in the State are supplied outside the State on a commercial basis a relief from SSDT will be available. For this relief to be claimed exporter businesses will need to register with Revenue before making supplies outside the State.
On What will the Tax apply?
The tax will apply on a volumetric basis at one of two rates.
- A rate of €16.26 per hectolitre will apply to drinks with a total sugar content of 5 grams or more, but less than 8 grams, per 100 millilitres.
- A higher rate of €24.39 will apply to drinks with a total sugar content of 8 grams or more per 100 millilitres.
These rates will equate to €20 and €30 per hectolitre once VAT is applied. (1 One hectolitre equals 100 litres)
Taxable Sugar Sweetened Drinks may be in ready to consume or concentrated form.
Ready to consume Sugar Sweetened Drinks are intended for direct consumption include:
- Drinks that are supplied prepacked in bottles, cans, kegs etc.
- Drinks that have been prepared at catering level from concentrates and are supplied directly to final consumers.
Concentrated Sugar Sweetened Drinks are solid or liquid substances that require preparation to produce ready to consume drinks.
- Prepacked, concentrated products intended for home preparation to produce ready to consume drinks, such as bottled squashes, cordials
- Prepacked, concentrated products intended for preparation at catering level to produce ready to consume drinks that are supplied directly to final consumers, e.g. post mix concentrates supplied to cinemas, restaurants etc.
If a SSD in concentrated form is taxed on first supply in the State the prepared, ready to consume form is not taxed again on subsequent supply in the State.
In determining whether a product will be liable to SSDT it must satisfy three criteria.
- The classification of the product by reference to the Combined Nomenclature (CN).
In the case of ready to consume drinks, the product must fall within particular CN headings to potentially be liable to the tax. Products falling under CN headings 2009 or 2202 may be liable; these include juices and water/juice based drinks.
Specific products falling under CN 2202 subheadings are excluded from liability. These include alcohol-free beers and wines, drinks that are based on soya, cereals, nuts or seeds or that contain milk fats and products labelled as food supplements. In addition, any products excluded from EU food labelling obligations on the basis of their small scale production will not be liable to the tax.
Suppliers who have queries relating to the CN Classification code of their product should contact the producer/wholesaler/distributor where they sourced the product.
- Whether or not the product contains added sugar
The next step in determining if it is liable to SSDT is to identify if it contains added sugar. For the purposes of SSDT, sugar means monosaccharides and disaccharides. A product contains added sugar if sugar, or a substance containing sugar, has been combined with other ingredients during production. However, if the substance containing sugar is a fruit or vegetable juice, then the product is not regarded as containing added sugar. This means that juices, to which neither sugar nor sugar containing substances other than juice have been added, will not be liable to the tax.
- Total sugar content of the product.
If a product meets the CN classification criterion and contains added sugar, the final step in determining if it is liable, on first supply in the State, to SSDT is to establish if its total sugar content, in ready to consume form, is 5 grams or more per 100 millilitres.
In the case of prepacked, ready to consume drinks the total sugar content is established on the basis of information provided on the product’s label/packaging. This information is required to be provided under EU law and in most instances is presented in the form of a table of nutrition facts. If the information indicates that the total sugar content of the product is 5 grams or more per 100 millilitres then the product is liable to SSDT.
In the case of concentrated products, or ready to consume drinks prepared from them, the total sugar content is established on the basis of nutritional information for the ready to consume drink prepared according to labelled instructions.
A liability to SSDT arises where a supplier makes a supply in the State, for the first time, of a quantity of Sugar Sweetened Drinks. The goods have either been brought into the State or produced in the State and are being supplied to another person by the importer or producer.
The liability arises when the first supply is made in the State. This is the point at which the supplier transfers ownership, or the right to dispose of the goods, as owner, to another person. Where the first supply is between related companies it is not regarded as a liable supply for the tax.
If a supplier makes a first supply but provides the goods free of charge, it is still a supply liable to SSDT. The SSDS must register with Revenue before making a first supply in the State.
Sugar Sweetened Drinks Registration
Anyone who makes a first supply of Sugar Sweetened Drinks in the State must be registered with Revenue as a SSDS. The SSDS registration process is available through Revenue Online Services (ROS).
SSDSs will be liable to account for and pay SSDT on all taxable goods they first supply in the State. Regardless of how many subsequent times the goods are supplied in the State, the SSDT liability arises only on the first supply in the State. Those making second or subsequent supplies, either in or outside the State, will not have an SSDT liability nor will they be required to register as SSDSs. Only those making first supplies in the State will be liable for the tax and must register with Revenue.
The accounting periods for SSDT will run bimonthly starting with March/April which means the first accounting period for SSDT will run from 6 April to 30 April. The return and payment for supplies made during the April 2018 accounting will be due no later than 31 May 2018. After April 2018, returns and payments will be due by the end of the month following each two- month accounting period; e.g. returns and payment for supplies made during May and June will be due by the end of July.
Tax Relief on Sugar Sweetened Drinks
A full relief from SSDT is available where Sugar Sweetened Drinks that were sourced in the State, after the introduction of the tax, are subsequently supplied on a commercial basis outside the State.
The relief will operate by way of repayment to the exporter. The relief will operate on a repayment basis to the SSDE who is deemed to have paid the tax on the goods sourced in the State.
The SSDE will have to retain records to prove that the goods were sourced in the State and records in relation to the subsequent supply of the goods (and their return if relevant) outside the State.
In order to claim any available reliefs the exporter needs to have, in advance of the export, registered with Revenue as a Sugar Sweetened Drinks Exporter (SSDE) in order to claim the relief from SSDT for Sugar Sweetened Drinks sourced in the State and subsequently supplied on a commercial basis outside the State. The relief does not apply to goods that were not sourced in the State. Therefore, suppliers exporting Sugar Sweetened Drinks that were not sourced in the State cannot claim the relief and should not register as SSDEs.
It should be noted that registration as a SSDS is separate and distinct from the SSDE registration. A business may be registered either as a SSDS or as a SSDE or it may need to register as both. Registration must be completed in advance of commencing to make relevant first supplies or exports.
Though SSDSs are not required to identify the SSDT as a separate line on invoices to customers, they are required to retain all records relevant to the tax and to provide these to Revenue when requested to do so. Accounts and records relevant to the tax must be kept for a period of six years.