VAT cancellation for housing construction to cut production cost by 10%, say constructors

Kyiv, June 11 (Interfax-Ukraine) – The cancelation of VAT on housing construction would cut its production cost by 10% and cut the price of apartments by 8% in the future, according to representatives of Ukrainian construction companies.

"Constructors support the initiative," the head of the Ukrainian Construction Association (UCA) Lev Partskhaladze said at a press conference at Interfax-Ukraine on Friday, commenting on the requirement foreseen in the draft new Tax Code.

"The production cost of construction would fall by 10% and housing would become more affordable, so demand would grow," he said.

Vice President of the Construction Chamber of Ukraine, Stanyslav Stashevsky, said that the chamber, which unites over 250 large construction organizations, is backing the requirement.

In turn, Deputy Regional Development and Construction Minister Dmytro Isayenko expressed hope that the Tax Code would be passed by the end of this year and the VAT cancellation requirement would take effect from January 1, 2011.

"According to our preliminary calculations, this would cut the price of one square meter from 5% to 8%, depending on the complexity of the project and the volume of construction and assembly work," Isayenko said.

Representatives of construction organizations said that VAT cancellation would cut the price of one square meter by 8%.

"The fall would be 7-8%. The prices of projects, which would start building in 2011, would be cut and we'll see the effect in late 2011-2012," Partskhaladze said.