Ukraine. Parliament approves zero VAT rate on grain exports

2011-10-20 15:29:46

The Verkhovna Rada has adopted a zero rate of VAT on exports of grain by amending the government bill on changes to the tax code regarding the simplified taxation system.

The document was supplemented with the exemption of customs' export of crops by agricultural enterprises, manufacturers and companies that directly purchased such crops from farms, which enjoy a zero rate of value added tax.

Finance Minister Fedir Yaroshenko, who was sitting in the government box, spoke out against this amendment. "The amendment absolutely does not apply to small businesses and a simplified system, while its implementation will lead to a budget loss of UAH 5 billion (1 USD - 7.98 UAH)," he said.

As reported, lifting of the zero rate of VAT on exports of grain and introduction of duties on grain exports came into force on 1 July 2011. In that format, the removal of VAT without compensatory mechanisms hit farmers instead of those against whom it was targeted. Now officials must develop a clear pattern of administration of the tax.