FCI proposes ‘national register’ and carbon tax rebate for contractors

Agricultural contractors have requested that their role be taken into full consideration in the next Common Agricultural Policy (CAP) and Programme for Government.

The Association of Farm & Forestry Contractors in Ireland (FCI) has written to Minister for Agriculture, Food and the Marine Barry Cowen, requesting that “the important role of contractors be taken into full consideration in the next Programme for Government and the Reform of the CAP 2021-2027”.

The representative group noted that agri contractors play a critical part of Ireland’s agriculture’s value-chain, highlighting that “90% of regular farm machinery work on Irish farms is completed by farm contractors”.

Consequently, the FCI says it is seeking action on the following issues in the agricultural section of the new 2020 Programme for Government:
  • The creation of a national register of farm and forestry contractors in Ireland by the Department of Agriculture, Food and the Marine and in association with the Office of the Revenue Commissioners;
  • That contractors who are eligible to be listed on the above national register are also eligible for a carbon tax credit in the same way that farmers can avail of the carbon tax credit;
  • That contractor charges for their services are zero-rated for VAT purposes, or alternatively that non-VAT registered farmers can claim the VAT back on all agricultural contractor service invoices, in the same way that they can claim the full amount of VAT paid on invoices for farm buildings construction and land improvements works.

The FCI said that contractor services “provide a unique value-added component to the chain of Irish agricultural production, ensuring the competitiveness of Irish agricultural production through the use of high output, efficient and modern lower carbon machinery systems”.

The FCI criticised the exclusion of contractors from the Carbon Tax Rebate System, which is open solely to farmers, stating:

“This is despite the fact, in carrying out 90% of the farm mechanisation work on Irish farms, their modern and efficient machine consume close to 350 million litres of green diesel annually, valued at in excess of €262 million.”

Quoting the Department of Agriculture figures from 2019, the organisation added:

This alone is 62% of the total energy bill for the entire Irish agricultural sector based on the total expenditure on energy and lubricants of €424.1 million in 2018.

Farm diesel used by a farmer in the course of a farming trade is a deductible cost and, as carbon tax is included in the cost of that diesel, a farmer obtains a second deduction in the form of a tax credit, for the amount of the carbon tax incurred on the purchase of farm diesel, the FCI says.