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On February 22, the President of Ukraine signed the Law on Amendments to the Tax Code of Ukraine, which provides for a reduction of the VAT rate to 14% for certain types of agricultural products.<\/p>\n
The document provides for a reduction in the VAT rate from 20% to 14% on the supply and import of certain types of agricultural products into Ukraine. These include rapeseed, sunflower, wheat and rye, barley, corn, soybeans and other oilseeds, cattle, whole milk, and so on.<\/p>\n
The European Business Association fully supports this decision in the context of cereals and oilseeds. The VAT rate reduction on transactions for the sale of grain and oilseeds provides for the proportional reduction of the compensation from the budget to which exporters of such grain and products of their processing are entitled. In other words, budget expenditures and the risk of losses related to VAT fraud and unfair practices of minimizing tax liabilities are reduced. Thus, lowering the VAT rate on grain and oilseeds will contribute to the de-shadowing of agricultural production. Besides, it will help attract investment in the industry and increase the competitiveness of domestic agriculture.<\/p>\n
\nMeanwhile, this draft law is not so relevant to the whole milk industry. Thus, the Committee experts predict that even if the VAT rate for raw milk is reduced to 14%, its selling price including VAT for milk processors will remain unchanged. There will be an increase in the market value of raw milk, which, in turn, will increase the cost of finished dairy products and may lead to the fact that Ukrainians will buy less quality and healthy dairy products.<\/p>\n
Therefore, the business calls on the Verkhovna Rada to make additional amendments to the Tax Code shortly and exclude whole milk from this list, so as not to get the opposite negative effect of a quality decision.<\/p>\n
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