KYIV. July 27 (Interfax-Ukraine) – The Agricultural Policy and Food Ministry of Ukraine has proposed that a zero excise duty should be set for ethyl spirit used in the production of diluted acetic acid, perfumes and cosmetics, technical and chemical products.
According to a draft law on amending Article 229 of the Tax Code of Ukraine regarding taxation and regulation of the production and use of spirit, posted on the ministry’s website, the measures will stimulate the development of the spirit sector.
The ministry said that since 2005, the requirement to set a beneficial excise duty on ethyl rectified spirit, which is used to produce vinegar, and ethyl denature spirit for production of perfumes and cosmetics, chemical and other spirit-containing technical products. This resulted in the reduction of production of the above-mentioned products and the drop in spirit production, stoppage of distilleries, reduction of workforce and a decline of tax payments to the budgets of all levels.
At present, the full excise duty is set on spirit irrespective of the purpose of its use (UAH 70.53 per liter of 100% spirit), which restricts its application.
According to an explanatory note to the draft law, household detergent producers refused to use technical spirit made in Ukraine at the high price, as the cost of spirit considerably increases the price of detergents compared to the similar imported products. Ukrainian spirit-containing technical products were replaced by similar goods from Belarus, Moldova, Lithuania and Poland.
The ministry said that the annual production capacity of state distilleries totals over 60 million decaliters, which is four times bigger than the market’s needs. Exports are restricted, as the Association Agreement between Ukraine and the EU includes a quota of 27,000 tonnes.
“The zero excise duty for the said types of spirit would allow harmonizing the structure of the excise duty under Directive 92/83/EEC and it would allow loading Ukrainian distilleries, improve their financial and economic state and increasing payments to the national budget.
