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TAX CODE AMENDMENTS PROPOSE ELIMINATION OF SPECIAL VAT REGIME FOR AGRICULTURE FROM 2016

KYIV. Aug 5 (Interfax-Ukraine) – The revised Memorandum of Economic and Financial Policies of the Ukrainian authorities, prepared as part of cooperation with the International Monetary Fund, includes a proposal to eliminate the special value-added tax (VAT) regime for agribusinesses in Ukraine as of January 1, 2016.

“We plan to submit to parliament by September, Tax Code amendments, which will introduce the general VAT regime in agriculture effective January 1, 2016. This measure will yield about 0.3% of GDP,” the memorandum said.

The special regime currently allows farmers to keep the sum of VAT charged on the value of supplied goods and services, which should be transferred to the national budget under the general regime. The special regime was stipulated in the coalition agreement which was signed by the leaders of the ruling Ukrainian political parties in November 2014 which will be in effect until 2018.

Large agribusinesses repeatedly criticized the cancellation of VAT benefits, saying that it may trigger a decline in agricultural output and a reduction in payments to the national budget due to a decrease in farm produce exports.

The original wording of the memorandum with the IMF also included the provision to eliminate the special VAT regime.

On July 16, Ukraine’s Verkhovna Rada passed draft law No. 2173a, which suggests a change to the system of electronic administration of VAT and the cancellation of VAT benefits for agrarians. A group of lawmakers headed by Oleksandr Bakumenko from the Petro Poroshenko Bloc blocked the parliament’s rostrum, demanding that the provision cancelling the special regime be deleted from the bill. The group insisted it was needed as the Ukrainian agrarian sector is facing a difficult economic situation.

Ukrainian Prime Minister Arseniy Yatseniuk in turn accused the lawmakers of lobbying for large agricultural holdings’ interests and suggested a compromise when the special regime will remain for small farms whose land bank is up to 3,000 hectares and annual revenue does not exceed UAH 50 million.

Yatseniuk said that such farms account for 98% of all agricultural producers registered in Ukraine.

After the provision was withdrawn from the bill, the document was supported by 233 MPs.

EBRD COULD ISSUE EUR55 MLN TO SOUFFLET TO REPLENISH WORKING CAPITAL

KYIV. Aug 5 (Interfax-Ukraine) – The European Bank for Reconstruction and Development (EBRD) is considering issuing EUR55 million to the subsidiaries of Groupe Soufflet in Ukraine to replenish its working capital related to procurement, production and sale of agricultural products.

According to the bank’s website, the decision will be made on September 2.

Providing seasonal working capital to the subsidiaries of Soufflet Groupe will give the required support to farmers to enable them to invest in seeds, fertilizers, plant protection agents and harvesting.

The debt financing of the working capital of Soufflet will allow the bank to support investment in primary agriculture by supporting small and medium-sized farms.

French group Soufflet owns grain elevators and is engaged in the grains trade. The company owns 42 plants in Europe, Asia and America. Soufflet is one of the world’s major suppliers of malt. The group operates in 17 countries.

In Ukraine, Soufflet Group has invested in malt production, malted barley and wheat storage. Soufflet Group intends to invest almost EUR250 million in the construction of a terminal at Illichivsk seaport.

KYIV PROMISES IMF TO IMPLEMENT SERIES OF ANTI-CORRUPTION MEASURES – UPDATED MEMORANDUM

KYIV. Aug 5 (Interfax-Ukraine) – As part of the program of financial assistance from the International Monetary Fund (IMF), Ukraine has pledged to implement a number of urgent measures for combating corruption.

According to the updated memorandum between Ukraine and the IMF, Kyiv pledges to ensure the activities of the National Anti-Corruption Bureau (NAB), to provide it with timely access to relevant information from other public institutions by end-September 2015.

The Ukrainian government also promised to ensure the transparent elections of the head of the anti-corruption prosecutors on a competition basis. Kyiv also promised not to make any changes to the Law on Prosecutor’s Office concerning the procedure of appointment of without agreeing them with the IMF.

The Ukrainian government will also ensure that the NAB is fully operational by end-January 2016, allocation of necessary infrastructure (e.g., hardware; software; access to administrative, law enforcement, and commercial databases; vehicles; special tools; investigative material), supported by the appropriate budgetary allocation if necessary, operation of a hotline, including back office to identify cases deserving pre-trial investigation.

Kyiv also pledged to implement the anti-money laundering (AML) framework. The NBU will develop risk-based off-site and on-site AML supervisory tools, focusing on risks related to domestic politically exposed persons, by end-December 2015.

Kyiv also plans to implement asset disclosure requirements for high-level officials. By end-December 2015, the Ministry of Justice will ensure that applicants and newly appointed officials to high-level positions under the NAB’s jurisdiction file their asset disclosures electronically.

In line with legislation, all high-level officials will report their assets electronically by end-April 2016. The disclosures will be directly and freely available to the public on a single website shortly after submission.

By end-December 2015, a law will be adopted which strengthens the provisions in the Code of Civil Procedure on order for payment for domestic transactions and on garnishment of bank accounts.

The updated memorandum envisages that as part of education reforms the number of schools will be reduced by 5% after the end of the 2015-2016 academic year. Expected savings will be reinvested in the sector to upgrade the school and class infrastructure and support student transportation.

WEATHER CENTER FORECASTS SUNFLOWER SEED YIELD AT 10.3 MLN TONNES IN 2015

KYIV. Aug 4 (Interfax-Ukraine) – The yield of sunflower seeds in Ukraine is projected to reach 10.3 million tonnes, head of the Ukrainian Weather Center’s agrometeorological department Tetiana Adamenko said at a press conference in Kyiv on Tuesday.

“We think the crop capacity will be about 20.1 centners [one metric centner equals 100 kg] per hectare, and the gross yield could reach 10.3 million tonnes. We should proceed from the fact that the areas under sunflower crops this year are about 5 million hectares, which is less than in 2014 when it was 5.2 million hectares, and in 2013 it was 5 million hectares,” she said.

According to her, this year’s harvest will remain almost unchanged compared to last year, when Ukraine harvested about 10 million tonnes.

She also confirmed that the maize yield forecast is set at 26-27 million tonnes. She added that high temperatures in some regions could make farmers gather maize for silage, however she did not give more details about the size of the maize crops which could be used for silage.

In her words, there will be a favorable period after August 20 for sowing winter rapeseeds, but there could be a delay due to the absence of rain, which may affect any future harvest.

The gross yield of soybeans is expected to reach last year’s level. It may be a little higher than 3.8 million tonnes due to an increase in areas sown with soybeans.

As reported, the Ukrainian Weather Center forecast that the gross yield of grain in Ukraine in 2015 will reach 60.5 million tonnes.

ANTONOV INTRODUCES SYSTEM TO CONTROL LIFECYCLE OF NEW AIRCRAFT MODELS BASED ON SIEMENS PLM SOFTWARE

KYIV. August 4 (Interfax-Ukraine) – State enterprise Antonov (Kyiv) has introduced a modern product lifecycle management (PLM) system for new aircraft models based on Siemens PLM software, which uses the “without drawings” technology, which is based on 3D models, the press service of the company has reported.

“The use of modern digital technologies in the creation and maintenance of complex technical objects like aircraft is the requirement of time, a prerequisite for the successful integration of the enterprise into the world aircraft industry,” the press service said, citing Antonov Acting President Mykhailo Hvozdev.

He said that Antonov experts have developed a normative and methodological base of electronic projects and have formed a database of electronic models of standard, unified, purchased components (about 300,000), as well as other materials used.

“In this direction we have been successfully cooperating with Siemens for three years and are ready to continue this cooperation,” he said.

Antonov has for the first time fully used the new technology in the design and building of the first prototype of the transport An-178 aircraft.

“It allows for reducing costs for implementing the program, significantly reduce the terms and improve the quality of manufacturing certain components and aircraft as a whole,” the report said.

IMF NOTES SIGNS OF ECONOMIC STABILIZATION IN UKRAINE, SAYS BANKING SYSTEM RECOVERY IS KEY TO GROWTH

KYIV. Aug 4 (Interfax-Ukraine) – The Ukrainian economy is showing signs of stabilization, however to restore economic growth it is crucial to continue the current balanced policy and structural and institutional reforms, the International Monetary Fund (IMF) has said.

“The Ukrainian economy remains fragile, but encouraging signs are emerging. In recent months, the exchange rate has stabilized, domestic-currency retail deposits have been increasing, and the pace of economic decline is moderating. Continued prudent policies and further reforms should allow the economy to turn the corner and growth to resume in the period ahead,” the IMF press service reported, citing IMF First Deputy Managing Director David Lipton who was speaking after the IMF Executive Board’s discussed the issue of the second tranche of the EFF program for Ukraine.

“Restoring a sound banking system is the key for economic recovery. To this end, the strategy to strengthen banks through recapitalization, reduction of related-party lending, and resolution of impaired assets should be implemented decisively,” he said.

“Maintaining an appropriately tight monetary policy and building up official foreign exchange reserves will be critical to entrenching external stability and anchor inflation expectations. As disinflation takes root, monetary policy can be carefully eased to support economic activity. Removal of administrative measures on foreign exchange operations should proceed in a gradual and sequenced manner, once the enabling conditions are in place,” Lipton said.