Draft Law of Ukraine

"On Prolonging Validity of Some Norms of the Law of Ukraine "On Value Added Tax"

The draft suggests prolonging for one year (until January 1, 2005) validity of privileges on payment of value added tax for some agricultural producers, as well as providing state support in the form of subsidies to such separate producers.

The draft envisages prolonging validity of sub-clause 6.2.6 of the Law of Ukraine "On Value Added Tax", which sets forth zero rate of value added tax for transactions on sale of milk and meat in live weight to processing enterprises by agricultural commodity producers of all types of ownership and management.

Also the draft suggests prolonging validity of clauses 11.21 and 11.29 of the Law of Ukraine "On Value Added Tax".

Clause 11.21 sets forth that the amount of funds, obtained by the budget from payment of value added tax by processing enterprises for milk and dairy products and meat and meat products sold thereby, shall be fully transferred exclusively for payment of subsidies to agricultural commodity producers for milk and meat in live weight sold thereby to processing enterprises.

This clause establishes that the amount of value added tax subject to payment to the budget by agricultural enterprises for milk, cattle, poultry, wool sold thereby, as well as dairy products and meat products manufactured at their own processing units, shall be fully at the disposal of these agricultural enterprises and shall be aimed at supporting their own production of cattle-breeding and poultry goods.

In its turn, clause 11.29, whose validity is suggested to be prolonged, suspends validity of clause 7.7 of the Law of Ukraine "On Value Added Tax", that sets forth the procedure for calculating the amount of tax subject to payment to the budget or compensation from the budget and terms for settlements with the budget. Also clause 11.29 suspends clauses 10.1 and 10.2 related to responsibility of taxpayers and control over payment of value added tax. Validity of the above-mentioned clauses 7.7, 10.1 and 10.2 is suspended only in part dealing with payment to the budget of value added tax on transactions related to sale of goods (works, services) of domestic production.

Also, according to clause 11.29 of the Law of Ukraine "On Value Added Tax", the amounts of value added tax, which remain at disposal of agricultural commodity producers, shall be used thereby for purchasing material-technical resources with industrial designation.