Draft Law of Ukraine

"On Amendment of Some Legislative Acts of Ukraine on Collection of Excise Duty"

This draft law provides for amendment of the Decree of the Cabinet of Ministers of Ukraine “On Excise Duty” for the purpose of exempting producers of excisable goods from payment of excise duty when they export excisable goods from Ukraine. It is proposed to make similar amendments to the Law of Ukraine “On Excise Duty on Alcohol Drinks and Tobacco Products”.

Current versions of the above legislative acts do not specify requirements for exportation of excisable goods from Ukraine by producers thereof. Inasmuch as the draft law stipulates that excise duty shall not be collected on goods exported by their direct producers, substantial volumes of exported goods will be subject to excise taxation, which, in fact, distorts the nature of this tax and causes ungrounded increase in prices on exported goods.

It is proposed to reduce, from 90 to 30 days, the term within which the those producers of alcohol drinks, who use non-denatured ethyl alcohol, shall have the right to deferral of the excise payment. The period for payment of excise duty, if reduced from 90 to 30 days, will restrict possibilities of business entities to use tax bills or bank guarantees during period of production of alcohol drinks with utilization of ethyl alcohol. Reduction of the excise duty payment periods will make producers of alcohol drinks to reduce periods of alcohol drinks production and this, in certain instances, is hardly possible if to take into account technological peculiarities of production of some categories of alcohol products.

This draft provides for deletion of Articles 4 and 5 from the Law of Ukraine “On the Rates of Excise Duty and Import Duty on Some Vehicles”. These Articles set forth privileges related to payment of excise duty by Ukrainian producers on automobiles, motorcycles as well as on components used to produce vehicles.

According to this draft, excise duty rate shall be raised for motor fuel mixes from EURO 30 to EURO 60. Application of the rate equal to EURO 60, as it is envisaged in the draft law, will deprive production of the said products of any sense.

Production of biofuel can be developed at the condition the state applies a series of limiting measures, in particular, for the account of implementation of a reasonable tax policy related to production of motor fuel mixes. Inasmuch as the use of motor fuel mixes helps to substantially reduce discharge of dangerous substances into the atmosphere, such motor fuel mixes are considered biofuel which allows to resolve the problem of environment safety improvement, and this is especially significant for metropolises.