The Ukrainian Agri Council (UAC), which unites more than 1,200 agricultural producers throughout Ukraine, opposes the provisions of Draft Law No. 10168-2, which provides for VAT rate of 14% on exports of all types of agricultural products, except oil, nuts and honey. The respective amendment No. 32 was supported by the Tax Committee of the Verkhovna Rada during the preparation of the draft law for the second reading.

These rules will seriously worsen the operating conditions of the agricultural sector, reduce the purchase prices for agricultural products and the competitiveness of our agricultural producers at the international market. And the discriminatory amendment in the form of preserving the 0% VAT rate for oil exports violates the principle of equality in the market.

“In fact, these are new ‘soybean amendments’ that have no logical explanation other than the desire to create privileges for oil and nut producers. It is declared that the introduction of VAT taxation on exports at the rate of 14% is necessary to fight against the non-return of foreign currency earnings. Only after the currency is returned will be able to change the rate to 0% and refund the VAT. However, there are problems with non-return of foreign currency earnings in the export of oil and nuts. There is no evidence that they are less than in the case of exports of other agricultural products,” the farmers say.

The introduction of 14% VAT on exports is an unjustified measure and an excessive burden for farmers. The fact that the draft law already provides for the verification of each export invoice by the SAMCTIRAC (system for automated monitoring of compliance of tax invoices with the risk assessment criteria) guarantees blocking the illegal grain, while legal exporters return foreign exchange earnings. 

If the idea of setting of 14% VAT rate is considered as an additional tool to fight against illegal exports, it should either apply to all agricultural exports, including oil, or apply only to those exporters who have non-return of foreign currency earnings, as it was previously provided for in the draft law before the introduction of amendment No. 32.

The Ukrainian Agri Council are appealing to the Verkhovna Rada of Ukraine and urges MPs not to support amendment #32, which sets 14% VAT rate on agricultural exports.