VAT refunds review

THE method used in establishing the VAT refund rate for non-registered farmers is to be examined by a working group being set up by Finance Minister Charlie McCreevy.

Macra na Feirme president Thomas Honner welcomed the decision, which was secured in the Sustaining Progress deal in the light of changes that have occurred in farming since the last review in 1988. The scheme, open to non-VAT registered farmers, is designed as a revenue neutral exercise to offset VAT that is paid on certain farm inputs against VAT which is not claimable on sales.

Mr Honner said falling product prices along with a greater percentage of farmer income coming from direct payments means there is a reduced base of farm sales that is eligible for the VAT refund. The recent increase in the VAT rate from 12.5% to 13.5% has also increased the VAT charges to farmers. Macra would be seeking a rise in the refund in order to keep pace with the changes.

ICSA beef committee chairman Joe Kilmartin has called on Mr McCreevy to exempt from 2004 farmers who are not registered for VAT from the 3.52 VAT charged on BSE testing of over-30 month cattle.

Mr Kilmartin said 12% of prime beef slaughtered this year was tested for BSE and this cost farmers nearly 600,000 in VAT. Relatively few Irish farmers are registered for VAT.

“The 21% VAT on BSE testing increases the cost of testing each animal from 16.76 to 20.28 and this is on top of the rendering charges. Making non-VAT-

registered farmers exempt from this BSE VAT would bring Irish BSE testing more into line with other EU countries such as France where the BSE test costs 14 per head,” he said.