The Association of Milk Producers welcomes the signing by the President of the Law of Ukraine 3656 on reducing the VAT rate to 14% for certain types of agricultural products!
AMР was among the initiators of lowering the VAT rate on certain agricultural products, primarily milk and dairy products, and supported the promotion of Law 3656. We are confident that the implementation of the law will have a positive effect on agribusiness and combat the agricultural grey market.
Therefore, we expect a consistent expansion of the norm. After all, lowering the VAT rate not only on raw materials, but also on finished agricultural products is the best world practice, which allows making socially significant goods, such as dairy products, more accessible to the final consumer.
Currently, Law 3656 applies to operations on import and supply of certain types of agricultural products on the territory of Ukraine, in particular: 0102 (cattle, live); 0103 (pigs, live); 0401 (for whole milk), 1001 (wheat), 1002 (rye), 1003 (barley), 1004 (oats), 1005 (corn), 1201 (soybeans), 1204 00 (flax seeds), 1205 (feverfew seeds) and rapeseed), 1206 00 (sunflower seeds), 1207 (seeds and fruits of other oilseeds), 1212 91 (sugar beets).
The new law helps to save working capital by farms and processors when purchasing products (because most often it is credit, it also reduces producers' costs), reduces the amount of VAT frozen until the refund, and reduces the attractiveness of illegal fraud in the sale of illegal grain (" scrolls ") - ie the actual theft of VAT from the state budget.
Operations on import to the customs territory of Ukraine of purebred animals and breeding (genetic) resources under the above codes remain exempt from VAT under Article 197.18 of the Tax Code
Transactions that started before the application of the reduced VAT rate are completed at the VAT rate of 20%.
For a detailed explanation of the practical application of the law and the administration of mixed 14-20% VAT (on real examples of real farms) from a tax professional, Deputy Head of the UAC, Adviser to the Deputy Minister of Finance of Ukraine, Olga Bogdanova - see the webinar "Reducing the VAT rate up to 14%: how farmers will work "at the link: