It has been proposed that the Ukrainian parliament from April 1, 2013 until December 31, 2014 exempt from value added tax (VAT) transactions on the sale of imported natural gas (without tariffs for transportation and delivery) to industrial consumers.

The author of draft law No. 2100 registered on January 25, 2013 is MP from the Party of Regions, Yevhen Sihal. The bill amends the Tax Code of Ukraine.

The requirement will not apply to transaction on supply of gas by national joint-stock company Naftogaz Ukrainy to households, organizations that are financed from the national and local budgets and heat supply companies which produce heat for households.

The lawmaker said that the adoption of the draft law will protect domestic manufacturing and will ensure the production of competitive products via the optimization of the cost of imported natural gas for industrial consumers.

"Possible losses to the budget will be fully compensated for thanks to revenues from the growth of export transactions by domestic enterprises that use imported gas for production," reads an explanatory note to the draft.

The document also says that the similar tax regime was in effect in the period from July 1, 2011 to May 24, 2012.

As reported, the National Commission for Energy Regulation sets cap prices of natural gas for industrial and associated consumers, and also for budget-sustained organizations.

In the first quarter of 2013, the natural gas price for industrial consumers will be UAH 3,509 per 1,000 cubic meters, excluding VAT, target-markup charges, and tariffs for transportation and delivery. If the draft law is passed, consumers could save UAH 701.80 on 1,000 cubic meters of gas.

For example, taking into account VAT, tariffs for transportation and delivery and target-markup charges, the price of gas for industrial consumers of Kyivgaz at present is UAH 4,687.416. If the parliament approves the bill, the end price of gas for industrial consumers of the Kyiv's company will fall to UAH 3,985.616.