Finance Ministry is drafting a tax reform / Photo from UNIAN
Ukraine’s Finance Ministry proposes to cancel all existing VAT benefits in the framework of tax reform, claiming they distort competitive environment.
"Value-added tax is extremely important for any country,” the Ministry of Finance wrote on its website ahead of the meeting of the National Reform Council. “But for a truly fair taxation regarding VAT, we offer to eliminate all the VAT benefits that distort the competitive environment in Ukraine. We suggest, if it is truly needed, replacing tax incentives with a transparent direct budget support,” reads the statement.
As UNIAN reported earlier, the Finance Ministry had proposed to cancel a special regime of VAT payments for agricultural businesses, without establishing a clear deadline for taking a relevant decision.
Putting the farmers into a framework of conventional taxation system and the abolition of the existing exemptions from VAT payments remains one of the most controversial issues in the field of agribusiness management. The authorities first voiced the idea to abolish tax breaks for farmers back in 2014. At the time, the government explained that the innovation would affect only 10% of agricultural enterprises, representing the segment of large companies. However, the issue was later removed from the agenda.
Read alsoVAT refunds in Ukraine decline by nearly 1.5 times in last monthMeanwhile, abolishing VAT exemptions for farmers was among the requirements of the IMF loan program signed in March of this year. The deadline for the Ukrainian government is set for the end of September, 2015. The move is deemed as a structural beacon in the process of the implementation of reforms.