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The Ministry of Agrarian Policy and Food of Ukraine proposes abolition of a special regime of value-added tax (VAT) payments for agricultural producers to be implemented in several stages, namely of the payment of 10% VAT to the budget fund in 2016-2017; and then transition to a general taxation system.
The proposal was included in the draft law "On Amendments to Article 209 of the Tax Code of Ukraine (regarding the special VAT taxation regime of activities in agriculture, forestry, and fishery), which is available on the website of the Agrarian Ministry for public discussion.
"The gradual transition of agricultural enterprises to a general VAT taxation system is planned to be implemented in stages, by introducing from January 1, 2016 a provision, according to which 10% of VAT payments will be channeled to the State Budget's special fund with the aim to use them for supporting agro-industrial complex of Ukraine and, above all, the livestock industry, small and medium agricultural producers," as stated in the explanatory note to the to the project.
Read alsoUkraine seeks foreign investors in $18 bln renewables market: BloombergIt is noted that the implementation of the proposed measure will help avoid sharp withdrawal of funds from cash turnover of agricultural enterprises and will provide additional revenues to the State Budget's special fund in the amount of about UAH 2 billion per year during 2016-2017.
As UNIAN reported earlier, the special regime of VAT accumulation with regard to agricultural enterprises has been planned to remain in force until January 1, 2018. At the same time, Ukraine has committed to cancel VAT benefits starting January 1, 2016.
Agricultural producers and the Agrarian Ministry have repeatedly stated that they were opposing the abolition of the special VAT regime, emphasizing that such move would lead to a distress in livestock production.
Read alsoUkraine to abolish VAT benefitsIn late October, the relevant committee of the Verkhovna Rada submitted a draft tax reform, envisaging the abolition of VAT benefits for all agricultural enterprises, except for livestock production. According to Tax Committee Chairperson Nina Yuzhanina, the IMF was supportive of this proposal. The draft tax reform also provides the introduction of direct subsidies for farmers who are affected by the abolition of the special regime.