I propose to take Questions Nos. 216 and 217 together.
The position is that the VAT regime and indeed the rating of all goods and services are subject to the requirements of EU VAT law with which Irish VAT law must comply. While we can retain the zero and livestock rating provisions which were in existence on 1 January 1991, we cannot introduce any new ones. Therefore, it is not possible to apply either a zero or livestock rate to the supply of live poultry.
Under Annex III of the VAT Directive, VAT registered hatcheries are liable to VAT at the 13.5 per cent rate on their supplies of live poultry. VAT registered farmers are entitled to claim VAT on their input costs which would include VAT paid on live poultry.
In relation to unregistered farmers, the Deputy will be aware that such farmers receive compensation for VAT paid on their inputs through the farmers flat rate addition. The flat-rate scheme, which is provided for under the VAT Directive, is a simplified and practical method of applying value-added tax to farming. It compensates unregistered farmers on an overall basis for the VAT charged to them on their purchases of goods and services. This is achieved without applying the normal VAT rules on registration and returns. The farmers VAT flat-rate addition for un-registered farmers was increased in my last Budget from 4.8 per cent to 5.2 per cent. In this regard, the Government's position of maintaining the farmers flat rate addition at the appropriate rate has not changed.