248. Deputy Martin Kenny asked the Tánaiste and Minister for Finance the estimated annual cost of increasing the VAT flat rate for farmers to 5.1% [48440/26]

The flat rate addition is designed to compensate non-VAT registered farmers for the VAT incurred by them on the purchases of goods and services. These farmers add this percentage to their prices when selling to VAT registered businesses that subsequently treat the flat rate addition as a normal input VAT in their periodic VAT returns.

Under the EU VAT directive, the flat rate addition is calculated using macro-economic statistics for the preceding three years. Member States are not allowed to fix a rate independently.

I can confirm that the gain to the exchequer when the rate reduced from 5.1% to 4.5% was estimated to be €61.5 million. I can confirm that the estimated cost of an increase in the rate to 5.1% would be of a similar amount.