Farm income and its taxation

Abstract

Motivation: It is increasingly common to hear the opinion that farm income should be taxed with income tax, just like other types of economic activity. Currently, the level of taxation of farm income is low. As the economic power of the farm increases, the level of taxation of its income decreases. Over the years 2014–2019, no variation can be observed in the level of taxation of farm income. Certain simplified attempts to record economic events on farms, due to the fact that they receive all kinds of subsidies, are being gradually introduced by the Ministry of Agriculture and Rural Development. The time has come to carry out a reliable assessment of the income situation of farms. The calculation of income is important for making management decisions on the farm so as to optimise the production structure, costs, etc.

Aim: The objective of the study is to assess the level of income among FADN farms in various economic classes, to assess the level of taxation of income of these farms, and to present the problems related to a potential change in the taxation of agricultural activities. The study aims to show the problems related to calculating income on farms and to present the advantages and disadvantages of the existing taxes paid by farmers.

Results: The result of the study is a proposal regarding tax rates in agriculture. According to the author, in the case of taxation of farm income, in order to maintain its current level of taxation, the tax rate should be 1–2%. If farm income were to be taxed, the tax rate, which would not increase the current tax burden, should be 2–5%.