Is there a benefit in the light industry?

Author: Svetlana Bagdashkina, Attorney, Senior Associate

Media name: "Yurydychna Gazeta"

Exit: April 8, 2019

The draft Law No. 10192 dated March 27, 2019 provides for the granting of exemption from VAT to enterprises of the light industry of enterprises subject to VAT. It is obvious that the attempt by the authors of the bill to introduce a reduction of the tax burden on this sphere of business is carried out in order to improve the investment climate in Ukraine. But should we expect positive results from the proposed changes? Will there be tax obstacles for businessmen?
The same has already been implemented in 2011. Then the benefits concerned only the income tax, excluding from the range of privileged enterprises working with tolling raw materials, envisaged special conditions for the formation of incomes and expenses and accounting for exchange differences. Then they did not last long.
The current text of the project currently does not exclude from the range of privileged companies working with tolling raw materials. That is, now the benefits will apply not only to full-cycle enterprises, but also to enterprises specializing exclusively in tailoring. It can also be concluded that the law will apply not only to large but also to medium and small businesses.
The exemptions of the sample of 2011 did not result in a flurry of litigation, and those disputes, as a rule, concerned the principles of the definition of the type of activity by the controlling body, which was facilitated by the then change in the ECE from the sample of 2005, for example, in 2010. Some of these disputes ended only in February 2019, the final decision of the KAS Sun. Consequently, it is possible that this time disputes regarding the definition of the type of activity of privileged persons will also take place. In addition, the use of VAT privileges will lead to a much larger number of disputes, the subject matter of which will only show time.