November 7, 2011

Ukraine scrapes plan to refund grain export VAT

Ukraine's parliament on Friday (Nov 4) ditched attempts to reinstate value added tax (VAT) refunds to grain exporters following President Viktor Yanukovich's refusal to support the costly measure.

The parliament approved an amended version of a bill it passed last month which no longer included an article on VAT refunds to grain traders.

Fedir Yaroshenko, Ukraine's Finance Minister, told the parliament in October that the refunds would cost the budget about UAH5 billion (US$625 million) in 2012.

The parliament abolished VAT refunds in July 2011, securing a lucrative revenue stream for the government, and traders have said that this law, combined with grain export duties, choked off export shipments.

Export duties, however, expired on October 22, which could help the country to sell abroad 25-27 million tonnes of grain this season.