Reduction of VAT on agricultural goods: What falls under the 13% rate and what changes?
The Independent Authority for Public Revenue (AADE) has issued new guidelines clarifying that specific agricultural goods will now be subject to a reduced VAT rate of 13% instead of the standard 24%.
Which Products Are Included?
The reduction applies only to equipment and tools used exclusively or primarily in agriculture, livestock farming, and forestry. According to the circular, the following items now fall under the 13% VAT rate:
✅ Irrigation and Farming Tools: Hoes, shovels, axes
✅ Water Pumps: Used for irrigation systems
✅ Spraying Machines: For pesticide and fertilizer application
✅ Harvesting Machines: Various mechanical harvesters
✅ Milking Machines: Used in dairy farming
Which Products Remain at 24% VAT?
However, not all products used in agriculture are eligible. Items that have dual purposes or are widely used outside agriculture remain at 24% VAT. These include:
❌ Ventilation Equipment: Fans and air circulation systems
❌ Sorting Machines: For fruits and vegetables
❌ Lifting Platforms: Used for various industrial applications
❌ Lawn Mowers: Primarily intended for gardening rather than agricultural use
Impact on Farmers and Agricultural Professionals
This tax reduction aims to lower costs for farmers and agricultural businesses by making essential equipment more affordable. For example, a water pump for irrigation or a spraying machine will now be taxed at 13% instead of 24%, significantly reducing the final cost of agricultural investments.
However, non-exclusively agricultural products like industrial ventilation systems or garden tools will not benefit from the reduced tax rate.
