“Ukrainian Club of Agricultural Business” Association experts have estimated 6.1 B UAH of taxes paid by agricultural entities to local budgets. Along with, nearly 7 M ha managed in “black” market framework and thus, Ukrainian budgets have lost around 2 B UAH (1/3 of paid taxes in 2015) on different administrative levels. Experts estimate potential tax cash inflow from agricultural business activities in 3.6 B UAH after legalization steps adoption in 2016.

Rural areas development financing and local budgets’ cash inflows increase is achievable via certain taxation of agricultural businesses:

1. 4^th group unified tax: paid taxes cash directed completely to budgets of rural communities. 2015 tax rate estimated in 0.45% for tillage lands on regulatory monetary value of agricultural lands. 2016 tax rate estimated in 0.81%.
2. PIT tax on land rent: 2015 tax rate estimated in 15%, 2016 is 18%. 75% of paid tax cash accumulated in local budgets levels or transferred to rural communities in case of association.
3. PIT tax on wages: 2015 tax rate estimated in 15%, but increased to 18% in 2016. 60% of paid amounts accumulated on district level in regions, 15% - on regional level and other 25% - on the state level. In case of rural communities association, certain amount of taxed cash directed to common budges.

2.5 B UAH taxed due to 4^th group unified tax and directed to local budgets according to official exploitation of 21.3 M ha agro lands by agricultural business. Due to “black” land usage local budgets have lost 0.82 B UAH. Based on unified tax increase in 2016 agricultural companies will transfer around 5.3 B UAH from official land usage and, with legalization, budgets will receive 1.8 B UAH extra.

PIT on land rent in 2015 accounted in 1.81 B UAH. Amount of 0.6 B UAH lost. Increase of PIT in 2016 may cause local budgets cash inflow growth up to 2.61 B UAH this year along with potential inflow of 0.87 B UAH due to legalization.

Local budgets inflows from PIT on wages from agricultural business estimated in 1.77 B UAH and 0.59 B UAH were lost due to “black” market. Experts forecast 2.69 B UAH tax payments to regional level budgets and account 0.9 B UAH as perspective inflow resulting due to legalization in 2016. Likewise, average wage level expected to growth from 3140 UAH up to 3984 UAH per month considering short term balance in economy.

“Around 1/3 of agricultural businesses operate in “black” market, causing rural areas degradation in socioeconomic aspects and tax burden increase plays only as a motivator for certain businesses to operate illegally. Market see the situation when fiscal entities intensify taxation of legally operating “white” companies and fail in prevention of illegal or semi legal exploitation of agro lands. We consider that implementation of unified social tax paid per each ha of agricultural land will help to increase local budgets based on legalization of “black” agro businesses”, UCAB General Director, Taras Vysotskyi noted.

Despite mandatory tax payments, “white” agricultural companies contribute social grants to local communities and citizens. According to the Association research, agro entities direct 66 UAH per ha in average to cover social issues within rural communities. The overall volume of mentioned social contribution from agricultural industry valued at 1.4 B UAH.