PREVENTION OF EXPORT OR REQUIRED IMPROVEMENTS
In the recent past, the Ukrainian agri-export sector experienced a period of ambiguity. While traders had active contracts to sell Ukrainian agricultural products that required fulfillment, Ukrainian authorities, on the other hand, were consistently denying the export of agricultural products. What was most perplexing for all the participants in these twists and turns was that there were no explanations from these authorities regarding the reasons for such decisions.
And the waiting is over! But… whether the government’s decision resolves the existing issues?
On 31 October 2023, the Cabinet of Ministers of Ukraine issued Resolution No. 1132 "On the Implementation of an Experimental Project on the Verification of Subjects of the Agro-Industrial Complex under Martial Law" (“Resolution”). This act fundamentally changed the procedure for the export of agricultural goods from Ukraine.
In plain words, the Resolution provides that only legal entities that are included in the verification list of Ukrainian exporters and meet the established criteria are entitled to export agricultural products. All procedure of verification is carried out by Ukrainian authorities.
But, delving deeper, the established rules apply to the export of agricultural products under UKTZED codes 1001, 1002, 1003, 1004, 1005, 1201, 1205, 1206 00, 1507, 1512, 1514, and 2306.
Thus, an exporter of the goods under the said codes must meet the following requirements:
- an exporter must be a VAT payer at the time of submitting an export application and as of 23 February 2022;
- an exporter has no tax debt for the payment “Penalty for Violation of Settlement Deadlines in Foreign Economic Activity, Non-Performance of Obligations, and Penalties for Violating Currency Legislation” (payment code - 21081000);
- an exporter has documentary confirmation from the bank that from 23 February 2022 to 27 October 2023, an exporter conducted at least one successful export operation with a return of foreign currency revenue;
- an exporter has not been subjected to a tax authority decision regarding the absence of a registered location;
- an exporter is not subject to the bankruptcy proceedings and is not in the liquidation.
As an alternative to the verification procedure, the Ukrainian Government provides a licensing procedure for the export of agricultural products.
So now, a new bureaucratic stage has been added to the export process (which is unlikely to please any of the traders) – the formation of a list of verified agricultural entities. Each of the entities that now wish to export Ukrainian agricultural products without hindrance must undergo this verification procedure.
But whether existing restrictions and established rules can be treated as a prohibition of export or other event that exempt sellers from liability for non-delivery of agricultural products. The question is still open.
It is not yet entirely clear how this innovation will work in practice and how realistic the requirements of Ukrainian legislation are. Hopefully, the market will return to normal, traders will adapt, and the goods will be delivered to buyers!
For additional information, please contact Mr. Ivan Kasynyuk, Partner at AGA Partners, This email address is being protected from spambots. You need JavaScript enabled to view it.; Mr. Oleksandr Zub, Associate at AGA Partners, This email address is being protected from spambots. You need JavaScript enabled to view it.; or Mr. Viktor Romaniv, Associate at AGA Partners, This email address is being protected from spambots. You need JavaScript enabled to view it..
