The UAC calls to fix the situation with fuel storage licenses by farmers.

In its statement to the Minister of Agrarian Policy and Food Roman Leshchenko and the Minister of Finance Serhii Marchenko, the UAC outlined the specific problems of agricultural producers that arose after the introduction of fuel storage licensing and suggested constructive ways to solve them.

Problem №1 - during inspections, the State Tax Service requires a large list of documents

The UAC explains that farmers are subject to the requirements of the Instruction on the procedure for receiving, transporting, storing, selling and accounting for petrol and petrol products at enterprises and organizations of Ukraine. This Instruction was developed to regulate the activities of fuel and energy enterprises and contains burdensome regulation of enterprises with a high risk of danger. At the same time, fuel sales/storage activities are currently subject to licensing.

The UAC's proposal: to simplify this Instruction, or to make changes so that it does not apply at all business entities that keep fuel for their own needs.

"An alternative way is to establish at the legislative level a requirement that the State Tax Service when conducting inspections for compliance with the Law of Ukraine "On state regulation of production and circulation of ethanol, cognac and fruit, alcohol drinks, tobacco products, liquids that is used in electronic cigarettes, and fuel” have the right to check only compliance with the licensing requirements established by this Law," is suggested in the UAC’s appeal.

Taking into account that nowadays there are no license requirements for a license to keep fuel for own consumption, for this type of license it is possible to verify the accuracy of the data specified in the application for a license.

Problem №2 - a significant number of inspections are on agricultural producers, whose fuel consumption does not exceed the average fuel consumption per hectare for agricultural enterprises

"Tax audits are also related to the need to amend the Procedure for forming a plan-schedule of documentary scheduled audits of taxpayers, approved by the order of the Ministry of Finance of Ukraine from 02.06.2015 № 524, in the issue of clarifying the indicator for risk criteria choosing business entities for conducting a tax audit. Thus, currently the controlling bodies during inspections of agricultural producers, for example in the part of accrual of VAT liabilities, fuel consumption standards per hectare of agricultural land is used," is mentioned in the letter.

The UAC’s proposal: to formalize the relevant criteria, providing that if the actual fuel costs of the taxpayer do not exceed these standards, then such a taxpayer is not included in the inspections schedule of compliance with fuel storage legislation. At the same time, this should not be an obstacle to conduct scheduled inspections on other issues provided by the Tax Code of Ukraine.

Problem №3 - there are no unified publicly available standards for fuel consumption by agricultural machinery for the cultivation of one hectare of agricultural land

It should be noted that for the fuel to be write-off during economic activities, including agricultural work, you should be guided by officially approved fuel consumption standards for specific models of agricultural machinery (tractors, combines, etc.) and types of agricultural work. Please, note that the Standard consumption of fuel and lubricants for the operation of machinery in construction approved by the order of the State Construction Committee from 12.01.2000 № 9, and the Consumption of fuel and lubricants for road construction and special machines, approved by the order of “Ukravtodor” corp. from 14.08.1996 р. № 156.

In the agriculture sector nowadays, there are no unified and publicly available standards for the relevant expenditures. Therefore, farmers are forced to order the development of individual basic standards in zonal and regional research centers of the agro-industrial complex productivity. Moreover, such developed norms are valid only for the specific enterprise that ordered them and can not be used by a farmer who has a similar model of agricultural machinery.

The UAC’s proposal: to approve relevant official and publicly available standards for fuel consumption for agricultural machinery and agricultural testing by the Ministry of Agrarian Policy in agreement with the Ministry of Infrastructure.

Problem №4 - the need to indicate in the license application the capacity of not only basins but also vats

Another problem of self-storage of fuel is the legal requirement (entered into force in 2021), which required farmers to indicate the capacity of all basins (stationary, non-stationary, consumer containers etc.) which are used for fuel storage. In practice, such requirements cannot be implemented, as it is impossible to calculate exactly how many non-stationary tanks (barrels) will be used to store fuel. Until 2021, the capacity indication requirements applied only to tanks (stationary fuel storage facilities).

The UAC’s proposal: to make legislative changes that will not apply to the requirement to indicate the capacity of tanks in the application for a license to store fuel for their own needs.

Problem №5 - expiration of the terms when you can get a license

The law requires businesses to obtain a license for fuel storage for their own consumption by March 1, 2020. Unfortunately, due to various objective reasons, including technical ones, as well as poor communication between the state and business, a significant number of farmers did not have time to obtain licenses before March 1, 2020, but received them later. This was discovered by regulatory authorities and began mass inspections with huge fines.

The above list of problems is not exhaustive and farmers provide numerous complaints about other difficulties and significant bureaucracy they face during the relevant inspections, as well as the need to provide a large number of documents at the request of the tax authorities.

Taking account the list, it is necessary to amend the legislation and abolish penalties for late receipt of a license for businesses that have already received licenses at the time of the inspection. It is also necessary to establish the fine amount proportions for unlicensed fuel storage to the actual amount of fuel stored by the relevant entity.

At the same time, the UAC asks to initiate the creation of a working group with the involvement of farmers and the Ministry of Agrarian Policy, the Ministry of Finance, the State Tax Service representatives and other interested bodies to promptly resolve the problem and find a compromise solution to the crisis in fuel control.

It will be recalled that in December 2019, the Verkhovna Rada of Ukraine adopted amendments to the Law of Ukraine “On State Regulation of Production and Circulation of Ethanol, Cognac and Fruit Alcohol, Alcoholic Drinks, Tobacco Products, Liquids Used in Electronic Cigarettes and Fuel”, which introduced licensing of fuel storage activities for own consumption, which also applies to farmers who are one of the main buyers of fuel.

The procedure for issuing a license for storage of fuel for own consumption has been significantly simplified and provides only for the application for a license indicating the volume of tanks used for fuel storage and their location.

However, in practice, after the licensing introduction, farmers faced a number of problems related to the state control over compliance with legislation on the circulation and storage of fuel.