A change in the approach to value added tax (VAT) refunds for farmers will result in job losses and damage Ireland’s climate and sustainability ambitions, the chair of AgTech Ireland has said.
Padraig Hennessy claimed that the “U-turn” by Revenue on what constitutes eligible on-farm equipment for VAT refunds will wreak havoc on agricultural machinery, technology, and innovation companies’ order books, along with farmers’ investment planning.
He urged Minister for Finance Michael McGrath to “move immediately to restore VAT refunds for those essential sustainability investments as had been custom and practice for many years”.
Revenue has previously stated that it has not changed its approach to the refund order, and highlighted that each claim “is assessed on its own merits”.
AgTech Ireland
Speaking from AgTech Ireland’s Oireachtas lobbying session in Dublin today (Tuesday, December 12) Hennessy said that the change in approach is not justified by amendments to legislation or a need to make savings for the national exchequer.
“The refund under this scheme, together with all VAT paid for by farmers on inputs which they cannot claim, are offset in the calculation of the flat-rate VAT refund all farmers receive on their produce sales and is therefore revenue neutral.
“However, the changed interpretation has many damaging consequences which run counter to government policy, especially when it comes to sustainability and climate efficiency on farms and the promotion of quality employment in rural areas,” he said.
Hennessy noted that farmers would have factored in the VAT refund when they made investment decisions for the enterprise.
“There was a legitimate expectation which has now been thwarted and their financial calculations are no longer sound,” he said.
“They contact us suppliers of agtech equipment and machinery to cancel their orders – leaving us at a major loss, with rapidly dwindling order books and having to change our staff rotas or even laying off some of our staff.
“Minister for Finance Michael McGrath must act, including if necessary, by amending the relevant Statutory Instrument (SI 201 of 2012) to ensure a return to a VAT policy which is coherent with our legally binding sustainability targets for agriculture,” Hennessy said.