IMF expects complete abolition of beneficial VAT taxation regime for farmers

Vacher stressed this requirement has to be fulfilled by 2017.

In early February, the IMF in its report recommended that the Ukrainian authorities should consider the abolition of the beneficial taxation regime for Ukrainian farmers, an increase in value-added tax and income tax rates to compensate for losses that may result from the decrease in single social security tax rate from 40% to 22%. The report did not mention specific timing.

As UNIAN reported earlier, on December 24, 2015 the Ukrainian parliament passed amendments to the Tax Code, representing a compromise between the proposals put forth by the Ukrainian government and the parliament's tax committee as for changes to the Ukrainian taxation system that were needed for the adoption of the 2016 national budget and the fulfillment of its revenue part.

The document changes approaches to the taxation of farmers in part of VAT payments. The payment of this tax will be split in the following way: producers of grain and industrial crops shall transfer 15% of the tax to special accounts (for further use when they need) and 85% shall be funneled to the national budget. Cattle, meat and dairy producers shall send 80% to the special accounts and 20% to the budget. The model for other producers will be 50% by 50%. The previously suggested model was the same for all agrarian producers: 75% was proposed to be paid to the budget and 25% to the special accounts.

Ukraine plans to abolish special VAT regime for farmers in 2017, as was agreed with the IMF.