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- in United States
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.
Download PwC Tax Alert_VAT on Packaged Water
Download FHC Judgment_VAT Exemption on Packaged Water
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