James McDaid
Question:58 Dr. McDaid asked the Minister for Finance if he will consider a case for exemption of the 2.5 per cent VAT refund in the livestock marts centre in view of the problems it is going to cause in this sector. [3699/95]
Written Answers - VAT Refunds at Livestock Marts.
Paul Bradford
Question:69 Mr. Bradford asked the Minister for Finance if his attention has been drawn to the concerns of the co-operative livestock mart sector at the proposed introduction of a declaration system for VAT refunds at livestock marts; if he will review the proposal; and if he will make a statement on the matter. [3939/95]
Michael P. Kitt
Question:70 Mr. M. Kitt asked the Minister for Finance if he will accept the request from ICOS that the livestock marts sector be exempted from the new VAT provisions to be introduced on 1 March 1995; and if he will make a statement on the matter. [4004/95]
I propose to answer Questions Nos. 58, 69, and 70 together.
I am informed by the Revenue Commissioners that the proposed declaration system does not represent a completely new requirement, as seems to be implied in the questions, but is in fact a significant simplification of the existing legal requirement. It is designed to maintain necessary controls while facilitating business in this sector.
The background is that farmers who are not registered for value-added tax and who supply agricultural produce or agricultural services to VAT-registered persons are entitled to be paid a flat-rate addition (at present 2.5 per cent) to the price received for their produce or services. This is to compensate the nonregistered farmer for the VAT he has paid on his purchases and for which he is unable to obtain credit. The flat-rate system is a major concessionary departure from normal VAT arrangements.
In order to establish proper entitlement to the flat-rate addition, the nonregistered (or "flat-rate") farmer is obliged under the Value-Added Tax Act, 1972 to issue an appropriate invoice for each transaction. The arrangements were most recently updated and specified in the Value Added Tax (Invoices and Other Documents) Regulations, 1992 (S.I. No. 275 of 1992).
In the case of agricultural livestock sold to marts, factories and exporters, the legislation provides for a settlement voucher to be prepared by the purchaser in respect of each "flat-rate" transaction, and for that settlement voucher to be acknowledged and signed by the flat-rate farmer making the sale.
Because of changes in the working arrangements for livestock sales over the years it has been represented that those requirements are now in practice difficult to meet. Accordingly, discussions have been held with the industry to see if other more satisfactory arrangements can be devised. The arrangements now proposed provide that, instead of requiring a signed settlement voucher in support of each flat-rate transaction, it will be sufficient now for the flat-rate farmer to sign a once-off declaration of non-VAT-registered status. Such declaration is then to be retained by the mart, factory or exporter, which will confirm the farmer's entitlement to the flat-rate addition in respect of all future transactions. The declaration is also to be made available for inspection by Revenue when/if required.
Implementation of the revised arrangements was deferred for up to a year, to 1 March 1995 in order to give all parties a workable lead-in period. I am assured that every assistance will be given by Revenue in cases where initial administrative difficulties are experienced.