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News / 24 December 2013 | 12:34
Government supports agricultural producers

Government supports agricultural producers

On Dec. 19, Verkhovna Rada passed Bill № 3757 "On amending Tax Code in terms of individual tax rates and tax privileges". One of the amended items is recovery of VAT refund practice for exports of grain and industrial crops (sunflower and rapeseed), the Information-Analytical  Bulletin of the Cabinet of Ministers informs.

According to experts of the Ukrainian Agrarian Association (UAA), if the President of Ukraine signs the bill, the profitability of grain farming will grow by 10 - 12% after the VAT refund is back on for grain exports.

Experts emphasize that the VAT for exports of grain and industrial crops will be refunded, provided that they are exported by  agricultural producers or traders who buy directly from them.

The pro of the regulation is that the chain of intermediaries will be removed from the agricultural exports. In order to get a  VAT refund, traders will be forced to develop their own regional networks, invest in their regional offices, warehouses, trucks.

Earlier, attempts to introduce a VAT refund for grain export faced a strong opposition from international traders. A strong antagonism like that stems from the fact that they buy their grain directly at the port. Due to a virtually unlimited access to cash and availability of own sales network on international markets, they could offer more favorable prices. At the same time, they did not need to invest in the procurement networks. Because of that, profitability of purchasing grain and industrial crops directly at the port was considerably higher.

If the bill enters into force, the international agricultural traders will have to review their business strategy, experts say. In order to be competitive, they will have - just like domestic agricultural holdings and traders – to develop their own procurement networks in Ukraine.

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