Posted: Wednesday, March 14, 2018. 8:20 am CST.
By BBN Staff: Yesterday, the Ministry of Finance issued a release in an effort to clarify some reports that the 2018 Budget will impose crippling taxes on farmers which in turn will result in higher agricultural production costs and ultimately higher food prices and inflation.
The Ministry explains that the amendment to the General Sales Tax (GST) Regulations will apply GST at the standard rate of 12.5% only on land preparation for agriculture, harvesting, and crop dusting services, and then only to those farmers who are registered for the GST.
The Ministry says that the amendment will not apply to all farming activities, nor will it affect those small farmers who are not registered for the GST because such small farmers are outside of the GST system.
According to the release, under the current classification it is almost impossible to identify and verify the actual service of agricultural land clearing from other activities such as road construction both of which use heavy equipment such as tractors, bulldozers, etc.
“Over the years it has become apparent that some registered farmers who are also engaged in other non-agricultural activities are taking advantage of current classification to claim all their sales under the zero-rated agricultural heading. The amendment is intended to close this loop-hole and to stop the abuse, the release further adds.
Farmers who are registered with GST will still be allowed to claim input tax in the furtherance of their legitimate farming business, so this amendment will not affect their costs.
According to the ministry, the amendment is not primarily a revenue-raising measure as it is expected to yield only a modest sum of $3.0 million in additional revenue.
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