For companies importing sugar sweetened drinks to Ireland or exporting them to the UK it is important to take account of the Sugar Sweetened Drinks Tax (SSDT) which will be introduced, subject to formal approval by the European Commission, on the 1 April 2018 in Ireland.
Simultaneously in the UK, a similar tax, the Soft Drinks Industry levy, will be implemented on 6 April 2018.
The following is high level summary of the taxes and their implications in both Ireland and the United Kingdom.
Scope
The tax shall be charged at the time the sugar sweetened drink is first supplied in the State by a supplier and that supplier shall be accountable for and liable to pay the tax charged.
‘First supply’ means a product supplied in the State that had not previously been supplied in the State.
For SSDT purposes, supply in the State means a supply from one supplier established in the State to another supplier established in the State, or from a supplier established in the State to a consumer in the State. The supply must not be made to a related company.
For the tax to apply on a drink, the following conditions must be fulfilled:
- The drink must be non-alcoholic (in the UK the drink must have a maximum of 1.2% alcohol by volume)
- The drink must have a sugar content of more than 5g per 100 millilitres
- The drink must be a water-based and juice-based drink
- The drink must be in a concentrated form or in ready-to-drink form
Dairy products are outside the scope of the tax as well as drinks based on soya, cereals, nuts or seeds.
Infant formula, follow-on formula, baby food, formulated food intended as a total diet replacement and dietary food used for special medical purposes are all excluded.
Pure fruit juice that does not contain added sugar are not subject to the tax due to nutritional value, vitamins and the fibre they provide.
Some exceptions will apply to small producers.
Rates
Returns and Payments
A supplier shall within one month after the end of a two months accounting period, in respect of the sugar sweetened drinks supplied in that accounting period, furnish to an officer a return in such form as the Commissioners may require showing:
- The quantity of ready to consume sugar sweetened drinks supplied by the supplier in that period, and
- The quantity of ready to consume beverages that would result from the preparation of the quantity of concentrated sugar sweetened drinks supplied by the supplier in that period.
The supplier shall pay the amount of tax due in respect of the accounting period concerned.
In the UK, when a drink becomes liable for the levy, the Supplier needs to report it to HMRC in a quarterly return and pay the levy due.
These will be fixed quarterly returns ending June, September, December and March.
Registration
Before making a supply of sugar sweetened drinks, suppliers will need to register with Revenue as a Sugar Sweetened Drinks Supplier (SSDS).
In the UK, registration is needed within 30 days of the end of the month in which a supplier first needs to report drinks subject to the tax. Registration is done via HMRC on gov.uk.
For further information on the sugar tax or to arrange a meeting please contact Carol Lynch on [email protected].
For more information about the partnership between BDO and Irish Exporters Association, click here.