Changes in the export of agricultural products

On July 1, 2024 the export security regime aimed at strengthening control over the timely return of foreign exchange earnings from the export of agricultural products through tax measures, as well as features of customs declaring of such goods will come into force. The features of the export security regime are introduced by the Laws of Ukraine No. 3706-IX dated May 9, 2024, "On amendments to the Tax Code of Ukraine and other legislative acts of Ukraine concerning the export features of certain types of goods during the martial law," and No. 3707-IX dated May 9, 2024, "On amendments to the Customs Code of Ukraine regarding the improvement of foreign economic operations for the export of certain goods" (hereinafter – “Laws").

Currently, special rules for taxation and export will apply to the following commodity positions according to the Ukrainian Classification of Goods for Foreign Economic Activity (hereinafter – "certain goods"):

• 0409 00 00 00 (natural honey);
• 0802 31 00 00 and 0802 32 00 00 (shelled and unshelled walnuts);
• 1001 (wheat);
• 1002 (rye);
• 1003 (barley);
• 1004 (oats);
• 1005 (corn);
• 1201 (soybeans);
• 1205 (rapeseed);
• 1206 (sunflower seeds);
• 1507 (soybean oil);
• 1512 (sunflower, safflower, or cotton oil);
• 1514 (rapeseed or mustard oil);
• 2306 (oilcake and other residues from the extraction of vegetable or microbial fats and oils).

Below we comment on the main provisions of the Laws. We will be pleased to discuss the relevant changes more extensively in the context of your business. 

Key provisions of the Laws regarding the export of certain goods are as follows:

• Entities engaged in foreign economic activity who are not VAT payers cannot export certain goods;
• Minimum permissible export prices are established and published on the official website of the Ministry of Agrarian Policy and Food of Ukraine;
• Special rules for the preparation and registration of tax invoices and adjustment calculations are introduced, as well as VAT taxation at different rates depending on compliance with the deadlines for settlements for export operations: the VAT rate of 20/14% is automatically set for the operation. However, exporters can submit an adjustment calculation to the VAT invoice to reduce the VAT rate to 0% if (i) the export operation is completed and (ii) the currency is received in Ukraine within 90 days;
• Requirements for currency control are strengthened, in particular, banks and exporters are required to provide information about the completion of settlements for export operations to the State Tax Service;
• The offset of counterclaims, the use of accounts of residents opened abroad to receive funds from non-residents, and the use of other forms of monetary settlements with a non-resident that do not involve the movement of funds in foreign currency from abroad to the accounts of residents in Ukraine are prohibited;
• The export security regime does not apply to supplies (stock) in the meaning of the Customs Code of Ukraine, as well as to seeds for sowing with a phytosanitary certificate issued taking into account the provisions of paragraphs 1-5 of Chapter IX of the Law of Ukraine "On Plant Quarantine";
• The customs declaration must reflect the details of the corresponding VAT invoice, with one customs declaration per one tax invoice, and the submission of one additional declaration to several periodic or simplified customs declarations is not possible;
• The invoice price of such goods declared in the customs declaration must not be lower than the value of the goods calculated according to the minimum permissible export prices (posted on the official website of the Ministry of Agrarian Policy and Food) on the date of submission of such customs declaration or on the date of conclusion of the forward contract (if the declaration is made on its basis);
• Additional grounds for refusal in customs clearance include the establishment of the fact (i) of the lack of registration of the VAT invoice, or (ii) exceeding 30 days from the day of its registration, (iii) discrepancy between the information stated in the VAT invoice and the information stated in the customs declaration, as well as (iv) declaration of an invoice value that is lower than calculated according to the minimum permissible export prices;
• Changes to the customs declaration for goods to which the export security regime has been applied are not allowed, in terms of: (i) the person responsible for financial settlement, (ii) the name of the goods, (iii) the commodity code according to the Ukrainian Commodity Classification for Foreign Economic Activity, (iv) an increase in the quantity of goods in kilograms (net weight), as well as (v) the date and number of the tax invoice. 

We continue to monitor developments on this issue and will keep you informed.