The bill №3131-d, which introduces a minimum tax per hectare, is due to be adopted by the end of this year. The Tax Committee of the Verkhovna Rada of Ukraine announces this statement. Who and how much will be payed after that?

UAC participants expressed their views on the bill and the need to fight against illegal tillage to Agravery.com.

In Ukraine, users of 12 million hectares do not pay any taxes for land use. At a time when even small farms have to pay about 4-5 thousand hryvnas per year for 10 thousand square meters of field. The bill №3131-d aims to force those who do not declare products produced in the field to pay the minimum tax. About 42 million hectares of agricultural land, from 30 to 40% of them are cultivated without proper registration in Ukraine. Owners of shares who do not want to pay taxes rent them out without a contract: according to the documents, such land is listed as uncultivated, so it is not necessary to pay taxes. Experts estimate that the delay in passing the bill №3131-d "On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine on legalization of all sectors of Agricultural Production" costs the budget of Ukraine losses of 6-22 billion UAH per year.

In anticipation of decent competition

Petro Hvozdyk, the owner of AE “Slobidska”, says that such gray schemes make competition unequal. After all, honest people pay more, so the cost of production grows.

"Now there is a certain inequality in the tax system. Honest farms pay a few thousand taxes per hectare, and individuals pay almost nothing. We have a small farm, so we pay about 5 thousand UAH per hectare, which go to both - local and district budgets.

And individuals pay within 200 hryvnias per hectare. I believe that this is not fair and I hope that the state will settle this issue and everyone will pay for the land," Petro Hvozdyk said.

His colleague, the owner of AE "LIS" Ivan Leschenko, pays 4,800 thousand UAH per hectare per year. At a time when there are many in the area who pay a few hundred hryvnia for rent and all. This allows producers who work illegal to sell wheat twice cheaper than the market price is, and still be in a big plus. "Those who work unofficially dump with grain prices. If you took the land, you have to pay for it. Otherwise, why is she to you? At that time, the tax office will not need to keep an army of workers looking for tax evaders. And everything will be simple - there are certain areas of land - you need to pay the approved amount," Ivan Leschenko added.

Kees Huizinga, the owner of LLC “Kyshchentsi”, explained the difference between legal and illegal work. Now the farm establish to satisfaction of court that they are not implicated in five lawsuits.

"They think we illegally use water for irrigation, then we sell onions too expensively. We grow plants, we work officially, and we are wrong. But those who work illegally - do not touch. Is that fair? Individuals do not have inspections of state labor, ecology, tax, fire safety. Although I understand that it is easier for the state to check one large farm than many small ones. I have nothing against small farmers, but everyone has to work by the same rules. Therefore, the adoption of the bill on the minimum tax per hectare would be the right decision. That would level the playing field in the market,” Kees Huizinga said.

How much will the tax minimum cost?

Since the beginning of this year, there have been three bills in parliament (№3131, №3131−1, №3131−2) on the introduction of a tax liability (ITL), or the so-called minimum tax per hectare. After a barrage of criticism, President Volodymyr Zelenskyi intervened. All wishes and remarks were taken into account in the fourth version of the draft law - №3131-d on legalization of all parts of agricultural production.

According to it, the ITL is not an additional tax or fee. This payment is paid in full only if the land user after payment of all taxes does not reach the minimum. In this case, he will pay only the difference. Users of plots provided for the construction and maintenance of a residential building and personal farms up to 1 hectare will not pay the minimum tax. According to the bill, the tax liability is calculated by the formula: ITL = NMV (normative monetary valuation) x S x K x M / 12, where S is the land area, M is the number of months of land use, K is the coefficient, the maximum amount of which is 0.045 (or 4,5%). For example, if the law was already in force in 2020, the maximum amount of tax liability was 1,400 UAH. This is with the average in Ukraine normative monetary valuation of land - 28,000 UAH per hectare and the value of the coefficient - 0.045.

Who will have to pay?

At the same time, the document provides a transition period. It is proposed to set reduced coefficients for 2021 - 2023 to calculate the tax liability - instead of a coefficient of 0.045, apply a coefficient of 0.03 - for 2021, 0.035 - for 2022, 0.04 - for 2023, and for SEI, including farmers, are generally provided for 2021 - 2022 to apply a coefficient of 0. Do not need to worry and those who lease their shares officially, according to the bill, the obligation to pay taxes rests with the tenant.

"Almost 40% of our agricultural land is cultivated according to illegal schemes. This figure is confirmed in several ways: from satellite images to data from the State Geocadastre and the tax service. The problem of tax evasion is not new for Ukraine. For example: every year we process 2 million tons of sunflower and it is more than we produced in the fields. Where do they come from? The bill №3131-d should reduce illegal share of land under cultivation. I emphasize that if you work honestly, it is impossible to pay less than the minimum tax is," the Deputy Chairman of UAC Mykhailo Sokolov said.

The Verkhovna Rada Committee on Finance, Tax and Customs Policy has already supported the revised bill №3131-d on the legalization of all parts of agricultural production and recommended to adopt it as a basis in the first reading. The Chairman of the committee Danylo Hetmantsev, during the forum "Dialogue of Civil Society, Business and Government" (which was held on September 22, 2020 at the Kyiv), assured that the bill №3131-d will be adopted in the first reading in November, and by the end of this year can be finally adopted.