Business news from Ukraine

Business news from Ukraine

UKRAINE PLANS TO HALVE EXCISE TAX FOR CRAFT BEER PRODUCERS

The Verkhovna Rada intends to reduce the rate of excise tax on beer to UAH 1.39 per liter from UAH 2.78 per liter for producers whose annual production volume does not exceed 200,000 hectoliters, as well as introduce the term “small beer producers.”
At a plenary session of parliament last week 284 MPs with the required minimum of 226 votes backed bill backed at first reading No. 5118 on amendments to Article 215 of the Tax Code of Ukraine.
According to an explanatory note to the document, there are 204 breweries in Ukraine with an annual production volume of up to 3,000 hectoliters, which pay UAH 30,000 per year for a wholesale beer trade license, and 28 breweries with a production volume of up to 200,000 hectoliters (for their annual license is UAH 500,000).
These companies account for 13% of the beer market in Ukraine, while the remaining 87% is divided among nine large beer producers. According to the document, the total tax burden per 1 liter of beer produced by small producers is significantly higher than the same indicator at the enterprises of the beer giants.
In addition, the authors of the bill said that all small beer producers are under significant regulatory and financial pressure, since they pay other tax payments along with the excise tax. In this regard, the reduction in the excise tax rate is proposed.
The bill will determine the entities of applying the reduced rate by introducing the term “independent small brewery” – an enterprise legally and economically independent from any other brewery, geographically located separately from other breweries.
According to the explanatory note, the bill brings the tax legislation of Ukraine closer to the EU legislation, complies with the EU Council Directive 92/83/EEC on the harmonization of the structures of excise duties on alcohol and alcoholic beverages dated October 19, 1992.
As expected, the implementation of bill No. 5118 will result in a decrease in annual budget revenues by UAH 328.3 million due to a decrease in excise tax rates on beer. At the same time, in the long term, due to the expected growth in beer production by about 20 million liters, the budget will be significantly replenished with tax receipts in the form of excise tax, single social security contribution, personal income tax, etc.

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MORE THAN 100 AUCTIONS PLANNED IN UKRAINE FOR MAY-JUNE AS PART OF LARGE AND SMALL PRIVATIZATION

Within the framework of large and small privatization for May-June 2021, more than 100 auctions are planned in Ukraine, said Deputy Head of the President’s Office Kyrylo Tymoshenko.
“At the end of April this year, President Volodymyr Zelensky unlocked large privatization in Ukraine. This is without exaggeration a historic event. Firstly, it will give new life to unprofitable property, and secondly, it will attract billions of dollars in investments. It’s time to turn unprofitable ballast into profit for the Ukrainian budget,” he wrote on his Facebook page on Tuesday.
Tymoshenko said that privatization is now a separate topic of conference calls in the President’s Office.
The next meeting was held on Monday, May 17, with the participation of representatives of the State Property Fund of Ukraine (SPF) and regional state administrations.
“The key thing in our joint work is that large and small privatization in Ukraine is transparent. For the first time in the history of Ukraine, there is a political will for this. The process is already irreversible,” the deputy head of the President’s Office wrote.
He recalled that in 2020 the SPF planned to receive UAH 400 million from privatization. Despite the quarantine, the real income was several times higher – UAH 2.5 billion.
Tymoshenko is convinced that large and small privatization in 2021 opens the way for even larger investments.
At the same time, according to him, the competition is growing. In April 2020, the average number of participants in the auction was 3.67, in April 2021 it was already 4.57.

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UKRAINE CLIMBS 17 POSITIONS IN SOCIAL PROGRESS INDEX TO 63RD PLACE IN 2020

Ukraine in 2020 climbed from 80th to 63rd place in the Social Progress Index among 163 countries with score of 73.38 points versus 66.97 in 2019, according to the index data.
“It is important that in the year of the pandemic, Ukraine improved its position in this global ranking. This means that at least part of the challenges we responded correctly,” Minister of Social Policy Maryna Lazebna told Interfax-Ukraine.
According to the study, the average score of the index among all studied countries is 64.24 points. Last year, the group of countries with a very high standard of living and a moderately high quality of life narrowed from 104 to 71.
“I would also like to note that among 15 countries with a similar level of GDP per capita in terms of purchasing power parity, Ukraine ranked fifth in terms of this index,” Lazebna said.
In addition, the minister noted the high assessment of Ukraine in the areas of equal access for women and men to basic knowledge, protection of property rights for women, equality of political power by gender.
“Also, Ukraine has demonstrated high rates of vulnerable employment, secondary school attainment, availability of affordable mobile telephone subscriptions, access to electricity,” the head of the Ministry of Social Policy said.
However, Ukraine showed significantly worse results in comparison with other countries in terms of life expectancy at 60 years (117th place among 163 countries), and also lags behind in a number of other indicators.
“According to the results given by the authors of the index, Ukraine has high inequality of political power by socioeconomic position, corruption, high levels of greenhouse gas emissions, large number of outdoor air pollution attributable deaths, high number of premature deaths from non-communicable diseases,” Lazebna said.
The Social Progress Index (SPI) measures the extent to which countries provide for the social and environmental needs of its citizens. Fifty-four indicators in the areas of basic human needs, foundations of well-being, and opportunity to progress shows the relative performance of nations. Under the technical guidance of Professors Michael Porter from Harvard Business School and Scott Stern from the Massachusetts Institute of Technology, the group formed a U.S.-based nonprofit called the Social Progress Imperative and launched the Social Progress Index for 50 countries in 2013.

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UKRAINE SEEKS TO INCREASE FDI INFLOW TO $15 BLN PER YEAR FROM 2025

Ukraine intends to increase the inflow of foreign direct investment (FDI) by 2025 to $15 billion per year, while at the end of 2020 their outflow amounted to $420 million, and in 2021 the National Bank predicts a recovery in FDI inflows at the level of $3 billion.
The targets are enshrined in the National Economic Strategy 2030 posted on the government’s website.
According to it, Ukraine should at least double its real gross domestic product (GDP) in 10 years.
Target indicators are also the following: an increase in exports to $150 billion compared to $49 billion in 2020, an increase in labor productivity by at least 1.7 times, and a decrease in the unemployment rate from 8.6% to 6% in 2030.
As indicated in the strategy, the share of the public sector of the country’s banking system by 2030 should be reduced to 25% from the current 54%.
At the same time, the document contains the intention of the Ukrainian government to keep the state budget deficit at the level of 2-3% of GDP, and the ratio of public debt to GDP at 30-40%.
As for the trade priorities of the state until 2030, here the document sets out plans to increase the share of small and medium-sized businesses of total exports to 40%.
International trade should also be facilitated by the reduction of the time for passing customs procedures to average European indicators, as well as the synchronization of the work of the customs authorities.
In addition, the National Strategy provides for an increase in the share of investment imports by at least 30% by 2030.

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FITCH AFFIRMS UKRAINE AT ‘B’, OUTLOOK STABLE

Fitch Ratings has affirmed Ukraine’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘B’ with a stable outlook, the agency said on its website.
“Ukraine’s ‘B’ IDRs reflect its track record of multilateral support and a credible macroeconomic policy framework that has underpinned a relatively high degree of resilience to the coronavirus shock. Ukraine’s human development indicators compare favorably with the peer group, it has a net external creditor position of close to 13% of GDP, and general government debt is somewhat lower than the ‘B’ median. Set against these factors are weak governance indicators, a high degree of legislative and judicial risk to policy implementation, and low external liquidity relative to a large sovereign external debt service requirement,” Fitch said.
“The stable outlook reflects expectations for gradual fiscal consolidation and continuation of macroeconomic policies that helped preserve broad stability in external finances during last year’s shock. The ability to issue eurobonds and available domestic liquidity has provided some limited space to manage a delay over the next six months in completing the first review of the IMF Stand-By Arrangement (SBA). The coronavirus shock temporarily reversed improvements made in recent years in terms of a declining debt burden and normalization of growth prospects after the 2014-2015 geopolitical and economic crises. At the same time, the political position of the administration has weakened somewhat and recent Constitutional Court policy reversals further underline the risks to SBA compliance, which constrain the rating,” according to the document.

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MODERN AQUA PLANS TO PROCESS FISH IN KROPYVNYTSKY

Modern Aqua Technology (Mykolaiv) plans to reconstruct the administrative building and garage located in the city of Kropyvnytsky with a total area of 605 sq m in the workshop for the production of fish semi-finished products with a daily processing capacity of three tonnes, the information of the Unified Register of Environmental Impact Assessment of the Ministry of Environmental Protection and Natural Resources of Ukraine says.
According to it, the company wants to convert the existing office building (area of 234.9 sq m) and a garage (370.9 sq m) into a workshop for processing freshly frozen and fresh river fish into fish semi-finished products, with a total capacity of up to 1.8 tonnes per day. The workshop will receive fish, carry out its sorting, defrosting, cleaning, cutting into fillets and portions, packing in plastic trays and cooling.
Modern Aqua Technology is also considering the option of installing equipment for the production of dried fish in the shop, but this measure requires large investments and carries increased sanitary risks, therefore, at the moment it is unacceptable for the company.
According to the register, the company intends to work 256 days a year in one shift. According to the document, the territory of the proposed activity is located at a considerable distance from the zone of residential and public buildings and does not imply a significant negative impact on the environment.
The operation of the processing plant is expected to increase the range of semi-finished fish products available in the region, create new jobs for the local population and increase revenues to the city budget.
According to the Unified State Register of Legal Entities and Individual Entrepreneurs, the ultimate beneficiary of Modern Aqua Tekhnology LLC (until February 2021 – Magnes Trade LLC) is Ivan Pohorily (Mykolaiv), whose main activity is the production of fertilizers and nitrogen compounds.

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