The biggest stumbling block was the accrual of a full-scale budget subsidy for those producers who are simultaneously engaged in both subsidized and non-subsidized activities. It is a question of the imperfection of the
Decree of the Cabinet of Ministers of Ukraine as of February 21, 2017 No. 179 "On approval of the Order of Procedure and the form of the Register of Recipients of Budget Subsidies, as well as the procedure for providing relevant information to the State Fiscal Service and the State Treasury Service."
According to this decree, agricultural enterprises that are simultaneously engaged in subsidized and non-subsidized activities, for example, growing grain and milk and meat production, face the problem of not receiving in full the "budget subsidy for the development of agricultural producers and stimulating the production of agricultural products " in order to pay the incurred costs for VAT. So, instead of 100% of the subsidy, they receive 55% because of a legislatively defined incorrect mechanism for VAT calculation in the abovementioned decree.
The Association of Livestock Breeders of Ukraine learnt about this issue from its members, in particular, LLC " Buchachahrokhlybprom " (Ternopil region) - a large enterprise that deals with both plant growing and animal husbandry, and is one of the leaders in the region for the production of milk. Chairman of the Supervisory Board of LLC " Buchachahrokhlybprom ", Hero of Ukraine, chairman of the Agricultural Development Union "Agrarian Union of Ternopil region" Petro Ivanovych Hadz drew attention to the imperfect formula of miscalculations of compensation of budgetary subsidies, according to which the enterprise receives a significant part of its budgetary subsidies.
The scheme for calculating subsidies is rather complicated, but briefly, it is convenient for the State Fiscal Service and the State Treasury, since the VAT on the subsidized and non-subsidized activities is summed up, and the final amount of funds to be returned to the payer is calculated from the total VAT paid by the entrepreneur for the subsidized and non-subsidized activities. This facilitates the administration of VAT. It is calculated automatically. But, in fact, the entrepreneur loses a large amount of money. Thus, it becomes unprofitable for the enterprise to engage in subsidized activities.
According to Petro Hadz, one of the mechanisms for solving the problem will be the delineation in the tax declaration of the amount of subsidized and non-subsidized activities for 2 applications, then the budget subsidy will be calculated separately for each activity, that provides fair VAT refund, which in turn will allow the enterprise to develop more.
This issue has already been raised by the Association of Livestock Breeders of Ukraine at a round table on the topic "Development of meat production and exports to Ukraine", organized on July 26, 2017 at the initiative of the Association of Livestock Breeders of Ukraine, the Ministry of Agrarian Policy, the Office of Reform Support with the support of the USAID project "Support to Agrarian and Rural Development" participation of specialized bodies, experts, branch agrarian associations, international organizations, producers and largest exporters of livestock products from different regions of Ukraine.
In addition, the positive decision of this issue was supported by the Prime Minister of Ukraine Hroisman during a working trip on livestock issues in July 2017 in Ternopil region to the PSC “Ivanivske”, in which LLC " Buchachahrokhlybprom " and the chairman of the supervisory board of " Buchachahrokhlybprom ", Petro Ivanovych Hadz, also took part.
Thus, given the importance and urgency of the problem, the chairman of the Association of Livestock Breeders, Irina Ponomar, addressed the corresponding official letter to the Deputy Ministry of Agrarian Policy and Food of Ukraine on European Integration Trofimtseva O.V. with a request to initiate on behalf of the Ministry of Agrarian Policy amendments to the Decree of the Cabinet of Ministers of Ukraine as of February 21, 2017 No. 179 "On Approval of the Procedure for the Maintenance and Form of the Register of Recipients of Budget Subsidies, as well as the procedure for providing relevant information to the State Fiscal Service and the State Treasury Service" the volume of agricultural commodity producers, simultaneously engaged in subsidized and non-subsidized activities, budget subsidies for the development of agricultural products and stimulating the production of agricultural products.
The Ministry of Agrarian Policy reacted positively and expeditiously to this appeal. The Ministry has already begun work to improve the mechanism for calculating and paying a budget subsidy, which the Deputy Minister of Agroindustrial Complex for European Integration Olga Trofimtsova noted in a letter as of 21.08.17. According to her, the draft of the relevant normative legal act will be posted on the official website of the Ministry of Agrarian Policy for its public discussion, and in the near future it will be agreed upon and adopted by the Government.
Thanks to our joint work with the Ministry of Agrarian Policy, another important step has been taken in the direction of assistance in the development of agrarian enterprises, the chairman of the Association of Livestock Breeders of Ukraine Irina Ponomar has said. Such actions will contribute to increasing the production of subsidized products and reducing the impact on the size of sales of other products.
Tomorrow, the head of the ATO, Irina Ponomar, as part of a working delegation from the Committee on Agrarian Policy and Land Relations and the Ministry of Agrarian Policy and Trade will visit the capacity of " Buchachahrokhlybprom ", where among other urgent issues the issue of subsidies for a more detailed discussion will be raised again.