Ukraine: cancellation of the VAT refund on oilseed exports to reduce the purchasing prices – expert


In Ukraine, the planned cancellation of the VAT refund regime for the export of oilseeds (sunflower seed, rapeseed, soybeans) may lead to some decreasing of the purchasing prices in the country by 15-20%, declared the brand manager at the company Pottinger, Vladimir Mirnenko.

According to him, selling of a finished product or a semi-finished product is much better than exporting of raw materials. In order to stimulate the domestic processing industry, the authorities canceled the VAT refund on oilseeds. And in theory, in the long-term it should bring positive results. For example, increasing of foreign exchange earnings (vegetable oils are more expensive than oilseed raw materials), he explained.

However, the expert considered that traders will not want to reduce their level of income flow, which will reduce the purchasing prices in the country by 15-20%. Large-scale oilseed processors will receive benefit from the situation, because they already have the required capacities to produce oils, as well as sales channels abroad. In addition, they win receive almost double benefit: they will purchase the raw materials at cheap prices, and then also get the VAT refund, said V.Mirnenko. He added that next year Ukraine is expected for reformatting of the crop rotation towards reduction of the planted areas under rapeseed, soybeans, and sunflower seed.

According to the expert, agricultural producers need to receive some "buffer time", which will allow to enterprises to invest in oilseed processing, found the required sales channels, etc., because the issue covers increasing of oilseed by-products sales, which need developing of new buyers.

Such time will allow to small-scale enterprises to agree on some joint processing capacities or change their crop rotation structures with the minimum negative consequences. Some transition period will allow minimizing the negative moments of the short-term prospect, and getting advantages of the long-term prospect, the expert recapped.