The Ukrainian Grain Association (UGA) has sent a letter to the Ukrainian authorities regarding a bill on value added tax (VAT) refunding for exports of grain and oilseeds to agricultural producers-exporters (No. 2527) which was passed at first reading in the parliament on May 14, 2015.

The association said in a press release that the initiatives presented in the bill on amending the Tax Code of Ukraine, regarding the creation of fair conditions for sales of agricultural products and support of agricultural producers, violates the principle of equal conditions for business.

"If the document is passed, the selective VAT refunding to certain economic entities will be restored in violation of the principle of equal conditions for doing business. In addition, the change of the VAT application and administration mode at the beginning of the new agricultural year would affect the grain sector, and the pace of exports could fall," the UGA said in a press release.

The association said that last year, under the decision of the parliament, VAT refunding for exports of grain for only agricultural producers was in effect in Q4 2014. According to data from the association and the American Chamber of Commerce in Ukraine, around 500 companies which are agricultural producers exported grain in October-December 2014, which is around 0.8% of the total number of agricultural producers in Ukraine.

"Thus, the state support of domestic producers with this VAT refunding regime came down to support of separate companies in the sector… We're convinced that in the present conditions the retaining of the existing taxation regime is very important for stable development of the grain market," the association said.