President of Ukraine Volodymyr Zelensky has signed a law restoring the value added tax (VAT) rate for part of agricultural products from 14% to 20%, the specified tax rate reduction was in effect from March 1, 2021 to July 30, 2021.
According to data on the website of the Verkhovna Rada, the law on amendments to the Tax Code of Ukraine regarding the rate of value added tax in taxation of transactions for the supply of certain types of agricultural products under No. 1600-IX (bill No. 5425-d) was signed on July 29.
According to the data on the website of the President’s Office, the law is intended to reduce the risks from higher food prices, as well as to create equal conditions for VAT taxation for agricultural producers and processing industry enterprises. The document comes into force on July 30 and applies to tax periods starting from August 2021.
As reported, on July 1, 2021, the parliament returned the VAT rate on livestock products, rye, oats, flax seeds and sugar beets to 20% from the previously reduced one 14%.
The 20% rate will again apply to products with economic activity codes 0102 (live cattle), 0103 (live pigs), 0104 10 (live sheep), 0401 (in terms of whole milk), 1002 (rye), 1004 (oats), 1204 00 (flax seeds), 1207 (seeds and fruits of other oilseeds), 1212 91 (sugar beets).
At the same time, with respect to other grains and oilseeds, the VAT rate is 14%. In particular, the matter concerns goods with codes 1001 (wheat and meslin), 1003 (barley), 1005 (corn), 1201 (soybeans), 1205 (rape seeds) and 1206 00 (sunflower seeds).
Earlier, a number of associations and food industry enterprises asked the president to veto bill No. 3656, adopted by the Verkhovna Rada in December 2020 and reducing the VAT rate on some agricultural raw materials to 14%, since its action entails an increase in the cost of food products by 3-4% and a decrease in the profitability of processing enterprises by 50-70%.
