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.