12:24 10.07.2018

MPs propose lowering VAT for berry producers to 7% from 2019

2 min read
MPs propose lowering VAT for berry producers to 7% from 2019

A group of lawmakers from different factions of Ukraine's Verkhovna Rada have proposed from January 1, 2019, to reduce value-added tax (VAT) for horticulture, grapes and viticulture products from 20% to 7%.

Corresponding bill No. 8570 has been registered in parliament on July 6. Its authors were 13 MPs, including Mykola Lyushniak, Fedir Negoy, Vasyl Petiovka, Oleh Kulynych and Robert Horvat.

Rada Committee on Agrarian Policy and Land Relations member Oleh Kulynych said gardening and other related activities always mean a serious capital investment with a long payback period, adding that Ukraine annually produces about 2 million tonnes of fruit and berry products, the lion's share of which is grown by small producers.

"Therefore, support from the state is a necessary and adequate step that we must take in return, which is confirmed by the experience of a number of EU countries, where the taxation of agricultural goods in most cases is subject to a lower rate, sometimes three times lower than the standard," Kulynych said on Facebook. He said the measure would encourage gardeners to leave the "shadow economy" and pay taxes in full.

"The introduction of a reduced VAT rate of 7% is an additional incentive to conduct activities officially, and, as a result, is a huge plus for the budget in the future," the MP noted.

According to the estimates of the Ukrsadprom Association, the introduction of a reduced VAT rate of 7% would boost budget revenue from about 12% to 25%. In addition, this would allow producers to save 13% of the funds they would have paid in value-added tax. The savings would let them accumulate about UAH 125 million to use for developing production and reducing the cost of farmed produce.

In this regard, the association supports the bill and calls on MPs to adopt it.

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