The Verkhovna Rada of Ukraine adopted as a basis the “agricultural” bill #8166-d, which introduces the regime of export security and regulation of the balance of payments of Ukraine for exports of agricultural products during martial law, which allows to ensure the full and timely receipt of foreign currency proceeds.
MP Yaroslav Zheleznyak (Golos faction) said in a Telegram channel that draft law No. 8166-d “On Amendments to the Customs Code of Ukraine and other laws of Ukraine on the introduction of special export procedures during martial law, state of emergency” was adopted as a whole at Thursday’s meeting by 231 votes (with the minimum required 226).
According to the explanatory note to the document, the bill allows the export of goods subject to the export security regime exclusively to legal entities – value added tax payers, whose registration is not suspended. In addition, in order to export goods for which the export security regime is applied, they will need to have a positive history in terms of the return of foreign currency proceeds for the previous six months and the absence of violations of currency legislation.
It is specified that if the exporter does not have a positive history or if its volume of export transactions considerably exceeds the previous six months, a legal entity must register the relevant tax invoices in the Unified Register of tax invoices.
“In such case the exporter will receive the right for budget refund for operations on export of goods outside the customs territory of Ukraine, in relation to which the export security regime is applied, only if the bank of Ukraine, which services such taxpayer, completes currency supervision over the resident’s compliance with the deadline for settlements of the respective operation on export of goods,” the explanatory note to the document specifies.
According to the author of the bill, such measures are caused by a significant debt of non-residents to the Ukrainian subjects of foreign economic activity, which amounted to $7.37 billion as of January 1, 2022, of which $5.08 billion was owed on export operations. At that, during nine months of 2022, the debt increased to $7.62 billion, and the debt on export operations increased to $5.45 billion.
“The adoption of the bill will facilitate the receipt of foreign currency proceeds and will prevent unjustified capital flight from the state by creating safeguards to reduce the cases of purchase of agricultural products for cash and the subsequent export of these products without the return of foreign currency proceeds from such transactions in Ukraine,” the explanatory note to the bill states.
Earlier, the Ministry of Agrarian Policy and Food of Ukraine specified that the draft law No. 81660-d agreed with the agrarian sector was proposed instead of the draft law No. 8166 the provisions of which were strongly criticized by agricultural associations. The amended document allows farmers to use the tax credit as collateral for the return of foreign exchange earnings and not to use working capital, as it was stipulated in the basic version of the bill.
According to the ministry, the document allows legal agribusiness to export agricultural products without any additional regulation within the established limit. The monthly amount of this export limit is calculated as double the amount of the average monthly volume of foreign exchange earnings returned by a legal entity, calculated for the previous six months. Within the limit, exports can be made according to the current procedure, without any additional legislative regulation.
In the event that the company’s export needs exceed the calculated limit, a tax invoice at the rate of 14% must be registered for this overtime amount. After the foreign currency proceeds are returned, it is possible to adjust such an invoice at the tax rate from 14% to 0% and receive a VAT refund on it.
“In fact, this makes it possible to use a tax credit as collateral for the return of foreign currency proceeds, and not just cash in hand, as it was envisaged in the basic version of the bill,” the Ministry of Agrarian Policy emphasized in the message.
