The struggle for the country’s main currency flow

A VAT refund is a compensation from the budget for the amount of VAT paid by an exporting company when purchasing goods and services for export. VAT paid in Ukraine is a tax credit. Since exports are exempt from VAT (it is paid by the consumer in the importing country), the exporter receives a tax credit refund from the budget.

According to Yurii Gaidai, senior economist at the Center for Economic Strategy, it was the problems with VAT refunds to exporters’ accounts from the budget, involving tax authorities, that led to an increase in black grain exports starting in 2022.

“The tax authorities often considered the tax invoices of honest companies that legally bought grain and paid taxes to be risky and did not register them. This pushed cash payments,” the economist said.

According to Nina Yuzhanina, a member of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy, in 2022-2023, the tax authorities rejected 3,800 taxpayers’ declarations and applications for VAT refunds worth UAH 23 billion.

According to Yuriy Gaidai, the first thing to do to reduce the volume of black grain is to put things in order with VAT administration. Blocking of invoices by the State Tax Service encourages many people to buy goods for cash and avoid paying taxes.

Secondly, we need the BES and other law enforcement agencies to work properly, looking for organizers of smuggling schemes among customs and tax officials. No smuggling as a systemic phenomenon can survive without the involvement of fiscal authorities.

Origin: Liga.net.