Apparently nothing is straightforward in matters of taxation.
According to the VAT law, basic food items are not liable to VAT. However, the law fails to define or provide a list of what constitutes basic food items. There has been a long standing dispute between the FIRS and some water bottlers as to whether bottled water is a "basic food" item given that it must have undergone some processing and packaging. FIRS also argued that packaged water is a luxury item which, in their view, the law did not intend to exempt from tax.
The Federal High Court has ruled that water is a basic food item and therefore exempt from VAT regardless of whether it has been processed or packaged.
Read our alert for further insights on the issue. I have also included a copy of the court judgment for your reading pleasure.
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