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Wine and Spirits

29/ 08/ 2014

Due to the long-lasting efforts of the Wine and Spirits Committee of the European Business Association (hereinafter – Committee and EBA respectively), the Verkhovna Rada of Ukraine (hereinafter – the VRU) on 12 August finally adopted the Draft Law “On Amendments to the Tax Code of Ukraine and Certain Laws of Ukraine regarding Straightening of the Control of Excisable Goods’ Circulation and Specification of Some Tax Norms” No2403 dated 26 February 2013.

Background: The Law of Ukraine “On Amendments to the Tax Code of Ukraine regarding Revision of Certain Taxes and Duties” No5503 -VI dated 20 November 2012 amended the Law of Ukraine “On State Regulation of Production and Circulation of Ethyl, Cognac and Fruit Alcohol, Alcoholic Beverages and Tobacco Products” No481/95-VR from 19 December 1995 (hereinafter – the Law No481/95-VR). Subject to the current Law No481/95-VR the paragraph 4 part 4 of the Article 11 is stated as follows: “Excise tax stamps of previous sample that had been purchased by an excise tax payer before a sample of excise tax stamps was changed should be used by such payer for labelling of produced, imported into the customs territory of Ukraine alcoholic beverages and tobacco products during 12 months from the date of introduction of new sample of excise tax stamps. Alcoholic beverages labelled by stamps of previous sample may be in circulation during 12 months from the date of introduction of new sample of excise tax stamps, and at the end of this term the excise tax stamps of previous sample should be exchanged for new excise tax stamps. Tobacco products labelled by stamps of previous sample that are in circulation after 12 months shall be considered as unlabelled. Replacement of previously purchased by payers excise tax stamps of previous sample as well as of excise tax stamps of previous sample on unrealized alcohol beverages within a defined by this paragraph period with stamps of new sample shall be free of charge in accordance with the established by the Cabinet of Ministers of Ukraine procedure”.

Mentioned provision might lead to some negative consequences such as additional expenses for representatives of business community and creation of favourable conditions for the introduction into circulation of illegal alcohol products (counterfeit and/or contraband).

The Committee’s experts repeatedly mentioned in EBA’s official requests to the respective authorities and during a number of meetings that such norm should be cancelled. As a result, the member of the Verkhovna Rada of Ukraine Ihor Tsyrkin introduced the amendment to the Draft Law “On the Amendments to the Article 230 of the Tax Code of Ukraine (regarding Control of Circulation of Alcoholic Beverages)” No2403 dated 26 February 2013 (the name of this Draft Law was changed in the second reading) that provided that already purchased excise tax stamps of previous sample should be used in production of alcoholic beverages and tobacco products till their full usage and labelled alcoholic beverages and tobacco products should be in circulation till their full realisation within their expiration date for consumption.

On 12 August the VRU adopted mentioned Draft Law in general in the second reading.

The EBA would like to express its gratitude to the VRU and the Ministry of Finance of Ukraine for their constructive cooperation and attention to this important question as well as to all member-companies for their active participation and persistence in solving this problematic issue.

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