Ukraine's Finance Ministry failed to reform fuel taxation system - Fuel Traders Association

Ukraine's Finance Ministry failed to reform fuel taxation system - Fuel Traders AssociationUkraine's Finance Ministry has failed to reform the fuel taxation system and combat the shadow trade, the Ukrainian Fuel Traders Association has reported.

The association said that this concerns the threatening situation with the retail excise duty on fuel, as many market players try to avoid paying it.

The statement of the Finance Ministry that they cannot change the situation with the downward pace of retail excise duty payment is wide open to criticism. In 2016, the ad hoc working group drew up mechanisms helping not only to retain, but also boost revenue of local and national budgets and liquidate the growing shadow fuel segment," the press service said, citing Association President Leonid Kosianchuk.

The association experts deny information of the Finance Ministry that liquidation of the retail excise duty would result in the loss of local budgets. It is proposed that these sums are transferred to the basic excise duty on petrol, diesel fuel and liquefied gas collected from imported fuel and fuel production. Then the money will be sent to local budgets from the national budget.

"The main argument of the Finance Ministry is the impossibility of determining the common approach to the distribution of funds among almost 11,000 local budgets. However, the working group headed by Deputy Finance Minister Yevhen Kapinos and with participation of the Association of Cities and Towns of Ukraine has drawn up a common position: the State Treasury Service will settle direct payments," the association said.

The current position of the ministry results in billion losses for the national and local budgets.

"We have given an effective mechanism to introduce it. The Finance Ministry and the State Treasury should work hard. The implementation of the initiative would add around UAH 2 billion to local communities and UAH 6.5 billion to the national budget," Kosianchuk said.

Earlier Kyiv City Administration asked the government to unite the retail and basic excise duty on fuel. The city lost UAH 221 million due to this division.
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