asked the Minister for Finance if legitimate agricultural contractors will be exempt from VAT for the coming silage campaign due to the appalling financial conditions of farmers and the urgency of replenishing fodder stocks; and if he will make a statement on the matter.
Written Answers. - VAT Exemption for Agricultural Contractors.
87.
I am not in a position to exempt agricultural contractors from VAT, as requested. VAT applies to the bulk of services carried out by such contractors at the rate of 10 per cent. This is not a penal rate of tax. It should also be noted that farmers, most of whom are not registered for VAT, are compensated on an overall basis for the VAT charged on their farm inputs, including the services of VAT-registered agricultural contractors, by means of the 2.4 per cent flat rate addition to the prices of their goods and services when selling to VAT-registered traders.