Michael Healy-Rae (Kerry South, Independent)
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Question 214: To ask the Minister for Finance his views that only VAT registered users be eligible for VAT rebate on diesel; and if he will make a statement on the matter. [22019/12]

Michael Healy-Rae (Kerry South, Independent)
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Question 215: To ask the Minister for Finance his views on whether farmers who are not registered for VAT should be allowed to recover the VAT element of invoices received from VAT registered contractors for work done; and if he will make a statement on the matter. [22020/12]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 214 and 215 together.

I am advised by the Revenue Commissioners that under EU VAT rules, traders, including farmers, who are registered for VAT, collect VAT on the goods and services that they sell and are entitled to recover the VAT they incur on business inputs used in the production of goods or delivery of services. VAT registered farmers are therefore eligible to recover VAT incurred on diesel as a business input.

Farmers who are not registered for VAT are not entitled to recover VAT, including that charged by VAT registered contractors, and are not required to charge VAT on their sales. However, these farmers are compensated under the farmers' flat-rate scheme for the VAT incurred on their purchases by means of a 5.2% flat-rate addition to the prices at which they sell their agricultural produce and services to VAT-registered traders. In addition, farmers who are not registered for VAT may be entitled to a refund under the Value-Added Tax (Refund of Tax) (No. 25) Order, 1993 for tax borne on the construction of farm buildings, fencing, drainage and reclamation of farm land.