Export VAT refunds still absent in Ukraine - UCAB
MOSCOW. Aug 26 (Interfax) - The mechanism of refunding value-added tax (VAT) on export operations in Ukraine is actually still not operating today, a circumstance that negatively impacts the cost of agricultural products, farmers' earnings, and investments in production and logistics, Ukrainian media said on Thursday, citing the website of the Ukrainian Agribusiness Club (UCAB).
At the same time, since VAT on the import and acquisition of resources has been paid in full, it is impossible to offset VAT credits, UCAB said, adding that it causes barriers to investment and to the creation of new jobs, because these payments form an VAT credit, which should be taken into account when calculating VAT and in its refunds.
"The consequence of the fact that VAT is not being refunded is the absence of a significant amount of circulating assets that agricultural producers could count on. For instance, farmers could now buy grain carriers, which are needed to transport grain intended for export. VAT of 20%, which should be used in a VAT credit count, has to be paid on each vehicle. As a result, per ten vehicles another two could be bought by using VAT refunds," UCAB general director Roman Slaston as quoted as saying by the organization's website.
Offsetting VAT credits helps create additional jobs, income tax payments, extra foreign currency proceeds, and a contribution to the country's GDP, but this is not happening because of the absence of VAT refunds, Slaston said
Ukrainian farmers are now waiting for VAT refunds for February-June 2022, when this mechanism did not work, UCAB said.
If the situation around the refunding of VAT to exporters does not change in the near future, the already challenging situation of Ukrainian farmers will get even worse, it said.
"In the end, all this could result in real agrarian VAT being sold on the market at a discount, and 'atypical export' will renew. Indeed, the number of applications [for a VAT refund] will decline, but VAT proceeds to the state budget will decrease significantly as well," Slaston said.
In conclusion, UCAB called on the Ukrainian authorities to ensure proper administration of VAT as soon as possible and to resume VAT refunds in order to encourage investments in agriculture.
As reported, VAT refunds stopped almost completely after February 24. Whereas VAT refunds stood at 18.52 billion hryvni in January and 12.07 billion hryvni in February, they dropped to 820 million hryvni in March, were totally absent in April and May, resumed in June, and were again halted in July.
A total of 40.9 billion hryvni were refunded in January-July 2022, VAT of 172.6 billion hryvni was paid over this period on goods manufactured in Ukraine. These figures for January-July 2021 stood at 86 billion hryvni and 172 billion hryvni, respectively.