Sinn Féin is calling for the rate of livestock VAT to be reduced to bring it in line with the flat-rate VAT addition for farmers.

This follows the publication of documents from the Tax Strategy Group (TSG), which suggested a cut in livestock VAT is economically possible.

As reported by Agriland on Friday (July 24), documents prepared for the Department of Finance ahead of Budget 2027 have floated the idea of reducing the rate of VAT on livestock sales in line with the farmer flat rate VAT addition.

Farmers who are not registered, or required to register, for VAT can avail of the VAT flat-rate scheme.

The majority of farmers are not registered for VAT, and this scheme allows those farmers to add and retain a percentage charge - known as the flat-rate addition - onto the amount they invoice VAT-registered businesses who they supply with animals, milk and other products in the course of their farming business.

The rate of flat-rate addition was reduced from 5.1% to 4.5% in Budget 2026 last year.

However, sales of livestock are subject to VAT at a rate of 4.8%.

As the flat-rate addition is now lower than the livestock VAT rate, farmers selling livestock through marts are now, for the first time, paying more VAT on those sales than the flat-rate addition they receive when selling animals.

In documents released last week, the TSG said that "there is scope" to reduce the livestock rate down to match the flat-rate payment.

Sinn Féin spokesperson for agriculture Martin Kenny has called on the government to take that option in the upcoming Budget 2027.

Following publication of the documents, Kenny said: "In last year's budget [Budget 2026], the government reduced the flat rate from 5.1% to 4.5%, which has resulted in farmers paying more VAT on sales in marts.

"In a recent response to a parliamentary question that I asked, the Minister for Finance stated that changes in the flat rate of VAT would cost Irish farmers €61 million this year," Kenny added.

"The government’s Tax Strategy Group has...proposed the idea of reducing the livestock rate and bringing it in line with the flat rate of VAT. This would in effect offset the flat-rate addition against the livestock rate being charged and therefore reduce the amount of VAT being charged on sales," he said.

The Sligo-Leitrim TD said that farmers "have had a very difficult year with input costs skyrocketing due to the US war in Iran".

"This is an issue that has angered farmers since the reduction in the flat rate of VAT, and while reducing the livestock rate won’t put money back in farmers pockets it will put a stop to farmers paying VAT on sales at marts," Kenny added.