Who benefits from the 10% VAT compensation? - Procedures that farmers must follow and products covered by the scheme
From January 1, 2026, a 10% compensation rate for farmers comes into effect, as part of the fiscal package.
The reform aims to ease production costs by compensating farmers for a portion of the VAT paid on seeds, seedlings, fertilizers, pesticides and other production inputs. The compensation will be paid directly by the tax administration, avoiding long-standing problems with payments from buyers.
The compensation is calculated on the total value of agricultural products sold, not on inputs purchased directly. So, it is a fixed rate that partially covers the VAT on inputs.
ALTAX has provided an explanation of how the scheme works. For example, if a farmer sells agricultural products (e.g., vegetables) worth 100,000 lek to a registered buyer, the compensation is 10,000 lek (10% of the sale value). This compensation partially covers the 10% VAT that the farmer has paid on inputs such as pesticides or seedlings.
But when is this compensation received?
But to benefit, sales must be made only to registered buyers such as: collectors of agricultural products, processors of agricultural products (e.g. dairy or fruit processing factories), or certified agritourism entities.
Farmers must request a fiscalized invoice from the buyer with their receipt, which must contain the value of the supply without additional VAT. They then submit a request for compensation twice a year (by December 31 for January-June and by June 30 for July-December).
The tax administration verifies and pays the compensation amount within 30 days. The compensation is calculated for a 6-month period by accumulating all sales.
This measure is expected to positively impact the formalization of the sector and provide about 1.5 billion lek in financial support annually. The main challenges are related to the limitation of qualified buyers and the adaptation of farmers to the new procedure. This scheme comes to the aid of farmers who are not registered for VAT, i.e. who do not charge VAT on sales and do not deduct it on purchases.
This scheme also ensures accurate tax documentation which combats informality. There are currently around 659 such buyers registered according to tax records and this measure aims to increase their number by increasing registration.
example
The farmer sells 100,000 lek worth of products to the collector
Compensation rate 10%
Cash value 10,000 lek
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