September 1, 2011

Tax effect on Ukraine's grain exports to remain throughout 2011

Effect of the customs duties on Ukrainian grain exports is expected to continue until the end of this year, said the Minister of Agrarian Policy and Food of Ukraine, Nikolai Prysiazhnyuk.

According to Prysiazhnyuk, the Ministry still has one week to negotiate with the Ministry of Finance and the Ministry of Economic Development, but N.Prysiazhnyuk thinks that by the end of the current year nothing changes.

The Ministry of Finance did not support the planned cancellation of grain export duties. The Ministry of Finance refers to the arrangement with the International Monetary Fund, by which the Government should not abandon any revenues to the budget.

According to calculations of the Ministry of Agrarian Policy, in the terms of the forecast of grain production at 50 million tonnes and exports of 24 million tonnes in 2011/12 marketing year the revenues to the budget may exceed the level of UAH4 billion (US$499,600).

Thus, the Ministry of Agrarian Policy plans to support exporters and agricultural producers in another way. The Ministry wants to compensate the duties by reducing tariffs on logistics. According to Yuri Gordeychuk, General Director of the grain trading company Valars, logistics costs form 15% of the grain cost. For example, reducing the cost of grain shipping from the elevator to the port by at least 20%, and cancellation of payment for the certificate of GMOs would compensate the losses caused by the action of customs duties.