In a move to bolster transparency and safeguard its economic interests, Ukraine has announced new regulations governing food exports. These measures, aimed at curbing potential abuses like tax evasion in the export of crucial agricultural products, were outlined in a government resolution released on Wednesday.
Ukraine stands as one of the globe’s leading food producers and exporters. However, officials estimate that as much as a third of goods intended for export are purchased in cash transactions, often bypassing the requisite tax payments. Additionally, concerns arise from the illicit concealment or delay of foreign currency receipts in offshore accounts.
Under the new regulations, only companies registered in the State Agrarian Register, operating as value-added tax payers with no tax arrears or currency repatriation delays, will be permitted to engage in exports. This approach seeks to foster conditions that prevent abuses and legal violations during the export of goods, all while ensuring the protection of the rights of law-abiding agricultural entities.
The government emphasized that this initiative serves not only to enhance regulatory oversight but also to support economic activities carried out in compliance with the law. Ukraine’s ongoing need for financial resources in the face of its conflict with Russia has prompted efforts to tighten controls on grain exports previously. In August, the southern Ukrainian region of Odesa, boasting ports along the Black Sea and Danube River, implemented an export control mechanism for grain.
This mechanism stipulated that vessel could only be loaded after a preliminary assessment of the legality of the grain’s origin. Government data reveals that Ukraine’s grain exports in October witnessed a nearly 50% year-on-year decline, dropping from 4.22 million metric tons to 2.15 million metric tons. This decline extends to the broader 2023/24 July-June season, with Ukraine exporting 8.9 million tons of grain, compared to 12.9 million in the previous year.
Traders and farmers’ unions have pointed to the blockade of Ukrainian Black Sea ports and Russian attacks on Ukrainian ports along the Danube River as primary factors contributing to the decrease in exports. Traditionally, Ukraine has relied heavily on its Black Sea ports for the majority of its exports.
Ukraine’s recent regulatory actions underscore its commitment to ensuring fair trade practices, bolstering economic stability, and safeguarding its vital agricultural sector against illicit activities. These measures aim to promote a transparent and accountable export environment in Ukraine, benefitting both domestic and international stakeholders.