Abolition of preferential tax conditions for the agricultural sector threatens agricultural decline and deterioration of the social situation in the countryside. This was stated by the Association "Ukrainian Agribusiness Club", Agrarian Union of Ukraine and the Association of Farmers and Private Landowners of Ukraine. The associations sent a relevant letter addressed to the President of Ukraine Viktor Yanukovych and the Chairman of the Verkhovna Rada of Ukraine Volodymyr Rybak.
"The amount of loss in case of tax exemptions cancellation for agricultural producers will be more than 19 billion UAH, leading to profitability reduction by over 50%. Economists’ calculations demonstrate that only the direct economic effect from cancellation of tax exemptions for agricultural producers will result in decrease of gross agricultural output by 8%", - the President of the Association "Ukrainian Agribusiness Club" Alex Lissitsa says.
UCAB emphasizes that the abolition of tax exemptions will affect 56 thousand business entities that provide employment to 650 thousand employees in rural areas. Number of loss-making enterprises, in this case, will increase from 17-30% (7-13 thousand companies) to over 50% (over 20 thousand companies).
"Enterprises will be forced to reduce and even stop agricultural production, which will adversely affect not only economic indicators but also the social situation", - the Director General of UCAB Volodymyr Lapa says.
Special tax regimes for agricultural producers have been set in force in Ukraine since 1998. Given the importance of agriculture for the country, tax exemptions were retained under the adoption of the Tax Code of Ukraine. According to the Tax Code, today in Ukraine farmers continue to operate under indirect state support, which is represented by the fixed agricultural tax and special VAT regime to VAT in the field of agriculture, forestry and fishery.
Due to this support, agricultural production volumes during 1999 - 2011 increased by 70%. From 2001 to 2012 exports of agricultural products increased almost in 10 times from 1.8 billion UAD to 17.9 billion USD. At that the positive balance increased from 700 million USD to 10.4 billion USD or in 15 times.
"Taking everything into consideration, the effect of special tax regimes for farmers is crucial under conditions of the incomplete agrarian reform, limited funding for agriculture through the direct budget support, an access to financial resources and price volatility for inputs" – the Director General of UCAB says.
In order to stimulate the development of agriculture and the sustainable growth of agricultural production, agricultural associations addressed to the President of Ukraine and the Chair of the Verkhovna Rada of Ukraine to preserve tax exemptions for farmers.
Association "Ukrainian Agribusiness Club"
Velyka Zhytomyrska str., 20 А, office 53, Kyiv, 01001
Phone: +380 44 201-4950
Fax: +380 44 201-4951
099 272 59 30
Tetiana Kotyk
www.agribusiness.kiev.ua
The Association "Ukrainian Agribusiness Club" (UCAB) www.agribusiness.kiev.ua was founded in 2007 to protect the economic and professional interests of players of agribusiness in Ukraine. UCAB is a unique platform in Ukraine for establishing business contacts between the leaders of agribusiness, improvement their work and dialogue with the government. UCAB actively supports Ukrainian producers in establishing and maintaining international business relations. The Association consists of the largest producers and processors of agricultural products in Ukraine.
