“Ukraine Overcames the Shadow Grain Market”

Thursday, June 3, 2021
“Ukraine Overcames the Shadow Grain Market”

Interview with Marian Zablocki, People's Deputy of Ukraine on Local Taxes and Duties of the Committee on Finance, Tax and Customs Policy of the Parliament of Ukraine

Maryan Zablocki shared with Agronews.ua the tools for destroying the shadow grain market, measures to optimize the land market and the results of deregulation of land relations:

How does the Ukrainian land market attract unscrupulous traders?

Everything is very simple. Because in Ukraine about a third of agricultural land is cultivated without any documents, that is, in the shadows. As a result, half of the grain market is traded for cash, its origin and movement cannot be traced, which causes huge losses for local budgets and the country as a whole. And big problems, especially for the Ukrainian countryside.

Are there specific numbers?

We now estimate that the losses from non-payment of taxes to local budgets amount to 12 billion (≈ $439 mln). That is why the current government is developing a set of measures to combat the shadow grain market and bring this area of ​​the agricultural sector to a new, transparent level of development.

 What tools are used?

The first is to reduce the VAT rate on grain to 14%, which reduces the need for farmers to "twist" the tax credit and tax liabilities. This is clear to all taxpayers. Although there is a lot of speculation around this topic. Secondly, I think that in the near future the Verkhovna Rada (the Parliament of Ukraine) will pass a law that will introduce a mandatory minimum tax on one hectare of cultivated agricultural land, ie a minimum amount of personal income tax and a fixed land tax that must be paid regardless of the circumstances. After all, every farmer who grows grain crops must pay at least 1,500 (≈ $55) in taxes. Well, the last element of this struggle is the introduction of a mechanism that will facilitate our cooperation with international organizations in punishing unscrupulous traders if they use the grain market of Ukraine to launder money.

The Law of Ukraine on Deregulation of Land Relations has come a long way before the President of Ukraine signed it on May 24, 2021. Will this event enter the history of Marian Zablocki personally?

Of course! I have been working on this law since 2013. Then it had a completely different look and simply transferred the land to the community. This was his main ideology. But over time, we realized that this law needs to consolidate the management of land relations at the legislative level and make it comprehensive. As a result, Law 2194 introduced new land legislation of Ukraine, which solves, clarifies and simplifies a huge number of problems. And not only related to the lease of agricultural land, but also to construction in general, even in such issues as construction near cultural heritage, the use of reserves and even the extraction of minerals.

In fact, this law is land reform, but not because it allowed the sale of land, it was actually done by another law, but because it solved quite a few problems in land management. Therefore, I thank all those involved in the adoption of this Law, the President, who signed it. This is a very necessary and correct reform.

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