Draft Law of Ukraine

"On Amendment of the Law of Ukraine "On the State Budget of Ukraine for 2004"

The draft suggests limiting Article 71 of the Law of Ukraine "On the State Budget of Ukraine for 2004", which prohibits settlements with the budget in non-pecuniary form. Particularly, the draft suggests not applying the above-mentioned requirements to settlements with the budget with application of tax bills of exchange when importing (transferring) to Ukraine's customs territory wheat and rye, as well as their mixtures (code of goods according to the Ukrainian Classification of Commodity for Foreign Economic Activity – 1001 10 00 90, 1001 90 99 00, 1002 00 00 00) (hereinafter referred to as "Grain").

The draft was introduced for the purpose of providing payers of value added tax – Grain importers (as well as sellers of produced (purchased) Grain on Ukraine's territory) in 2004 with an opportunity to reduce the amounts of their tax liabilities from sale of such Grain at the expense of amounts of outstanding budget compensation to them (including from export transactions). Such an opportunity will be stipulated by the Law of Ukraine N 1240-IV "On Amendment of Some Laws of Ukraine Related to Taxation with Respect to Grain Crops", approved by the Verkhovna Rada of Ukraine on October 23, 2003, and which is in fact cancelled when the Law of Ukraine "On the State Budget of Ukraine for 2004" (Article 71) becomes effective.

Apart from that, the draft envisages that paragraph two of Article 83 of the Law of Ukraine "On the State Budget of Ukraine for 2004" will be deleted. This Article, particularly, sets forth that in 2004 taxation with value added tax is not imposed on transactions on exporting (transferring) goods of groups 1-24 of Ukrainian Classification of Commodity for Foreign Economic Activity outside Ukraine's customs territory.