January 28 2008, 16:16

Ukraine: agricultural producers do not want to pay VAT

Soon entrance of Ukraine to World Trade Organization (WTO) will deforce national agricultural producers of all state donations and privileges. Market players say they are not ready to compete with the importers; they demand the Government to preserve the state support of agriculture.

The draft Law of Yevgeniy Sigal, the member of Verkhovna Rada (BUT), the owner of "Agromax" complex (TM "Gavrylivski Kurchata") is under consideration now in the parliament. The draft law proposes to partially preserve the preferential taxation of agricultural producers. To the opinion of the author of the document, the draft Law proposes the privileges which do not contradict to WTO conditions.

According to the recent amendments to the Law "About Value Added Tax" (adopted one month ago) the agricultural producers are deforced of zero VAT rate starting from the next year after Ukraine's entrance to WTO. If the draft Law of Mr. Sigal is adopted, the zero VAT rate will be restored for the "agricultural enterprises of all patterns of ownership (excluding enterprises - producers of excisable products), which generate not less than 75% of gross profit due to the sales of independently produced and processed agricultural products". VAT won't be collected from these producers only if VAT sum is spent for the purchase of "the inputs for the production purposes" during the reporting period.

Such agricultural producers will also be able to postpone VAT payment up to 720 calendar days due to the imports of the machinery which is not produced in Ukraine.

The profile Ministry supports the legislative initiative of Yevgeniy Sigal; the Ministry officials think that the introduced changes to the Law let agricultural producers more efficiently utilize state support; they will be stimulated to actively invest to the production. "The document is focused on the development of the national producer, we should support it", Petr Verbitskiy, Deputy Minister of Agrarian Policy shared his opinion about the draft Law.

"National agricultural producer is non-competitive. If we enter WTO, our producers will be wiped off the market by western colleagues. If the conditions of the organization do not let the state directly donate the national agricultural producers, Ukraine should actively use all possible mechanisms of the indirect donations in the way proposed, for example, by Yevgeniy Sigal", Yaroslav Sigal thinks, the President of the Association of Farmers and Landowners Association. To his opinion, one of the obligatory conditions for the agricultural production development in Ukraine is the preserved zero VAT rate for agricultural producers.