The Cabinet of Ministers of Ukraine initiated a revision of taxation system in the field of agriculture. The last suggestion implies to transfer those agricultural enterprises which have over 20 mln UAH of annual revenue and more than 3 ths hectares of farmlands to the common system of taxation. According to the calculations done by the Association "Ukrainian Agribusiness Club” (UCAB) adoption of this innovation in the long term perspective could lead to reduction of grain and legume crops harvest by 29.6% and put losses at more than 24 bln UAH.

Under the aforementioned criteria will come enterprises that generate 67.7% of the total revenue of the sector and that cultivate 47.7% of agricultural lands. After introduction of the new rules these businesses will be forced to pay about 1.9 bln UAH as income tax, and another 5 bln UAH of value added tax (VAT).

"In this case, money that could go for capital investments will be directed to the budget in the form of income tax and VAT. In 2013, investments in fixed assets of Ukrainian agriculture amounted to about 16.1 bln UAH. In the case of acceptance of this proposal, this figure can be decreased on about 6.9 bln UAH. or 42.7% ", - said Igor Ostapchuk, the expert of the Association" Ukrainian Agribusiness Club ".

By the calculations of UCAB, reduction of investments on 42.7% will lead to decreasing in yield of grain and leguminous crops produced by agricultural enterprises on 7.9 cwt/ha or 22,7% relatively to the average value for seven years, or on 16.2 cwt/ha (37.6%) relatively the average productivity in 2013. In the future it will lead to a decrease in budget revenues, currency income into the country from exports, an increase of unemployment, and reduce of GDP.

 «The novation bring the threat of reducing  production of grain and leguminous crops in Ukraine approximately on 18.7 mln t, or 29.6% of production in 2013, that in terms of value in prices of the previous year is 24.2 bln UAH. It means, for each additional hryvna taken from investments into fixed capital farmers will lack 3.5 hryvna ", - concludes the expert.

Association "Ukrainian Agribusiness Club"  

3 floor, 146 Zhylianska Str.

01032 Kyiv, Ukraine

Phone/Fax: +380 44 2362097/79

kotyk@ucab.ua 

Tetiana Kotyk 

www.ucab.ua

The Association "Ukrainian Agribusiness Club" (UCAB) www.ucab.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.