News
01.04.2013
Agriculture to stop in case of tax exemptions cancellation
In case of possible repeal of special tax conditions for farmers, the number of loss-making enterprises in the agrarian sector will double and their share will increase from 17-30% to 50-60% of the total number. This was stated by the leaders of eleven agribusiness associations in a letter addressed to the President of Ukraine, the Prime Minister and the Speaker of the Verkhovna Rada of Ukraine with a request to take into account their views on the preferential tax regimes for farmers to prevent the decline in Ukrainian agriculture.
Abolition of tax exemptions for farmers will reduce the volume of gross output in agriculture by 8-10% and cause the shortage of currency receipts from exports of agricultural products – the appeal says. In addition, the profitability of the industry will decrease by over 50% and economists’’ calculations show that farmers may suffer losses to the amount of 19 billion UAH.
In this regard, representatives of specialized agricultural associations, as well as organizations that unite international business in Ukraine are deeply concerned about possible cancellation of preferential tax regimes for farmers. After all, as of today, special tax regimes is the only source of support for farmers because financing of agriculture through direct budget support is limited, as well as the access to bank loans.
Specialized associations emphasize that abolition of tax benefits for farmers in the future will result in stagnation and economy shadowing, curtailment of investment processes and worsening of social and economic situation in rural areas. An additional negative factor is a significant complication of tax system administration by agricultural enterprises. What is meant here is that there exist a threat of closure of a large number of livestock enterprises and hindrance of crop production development.
Thus, even in case of continuation of tax benefits, the charged taxes and fees in the agricultural sector amount to over 42 billion UAH, which substantially exceeds the budgetary support of the sector. Therefore, under the present circumstances, the sector plays not only an important social role, but also contributes to the state and local budgets.
The crucial role of agriculture is evidenced by a number of important macroeconomic indexes, the most important of which is the share of agriculture and food industry in GDP, which exceeds 20%.
The trends of recent years indicate a gradual recovery of the industry. During the period of preferential tax regimes for VAT and fixed agricultural tax, the crop production industry revived, the livestock breeding industry increased production and the agricultural sector is steadily increasing its production volumes. In addition, agricultural enterprises increased tax revenues to the consolidated budget in more than 11 times. What is more, last year, a record foreign trade balance was achieved - over 10 billion USD.
Taking into consideration all the above mentioned factors, representatives of specialized associations believe that the system of tax incentives for agriculture is crucial for the development of the industry and must be preserved in order to prevent the decline in Ukrainian agriculture. In particular, the appeal to the President of Ukraine, the Prime Minister and the Speaker of the Verkhovna Rada of Ukraine was signed by leaders of the Agrarian Union of Ukraine, the Association "Ukrainian Agribusiness Club" the Association of Farmers and Private Landowners of Ukraine, the Association "Union of Poultry Farmers of Ukraine", the Ukrainian Agrarian Confederation, the Association of Milk Producers Ukraine, the Ukrainian corporation of meat production on an industrial basis "Tvarynprom”, European Business Association, the Association "Union of Feed Mill Industry of Ukraine", the American Chamber of Commerce in Ukraine and the Ukrainian Grain Association.
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.
