The abolition of export VAT refund is hardly the best solution to encourage processing — Buchatskiy

The decision of the Ukrainian Parliament (the Verkhovna Rada of Ukraine) to abolish the value added tax (VAT) refund for the export of soybeans, rapeseed and sunflower from March 1, 2018 is hardly the best solution to encourage processing. 

This was stated by the Head of the Agri-Trading Firm Agro-Delo Igor Buchatskiy.

"The cost of an oil processing plant reaches tens of millions of dollars, only large companies can afford it, which they did without novation. And to force those who simply produce and export, in such ways it will not work. This is beneficial only to a few large companies, who are well known in the market. The cost of raw materials is reduced for them. If a farmer has 4 thousand hectares of land, and 1 thousand hectares is under oilseeds, then, for him, processing is, first, not interesting, and secondly, it is too expensive. Oil processing is a business where you make money on volume, and not because you produced some gorgeous oil," he said.

In addition, Igor Buchatskiy added that, Ukraine has international partners who rely on raw materials to make their production capacities work.

"And if we process everything, who will we sell it to?" Europe will protect its processors, we will not trade there. There is a certain logic in why we export these crops," the director of ATF Agro-Delo stressed.

Igor Buchatskiy noted that the state should create common rules and maintain the economic stability in the country.

Reference: The Ukrainian Parliament voted to abolish value added tax (VAT) refund for the export of soybeans, rapeseed and sunflower from March 1, 2018. Experts say that this will cause UAH 10 billion losses for agrarians.