UKRAINIAN GOVERNMENT AGAIN HOLDS UP PAYMENT OF VALUE-ADDED TAX REFUNDS OWED TO GRAIN EXPORTERS AND OTHER PRIVATE COMPANIES

Ukraine said to have the worst track record in the world regarding vat tax refund payments

The government of Ukraine is once again holding back the payment of huge sums of value-added tax refunds, for long periods of time, owed to grain exporters and other private companies. Ukraine is reported by many private companies to have the worst track record of any country in the world regarding vat tax refund payments, according to the U.S.-Ukraine Business Council (USUBC).

Many grain exporting companies report over and over again to the U.S.-Ukraine Business Council (USUBC) that they are owed more vat tax refunds by the government of Ukraine for longer periods of time than they are owed by any other government in the world. USUBC has always had the vat tax refund problem as one of the top five issues it brings up regularly with the government of Ukraine.

Without a doubt one of the most negative aspects of the face that Ukraine now presents to the international business community is the government’s punitive and retrogressive attitude regarding the return of value-added tax refunds amounting to billions of hryvnia that are either now due or long overdue to many of Ukraine’s most dynamic international export earning companies, the U.S.-Ukraine Business Council (USUBC) said Tuesday.

The government of Ukraine wrongfully, corruptly and illegally uses the vat tax refunds that belong to private companies to finance its spending operations. The government uses the funds without the permission of the private companies and of course does not compensate them for the involuntary use of their private funds.

This rather 'normal' operating procedure on the part of the Ukrainian government to exploit and abuse the private business sector needs to stop now. The practice is not right, is not fair and is not legal according to Ukrainian law.

UKRAINIAN GRAIN ASSOCIATION CALLS ON GOVERNMENT
TO URGENTLY PAY GRAIN EXPORTERS VAT REFUNDS

In a news conference last Thursday in Kyiv the Ukrainian Grain Association (UGA), which represents grain traders in Ukraine, urged the government to repay the delayed value-added tax (VAT) refunds to grain exporters as quickly as possible. The government's debt to agricultural commodity exporters is about UAH 3.5 billion (approximately $440 million), UGA President Volodymyr Klymenko stated at the press conference.

The UGA urged that the government repay UAH 3 billion in debts to traders in November and December. Klymenko claims that the VAT refunds have become problematic because of insufficient funds stipulated in the national budget for them. In particular, he said that the 2009 state budget earmarks UAH 36.5 billion for VAT refunds, while the needed amount if the exports remain at last year's level stands at UAH 51 billion.

The UGA president says that the 2010 national budget foresees UAH 20 billion for VAT refunds. He said it is appropriate to increase the sum to UAH 50 billion. Klymenko said that agricultural financial experts say that the producers of grain and oil-yielding crops may lose up to UAH 10 billion from the 2009 harvest because of an increase in costs in the marketing chain and problems with VAT reimbursement," he added.

AMERICAN CHAMBER OF COMMERCE IN UKRAINE EXPRESSES
SERIOUS CONCERNS ABOUT VAT REIMBURSEMENT DELAYS

The American Chamber of Commerce in Ukraine in their morning news service last Thursday said, "Over the years, utilizing all available opportunities and advocacy communication channels, the Chamber in conjunction with many Members who represent different industry sectors, continuously raised the issue of VAT reimbursement expressing serious concern in regards to ongoing reimbursement delays, growing debts and corrupt refund schemes which the private sector unfortunately deals with in Ukraine.

"Particularly, the issue of VAT refunds within the Agrarian sector was raised at the Chamber Agrarian Market Leaders Breakfast that was held on Thursday, November 12th. CEOs, which represented the leading international and domestic companies who are among the biggest investors and employers within the agrarian sector, agreed that the systematic lack of VAT refunds is negatively impacting business operations, decreasing manufacturing volumes, causing employment reductions and harming the trust of investors as well as lowering the competitiveness of the industry and adversely impacting the profitability of Ukrainian farmers.

"According to the opinion of all participants, the country's investment attractiveness and competitiveness of the economy are also influenced by this particular problem, which is continuously communicated by all investors to their headquarters, Ukrainian and foreign media and international financial institutions who closely monitor the market.

"The attendees of the breakfast have agreed to further develop a position and strategy regarding the issues of VAT refunds within the agrarian sector with industry based associations the operating in the agricultural sphere, to continue the systematic and goal oriented campaign aimed at influencing the State authorities as well as attracting public attention to the consequences of the VAT issue for the general competitiveness of Ukraine.

"The Chamber will continue to advocate on behalf of the Membership regarding the implementation of systematic reimbursement of VAT and is thanking all Members for their proactive position and continuous support."

UKRAINIAN GOVERNMENT NEEDS TO STOP
ITS EXPLOITATION OF PRIVATE SECTOR

The U.S.-Ukraine Business Council (USUBC), on behalf of its over 100 member companies, joins with the Ukrainian Grain Association (UGA), the American Chamber of Commerce in Ukraine (Chamber), other business associations in Ukraine and their hundreds of private business members to urge the government of Ukraine to finally deal honestly and fairly with the vat tax refund issue, allocate adequate funds to pay the refunds on time and to stop the government's exploitation of the private business section, the engine of economic growth that is creating new jobs and wealth for the people of Ukraine and taxes for the government.
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17/11/2009 - U.S.-Ukraine Business Council (USUBC), www.usubc.org