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The Verkhovna Rada of Ukraine has increased the rental fee for mining companies

Mining industry / Ukraine

January 16, the Verkhovna Rada deputies adopted the law with amendments to the Tax code that include provisions of transfer pricing, the introduction of the BEPS action plan to combat tax evasion and increase the range of rental rates.

The Verkhovna Rada of Ukraine has increased the rental fee for mining companies

the Verkhovna Rada adopted in the second reading and in whole draft law №1210, which provides for an increase in rental rates for mineral extraction.

"Ends the day with a heavy heart. Supported the draft law No. 1210 in the second reading and in entirety as a law 283 MPs. How so? - ask many of my colleagues, and all eyes down. Cynical in the session hall continues with decision-making depending on their own interests," - wrote in Facebook the people's Deputy of Ukraine, member of the parliamentary Committee on Finance, tax and customs policy Nina Southerner.

Under the bill, the rate of the rent on extraction of iron ore will be 12%, if the average cost of iron ore index IODEX FOR 58% FE CFR China, officially defined by international news Agency Platts, the tax (reporting) period will be 70 dollars or more, if the price is lower - the rate will be 11%.

today the price of such ore on the world market above $ 90 a tonne and a serious drop in prices is not expected.

this bill was a norm, which was supposed to expand the tax base for the entire production capacity of the GOK.

Representatives of the MMC of Ukraine noted that in connection with changes in the Tax code the tax burden on the mining of the ore will increase by 5 times. That is, to produce products, while increasing rent payments and double taxation of products of processing will be unprofitable.

As reported, due to the increase in rent Ukraine may lose 70% of exports ores and, as a consequence, about 30% of all foreign exchange earnings. The railway sector in this case can lose 40% of the volume of transportation.

the rising cost of iron ore mining in Ukraine will lead to growth of labour migration, experts stress. According to the study one of the representatives of the four global auditors – PWC, tax initiatives laid down in the draft laws # 1210 and # 1210-1, will make the ore in Ukraine 9 times more than in Russia.

Bill No. 1210 was harshly criticized by the business. The business associations demanded the revision of such rules of law: enhanced capacity of fiscal authorities to apply fines; the possibility that tax inspections; the removal of restrictions on the request for information by the tax authorities of the business; selective significant increase in the tax burden on certain sectors.

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