Cheaper milk: Parliament planning to reduce VAT for dairy industry

The Verkhovna Rada has registered three key bills on the reform of the dairy industry, which provide for the reduction of prices for dairy products and also create new mechanisms for the development of the industry, reported the press service of the Ministry of Agrarian Policy and Food.

For in-depth analysis and longer stories, follow us on LinkedIn

In particular, draft law No. 9161 proposes to reduce the VAT rate on milk and dairy products to 10%, thanks to which the price will become more affordable for products of the entire dairy line-up. This applies to both domestic and imported dairy products, explains Minister of Agricultural Policy Mykola Solskyi.

"The importance of this draft law also lies in the reduction of shadow production and sale of dairy products. Producers of dairy products who do not pay taxes will lose part of their profits with the adoption of this law. Nothing will change in the balance sheet of legal producers," the official commented.

Two other bills — No. 9163 and No. 9162 — are taken from the book of the American commodity checkoff program model, which has been operating there for over 100 years.

It is established that market participants must deduct 0.5% from the sale of dairy products to the organization that will unite all legal producers and processors of milk. With the accumulated money, representatives of the industry will be able to independently promote dairy products, develop innovations, fight counterfeiting, establish and develop new standards.

"This will allow the state to transfer a part of the functions, which representatives of the industry can handle better than anyone else," Solskyi stressed.

According to him, the Ukrainian model will be somewhat different from the American one. The difference is that the collection of these funds will be handled by the combined inter-branch organization of milk producers and processors, and not the tax service. Thus, this model is even more liberal than in the USA, the Ministry of Agrarian Policy points out.

According to the agency's plan, the industry will independently allocate money for its needs, and the Ministry of Agrarian Policy will check whether the funds are directed as intended.

On September 6, 2022, the export of Ukrainian dairy products returned to the pre-war level.

In 2022, Ukraine set a record for the exporting of dairy products to Europe.