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Bills on dairy industry reform submitted to Rada – Agrarian Ministry

KYIV. April 4 (Interfax-Ukraine) – Draft laws with amendments to the Tax and Customs Codes on reducing the VAT rate for milk and dairy products and on introducing a contribution for sectoral financing of dairy product promotion programs have been registered in the Verkhovna Rada.

“The importance of the draft law (No. 9161 on reducing VAT) lies in reducing the shadow production and sales of dairy products … Dairy producers who do not pay taxes will lose part of their profits with the adoption of this law. Nothing will change in the balance sheet of legal producers, since the price reduction is offset by a decrease in VAT amounts,” Minister of Agrarian Policy Mykola Solsky said.

It is clarified that the VAT rate for both domestic and imported dairy products is proposed to be reduced to 10% from the current general rate of 20%, which will reduce its price for consumers.

Bills Nos. 9162-9163 contain a provision on the introduction of a fee of 0.5% from processing enterprises and importers to finance programs aimed at promoting dairy products. The manager of these funds will be a representative intersectoral organization of milk producers and processors, which will be created by the market participants.

In order to rely on these funds, the supply of dairy products must account for at least 50% of the company’s revenue.

“These funds will be transferred to an organization that unites most, if not all, legal milk producers and processors. With this money, industry representatives will be able to independently promote dairy products, develop innovations, fight against falsifications, set and develop new standards,” he stressed.

According to him, bills Nos. 9163 and 9162 are borrowed from the American model of the commodity checkoff program, which has been operating in the U.S. for over 100 years.