10:22 25.09.2020

Bill on reduction of VAT on some agricultural goods lobbies interests of large agro traders – expert

2 min read
Bill on reduction of VAT on some agricultural goods lobbies interests of large agro traders – expert

Bill No. 3656 adopted as a basis on reducing the VAT rate from 20% to 14% on some types of agricultural products lobbies the interests of large agricultural traders of unprocessed agricultural products and does not protect the interests of small farmers in any way, lawyer of Ilyashev & Partners Nina Bets has said.

"This bill is aimed exclusively at lobbying the interests of large agricultural traders of unprocessed agricultural products, the supply of which will be taxed for them at reduced rates. The bill does not in any way protect the interests of small farmers, who are most often individual entrepreneurs of the fourth group and, accordingly, are not VAT payers," she said in a comment to the Interfax-Ukraine news agency.

Bets also stressed that the bill does not reduce the cost of the final product for the consumer.

"After all, the reduced rate is introduced only at the stage of delivery of the unprocessed product, and at the subsequent stages of the movement of goods, the standard rate will be applied," she explained.

At the same time, the lawyer pointed out the inconsistency of the bill with European and international standards.

"According to EU legislation, if a reduced VAT rate is introduced at the stage of production of goods, its effect continues until the stage of delivery of the final product to the end consumer. This is the only way to ensure the affordability of some goods or services for consumers," Bets explained.

At the same time, VAT is one of the main sources of replenishment of the state budget, so the bill will affect its income, Ilyashev & Partners believes.

The expert explained that the proposed rules also complicate VAT administration.

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