The Slovak government intends to introduce a tax on sweetened beverages starting in 2025 and recently released a first draft of proposed legislation. The sugar tax, which would apply to companies that manufacture or that supply them in Slovakia, would be similar to taxes that already apply in several EU member states and some third countries.
The tax would apply to any beverage with added sugar or sweetener (in particular, sweetened packed beverages) and concentrates in liquid or powdered form. Hence, the tax would apply to beverages such as fruit or vegetable juices, syrups and coffee-based beverages (powdered or liquid concentrates). Although not specifically stated in the draft legislation, milk alternatives, yoghurt and milk drinks, and powdered non-alcoholic food supplements are expected to be excluded from the scope of the tax. The tax would not apply to beverages where no sugar or other sweetener has been added, e.g., pure fruit juices containing only natural sugar. Specific nutritional beverages such as infant formula and food for special medical purposes would be exempt from the sugar tax.
The tax base for packaged beverages and packaged concentrated substances (e.g. syrups or effervescent tablets) would be the quantity of the beverage expressed in litres. If the beverages are supplied in other units of measurement, that would be converted into litres or the tax base would be the quantity in kilograms.
The tax rate would be determined according to the category of the beverage. Three categories are proposed:
Compliance obligations would apply to payers of the sugar tax. Companies with tax IDs would be required to inform the Slovak tax authorities within five days of the taxable event that they are subject to the tax. Companies without a tax ID (primarily foreign companies) would have to register with the tax authorities within five days of the taxable event. Sugar tax returns would have to be submitted on a monthly basis.
Highlights of the sugar tax
The sugar tax would be a one-stage indirect tax on the consumption of sweetened beverages in the Slovak Republic, with the tax liability arising at the time of first supply of the beverage in the country or at the time of an intra-community acquisition of goods that are intended to be supplied in Slovakian territory for the first time.The tax would apply to any beverage with added sugar or sweetener (in particular, sweetened packed beverages) and concentrates in liquid or powdered form. Hence, the tax would apply to beverages such as fruit or vegetable juices, syrups and coffee-based beverages (powdered or liquid concentrates). Although not specifically stated in the draft legislation, milk alternatives, yoghurt and milk drinks, and powdered non-alcoholic food supplements are expected to be excluded from the scope of the tax. The tax would not apply to beverages where no sugar or other sweetener has been added, e.g., pure fruit juices containing only natural sugar. Specific nutritional beverages such as infant formula and food for special medical purposes would be exempt from the sugar tax.
The tax base for packaged beverages and packaged concentrated substances (e.g. syrups or effervescent tablets) would be the quantity of the beverage expressed in litres. If the beverages are supplied in other units of measurement, that would be converted into litres or the tax base would be the quantity in kilograms.
The tax rate would be determined according to the category of the beverage. Three categories are proposed:
- Packaged ready-to-drink beverages at a rate of EUR 0.15/litre;
- Packaged concentrated substances intended for the preparation of beverages at a tax rate of either EUR 1.05/litre if the beverage is supplied in any unit of volume or EUR 4.30/kg if the beverage is supplied in any unit of weight; and
- Packaged caffeinated beverages (i.e., energy drinks) at a rate of EUR 0.30/litre.
Compliance obligations would apply to payers of the sugar tax. Companies with tax IDs would be required to inform the Slovak tax authorities within five days of the taxable event that they are subject to the tax. Companies without a tax ID (primarily foreign companies) would have to register with the tax authorities within five days of the taxable event. Sugar tax returns would have to be submitted on a monthly basis.
Comments
The sugar tax would be incorporated into the cost of covered beverages, thus increasing the cost to the consumer, which is likely to have a negative impact on the market. However, the tax would be beneficial as it would promote the health of the population and generate revenue for the state budget.
The sugar tax still must be approved by parliament, signed by the president and published before it can become effective.
Lucia Bellanová
Petra Hužovičová
BDO in Slovak Republic