The terms of the Order of the Odesa Regional Military Administration No. 19 as of August 18, 2023 "On Some Issues of Financial Discipline under the Legal Regime of Martial Law" cannot be fulfilled. This was stated by all speakers on this issue during a meeting of the Coordination Headquarters for Logistics under the Ministry of Agrarian Policy on August 31, 2023.

In addition to other points that complicate and slow down the work of exporters in the Danube ports, paragraph 1.1 of the order is impossible to implement. It requires grain sellers to submit registered tax invoices for all goods to be exported along with a preliminary customs declaration. This is technically impossible in the case of direct delivery, when grain is loaded onto a ship directly from a truck. In this case, according to the requirements of the Tax Code of Ukraine, the tax invoice can be issued only after delivery (loading onto the vessel) or receipt of payment, which in the case of grain exports also occurs after delivery," explains Dmytro Kokhan, Deputy Chairman of the Ukrainian Agri Council.

"The implementation of this order contradicts the provisions of the Tax Code, and this is punishable. In fact, this order has put exporters in a situation where they have to choose between breaking the law or the order. The UAC has always been in favor of the fight against illegal turnover of grain and "gray" schemes, but not to the detriment of bona fide producers and exporters. In the case of the order of the Odesa Regional State Administration, it is the "white" exporters who suffer," emphasized Dmytro Kokhan.

Dmytro Radulov, Deputy Head of the Odesa Regional State Administration, did not deny the legal conflict created by the order. He suggested that market participants submit proposals to resolve this issue.

"If we cancel this provision, we will actually cancel the entire order. We propose to make technical changes that would improve the process itself. Our position remains that this order should be in force. We are ready to make the necessary changes, but we will not return to the previous working conditions, where 30% of grain was exported through illegal schemes," said Dmytro Radulov.

The second important problem of the above-mentioned order is the requirement for exporters to submit a customs declaration at least 10 days before loading the vessel. During this period, the customs service has to make a decision and authorize the loading of the vessel. This requirement is not only extremely burdensome to comply with, but also contrary to the provisions of the Customs Code of Ukraine, which clearly regulates the timeframe for customs clearance.

The meeting participants reminded the Odesa Regional State Administration that almost all sellers are currently loading ships directly from the truck due to the risk of Russian shelling, so as not to accumulate grain in ports. There has already been a significant reduction in new applications for grain exports in this region, and those that are currently being fulfilled were submitted before the order was in effect.

As a compromise, the UAC proposed to reduce the timeframe for customs to review and process declarations to 2 days. This would still be a violation of the law on the part of the customs, but it would somehow reduce the negative impact of the Odesa Regional State Administration's order on bona fide exporters.

The Ministry of Agrarian Policy supported the UAC's proposals and called on the Odesa Regional State Administration to clear cargoes within two days. In the case of loading from "wheels", the cargo customs declaration should be issued in accordance with the provisions of the Tax Code, i.e., the tax invoice should be requested after the grain is loaded onto the ship. Also, a "risk-oriented approach" should be applied to exporters - if a producer is unscrupulous, he should have all the problems provided for by law, while other producers should be able to pass without unnecessary obstacles.

The Ministry of Agrarian Policy also reported that a separate meeting on this order will be held on September 7.

For reference: The Ukrainian Agri Council previously called for amendments to or the abolition of the Order of the Odesa Regional State (Military) Administration "On Some Issues of Financial Discipline under the Legal Regime of Martial Law" No. 19 as of August 18, 2023.