Agriculture ministry to insist on retaining special VAT regime for farmers at meeting with IMF

"The Agricultural Policy and Food Ministry will at a meeting with the IMF insist on retaining the beneficial VAT taxation regime for farmers… We will try and insist, and convince, that it must not be done, as the Finance Ministry failed to convince them," Deputy Agricultural Policy and Food Minister Yaroslav Krasnopolsky said at a roundtable talk entitled "What is Threatening the 2016 Agrarian Season?" in Kyiv on Wednesday. He said that the cattle breeding sector would suffer the most as a result of the beneficial VAT taxation regime being scrapped. According to Director General of the Ukrainian Agribusiness Club Taras Vysotsky, the sector would decline by more than 15%. MP Oleksandr Bakumenko (Petro Poroshenko Bloc) said that currency revenue from exports of agricultural products would be reduced by at least $2 billion if the regime is scrapped As reported, the special taxation regime allows farmers to retain VAT accrued for the cost of goods and services and not pay it to the national budget. The coalition agreement supported retaining tax benefits for farmers until 2018. The updated memorandum of cooperation between Ukraine and the International Monetary Fund (IMF) states that the benefits should be revoked in 2016. Large agrarian associations in Ukraine oppose the revoking of VAT benefits, saying that this would cause a fall in agricultural production and would reduce national budget revenue due to a fall in exports of agricultural products. According to the Agricultural Policy and Food Ministry, direct subsidies required for Ukraine to join the World Trade Organization (WTO) to support agriculture are around UAH 3 billion, while in 2014 farmers accumulated VAT worth around UAH 20 billion. According to the draft tax reform proposed by 114 MPs, VAT benefits for all farmers should be scrapped, apart from cattle breeders and grain exporters.