Dáil Éireann Debate, Wednesday - 17 January 2024
1268. Deputy Claire Kerrane asked the Minister for Agriculture, Food and the Marine if he has engaged with the Minister for Finance on issues arising in relation to VAT refunds for farmers; if he has engaged with representatives from the agriculture sector and sought a solution; and if he will make a statement on the matter. [1622/24]
Amharc ar fhreagraThe Minister for Finance is responsible for tax policy and the Revenue Commissioners are responsible for the operation of the tax system and are independent in carrying out that function.
They advise that the VAT treatment of goods and services is subject to EU VAT law, with which Irish VAT law must comply. In accordance with the EU VAT Directive, farmers can elect whether or not to register for VAT in respect of their farming business. Farmers who register for VAT have an entitlement to reclaim VAT on costs incurred in relation to the agricultural business. Alternatively, farmers can remain unregistered and opt for the Flat Rate Farmer’s Scheme.
The Flat Rate Farmer’s Scheme is designed to reduce the administrative burden for farmers and allows them to remain outside the normal VAT system, thereby avoiding the obligations of registration and returns. Unregistered farmers may avail of a VAT refund on certain expenses allowed for under the “VAT refund order” (S.I. No. 201/2012). The VAT refund order allows for refunds to be claimed on outlay incurred on:
• the construction, extension, alteration or reconstruction of a farm building or structure; on fencing, draining and reclamation of farmland;
• and on the construction, erection, or installation of qualifying equipment for the micro-generation of electricity for use in a farm business.
I am advised that the refund order does not provide for refunds for VAT incurred on farm machinery, equipment, fixtures or capital expenditure generally. I am further advised that each claim is assessed on its own merits and a refusal of a claim for a refund under the order may be appealed to the Tax Appeals Commission.
In recognition of the various concerns around this issue, and that the different types of expenditure in agriculture can evolve quickly as agricultural technology develops, I have asked my officials to make any technical assistance available to Revenue in these assessments as required.
