11:54 21.01.2015

Metal companies should have VAT refunded to stabilize operation, otherwise production could stop, say expert

2 min read
Metal companies should have VAT refunded to stabilize operation, otherwise production could stop, say expert

The state should refund value added tax (VAT) to Ukrainian metal companies for exporting their products, otherwise production could be cut or stopped altogether, due to a lack of working capital, which would sharply decrease the inflow of foreign currency into the country and cause social problems, according to Chairman of the Federation of Metallurgists of Ukraine (FMU) Serhiy Bilenky.

Bilenky said in an interview with the 24 TV news channel that the situation on VAT refunding for exporters has gotten worse.

"As of December 1, 2014, according to our data, the debt for the metal sector was UAH 2.7 billion. I can also say about the largest company in metal industry – Metinvest – the debt to the company only for November-December 2014 was UAH 1 billion, and at the end of January it is expected to have another UAH 800 million. Overpayment of profit tax in the company was UAH 2.5 billion – totally around UAH 5 billion only for one company. This is working capital which could have been used more efficiently, for modernization, investment and repayment of credits," Bilenky said.

He said that VAT non-refunding affects the sector. Hostilities in Donbas and the decline in global prices for metal products are additional problems.

He said that steel smelting in Ukraine fell by 17% in 2014, and could fall by another 25-30% in 2015, or even 40%, if the negative trend continues.

The expert said that businesses in Ukraine require clear, transparent and stable work rules, which are now revised several times a year.

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