Supreme Court favours Revenue in banana war with Fyffes over taxes

Fyffes, the Dublin-based fruit company, said last night the Supreme Court ruling that banana ripening was not a manufacturing…

Fyffes, the Dublin-based fruit company, said last night the Supreme Court ruling that banana ripening was not a manufacturing activity would not have a material effect on the company. The group has not been able to claim the 10 per cent manufacturing tax rate for its banana ripening activities since 1992, said a spokeswoman. Yesterday's judgment related to a period between 1990 and 1992 when the company tried to claim the 10 per cent rate but was challenged by the Revenue Commissioners. It is understood Fyffes paid the full rate of tax at the time and would have been looking for a rebate had it been successful in the Supreme Court. Fyffes' shares fell to a new low yesterday of €1.0 from €1.01. Shares in the company have been on the slide since last February when they peaked at €3.98 on the back of the launch of Wordloffruit.com, its Internet venture.

The case dates back to 1986 when the Supreme Court found banana ripening did qualify as a manufacturing activity for the purpose of the low tax rate. In 1990 the law was amended to specifically exclude several activities including banana ripening. Fyffes exploited a legal loophole to claim the lower tax rate and were challenged by the Revenue Commissioners. In addition, the law was amended again in 1992 to close the loophole used by Fyffes, which had established a special subsidiary to ripen bananas on behalf of other group companies.

The Appeal Commissioners, who arbitrate on tax disputes, found in Fyffes favour in respect of the Revenue challenge. The Revenue appealed to the High Court and was defeated. A Revenue spokesman said last night it would not comment on Fyffes tax affairs. But the decision was unlikely to have any implications for other industries, he said.

John McManus

John McManus

John McManus is a columnist and Duty Editor with The Irish Times