The poultry sector is the subject of a major tax probe following an investigation by the EU Commission.
The move came following a complaint lodged to the Commission by Ireland Midlands-North-West MEP Marian Harkin on behalf of Cavan chicken farmer Alo Mohan.
Finance Minister Michael Noonan has admitted to the European Parliament that “VAT avoidance schemes were being developed and probably [were] in place, particularly in the poultry sector”.
Mr Noonan has proposed changes in the Finance Bill to prevent “tax evasion in the poultry industry that gave competitive advantage to those who used it rather than those who didn’t”.
Mr Mohan, a Nuffield scholar and former IFA poultry committee chair, contends that he lost out on €25,000 per year because did not participate in various VAT arrangements, including reclaiming VAT on inputs for farmers that were unregistered for VAT.
Unregistered farmers are not normally able to avail of a VAT refund on expenses, and are compensated for this with a 5.4pc flat rate addition on their sales.
Ms Harkin said: “This matter needs to be dealt with definitively in order to ensure we have a thriving competitive industry that pays the producers for their service and is not reliant on tax avoidance schemes.