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VRU registered three Draft Laws related to VAT refunding to agricultural producers

05/ 03/ 2019
  At present, there is an opportunity to restore free competition in the market of oilseeds, in particular soybeans and rapeseeds. Since the beginning of September last year, soybean producers have appeared in unequal competitive conditions with producers of other crops. On December 2017, the Verkhovna Rada of Ukraine adopted the so-called “soy-rapeseed amendments”, which cancelled VAT refunding for exports of soybeans (from 01.09.2018 until 31.12.2021) and rapeseeds (from 01.01.2020 until 31.12. 2021).  Additional norms introduced by the Law 2440-VIII, which entered into force from 1 September 2018, made exceptions for the producers, who grow these crops on their farmland. Such discriminatory conditions violate the principles of free market competition. As a result, farmers has already suffered losses from falling prices on the domestic soybean market, and in the future, they will be forced to reduce planting areas for these crops. Cancellation of VAT refunds when exporting rapeseeds and soybeans could lead to the removal of these oilseeds from crop rotation and to further losing technology to work with them. Reducing the number of crops in rotation threatens the gradual depletion of soils. Currently, the deputies of the Verkhovna Rada are ready to reinstate the status quo for soybean and rapeseed producers. Last month, the Verkhovna Rada of Ukraine registered three Draft Laws on amendments to the Tax Code of Ukraine regarding certain issues of taxation of value added tax on operations for the export of oilseeds outside the customs territory of Ukraine. In particular, the Draft Law No10027, as well as two alternative Draft Laws No10027-1 and No10027-2. It is worth noting that the approach proposed by the Draft Law No10027-2, unfortunately, continues the practice of unlawful restriction of the rights of certain categories of economic entities for VAT refunds on exports, and thus does not restore the protection of legitimate interests of business entities cultivating oilseeds (soybeans, rapeseeds). Draft Laws No10027 and No10027-1, on the contrary proposed to reinstate VAT refunding for the export of oilseeds (soybeans and rapeseeds). The only difference between them is the date of entry into force. In particular, if the Draft Law No10027 provides for a resumption of reimbursement the next day after acceptance and signing. At the same time, the Draft Law No10027-1 proposes to change the deadline for the temporary exemption from VAT refunding for exports of soybeans from 31 December 2021 to 1 September 2019. In other words,  the Draft Law No10027-1 proposes to restore the reimbursement of VAT refunding for soya from the beginning of September of this year, while abolishing the temporary prohibition on VAT reimbursements for export of rapeseeds. However, in general, both legislative initiatives are aimed at restoring fair conditions of taxation and proper competition in the agrarian market highly awaited by the grain business community of the European Business Association. Business draws attention to the last two draft laws. We hope that this year, honest competition in the market of oilseeds will be restored.

At present, there is an opportunity to restore free competition in the market of oilseeds, in particular soybeans and rapeseeds. Since the beginning of September last year, soybean producers have appeared in unequal competitive conditions with producers of other crops.

On December 2017, the Verkhovna Rada of Ukraine adopted the so-called “soy-rapeseed amendments”, which cancelled VAT refunding for exports of soybeans (from 01.09.2018 until 31.12.2021) and rapeseeds (from 01.01.2020 until 31.12. 2021) Additional norms introduced by the Law 2440-VIII, which entered into force from 1 September 2018, made exceptions for the producers, who grow these crops on their farmland.

Such discriminatory conditions violate the principles of free market competition. As a result, farmers has already suffered losses from falling prices on the domestic soybean market, and in the future, they will be forced to reduce planting areas for these crops. Cancellation of VAT refunds when exporting rapeseeds and soybeans could lead to the “removal” of these oilseeds from crop rotation and to further losing technology to work with them. Reducing the number of crops in rotation threatens the gradual depletion of soils.

Currently, the deputies of the Verkhovna Rada are ready to reinstate the “status quo” for soybean and rapeseed producers. Last month, the Verkhovna Rada of Ukraine registered three Draft Laws on amendments to the Tax Code of Ukraine regarding certain issues of taxation of value added tax on operations for the export of oilseeds outside the customs territory of Ukraine. In particular, the Draft Law No10027, as well as two alternative Draft Laws No10027-1 and No10027-2. It is worth noting that the approach proposed by the Draft Law No10027-2, unfortunately, continues the practice of unlawful restriction of the rights of certain categories of economic entities for VAT refunds on exports, and thus does not restore the protection of legitimate interests of business entities cultivating oilseeds (soybeans, rapeseeds).

Draft Laws No10027 and No10027-1, on the contrary proposed to reinstate VAT refunding for the export of oilseeds (soybeans and rapeseeds). The only difference between them is the date of entry into force. In particular, if the Draft Law No10027 provides for a resumption of reimbursement the next day after acceptance and signing. At the same time, the Draft Law No10027-1 proposes to change the deadline for the temporary exemption from VAT refunding for exports of soybeans from 31 December 2021 to 1 September 2019. In other words,  the Draft Law No10027-1 proposes to restore the reimbursement of VAT refunding for soya from the beginning of September of this year, while abolishing the temporary prohibition on VAT reimbursements for export of rapeseeds. However, in general, both legislative initiatives are aimed at restoring fair conditions of taxation and proper competition in the agrarian market highly awaited by the grain business community of the European Business Association.

Business draws attention to the last two draft laws. We hope that this year, honest competition in the market of oilseeds will be restored.

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