Reduction of VAT on Food

by Olha Povaliaieva
Monday, February 21, 2022
Reduction of VAT on Food

Ukraine can reduce the value-added of food products

On February 4, 2022, a group of people's deputies registered a bill in parliament that proposes to reset the VAT rate in Ukraine for food by 2023. A project to reduce VAT is currently being discussed by the office of the president and other Ukrainian comments. The option of lowering costs will be considered for basic foodstuffs. These include:

  • Bread;
  • Oil;
  • Groats;
  • Vegetables and others.

The commonwealth fund will lose about $2 billion if the bill is passed. At the same time, purchases will become more economical for Ukrainians. But this government initiative may also be of interest in the context of another statute on domestic trade.

"It turns out that near 30% of the price has not cost, but the influence of the supermarket. Markets delay repayments to manufacturers by 4 months. So, producers should use interest on these loans in the value of their goods. Thus, the price is rising," a politician from the ruling party Sluha narodu (Servant of the people) Davyd Arakhamyia said.

The politicians believe the bill will be approved. The deputies say they will be looking for compensators for potential budget losses. That would be a balanced solution.

It is important to note that such an initiative in Ukraine is linked to the changes that will take place in the European Union on July 1, 2022. A preferential VAT rate for food products is being introduced in Poland and other EU countries.

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