The Treasury Minister has confirmed today that the introduction of the Soft Drinks Industry Levy (SDIL) on the Island has been postponed for one year until 1 April 2019.
In order to keep costs for both business and government to a minimum Treasury negotiated with the UK Government to add SDIL to the schedule of common shared duties under the Customs and Excise Agreement 1979. Whilst it is the wish of both governments to treat SDIL as a shared duty, this requires a change in the United Kingdom’s legislation which could not be effected during 2017/18.
Taking that into account, plus the difficulties and costs for both business and government of introducing a stand-alone soft drinks levy in the Isle of Man, SDIL will be deferred for one year to be introduced as a shared duty from 1 April 2019.
Since SDIL was first proposed the soft drinks industry has been busy reformulating many products to reduce the sugar content. This will result in much lower SDIL revenue than the £1million originally anticipated. Nevertheless government will keep its promise to invest £100,000 during 2018/19 plus all future SDIL receipts into public health programmes aimed at reducing childhood obesity and encouraging physical activity and balanced diets.
Businesses on the Island buying soft drinks during 2018/19 should note that purchases from UK suppliers whilst being treated as 'exports' from the UK for the purpose of UK SDIL may still be charged inclusive of UK SDIL. Only those liable in the first instance to the levy in the UK (such as producers, importers and packagers) will be able to claim a tax credit from HMRC in relation to the export. Whether or not that person decides to pass on the credit (e.g. by way of refund) to you will be entirely a commercial decision.
Details of the UK SDIL can be found on the UK Government website.
Further information in relation to the introduction of SDIL on the Island will be made available later this year and published on the Customs and Excise website.