Additional items must be added to the Flat-Rate Farmers Refund Order, the Irish Creamery Milk Suppliers' Association (ICMSA) has said.

It is calling for automated calf feeders, parlour auto washers, cluster removers and additional milk points to be included as eligible items for reclaim.

Flat-rate farmers, those unregistered for VAT, can claim refunds for the VAT they incur on certain expenditure used solely for their farming business.

In June 2024, Revenue published the 'Flat-Rate Farmers Refund Order Tax and Duty Manual' to provide further guidance.

It outlines how VAT can be reclaimed by flat-rate farmers, the conditions under which VAT may be reclaimed, guidance on the types of expenditure on which VAT can and cannot be reclaimed, and the information required to make a claim.

The ICMSA has said that the additional eligible items it has outlined are needed to "encourage improved farm efficiency".

"VAT rebates on automated systems will support farmer uptake. The economic advantages of increased farm efficiency due to these technologies will multiply to the local economy," the association said.

Revenue told Agriland that there are "no plans at present to publish any further updates" to the manual published last year, but all tax and duty manuals are "subject to periodic review".

"From time to time, or as part of this periodic review process, published guidance may be updated to provide further clarity on specific topics as the need arises," Revenue said.

From January 1, 2025, the flat-rate compensation was increased to 5.1% from 4.8%.

The Minister for Finance is responsible for tax policy while the Office of the Revenue Commissioners is responsible for the operation of the tax system.

Minister for Agriculture, Food and the Marine, Martin Heydon explained recently that in accordance with the EU VAT Directive, farmers can elect whether to register for VAT in respect of their farming business.

"Farmers who register for VAT have an entitlement to reclaim VAT on costs incurred in relation to the agricultural business," Minister Heydon advised.

"Alternatively, farmers can remain unregistered and opt for the flat-rate farmers scheme.

"It allows such farmers to charge and retain a 'flat-rate addition' onto the amount that they charge for the agricultural goods and services they supply throughout their farming business.

"The scheme is designed to reduce the administrative burden on farmers and allows them to remain outside the normal VAT system, thereby avoiding the obligations of registration and returns."

As outlined, unregistered farmers can avail of a VAT refund on certain expenses allowed for.

"This allows for refunds to be claimed on outlay incurred on: the construction, extension, alteration or reconstruction of a farm building or structure; on fencing, draining and reclamation of farmland; and on the construction, erection, or installation of qualifying equipment for the microgeneration of electricity for use in a farm business," the minister added.