Key creditor of Ukraine international monetary Fund suggests that the authorities within the framework of tax reform to increase excise rates for beer and spirits, as well as to strengthen control over the circulation of alcohol through the taxation of sales of pure alcohol with the possibility of compensation payments under certain conditions. This is stated in the Foundation’s report, published on the organization’s website, UNIAN reports.
«You can raise in the next two years the excise tax on beer to 3.10 UAH per litre (against the current rate at 2.48 USD per liter — ed), wine — 0.1 USD per liter (against the current rate of 0.01 UAH — ed.), strong alcohol up to 123 USD per liter (against the current rate of 105.8 in USD per liter — ed)», — stated in the report. — It is recommended to tax the implementation of the clean alcohol and introduce a tax credit instead of a tax on sold alcoholic beverages, and system of promissory notes. We also recommend to establish a zero rate for all products from ethyl alcohol not intended for consumption by citizens, and provide for the recovery of tax paid».
In this context, the Fund was named one of the priority tasks of strengthening of control over the work of the state concern «Ukrspirt» and other business entities related to the alcohol industry.
According to analysts of IMF, in Ukraine there are ample opportunities of increasing excise taxes, the payments which fell, including in connection with the devaluation of the hryvnia and inflation.
«Ukraine could focus on bringing the excise duty rates to levels, which are used in other countries in the region, the report said. — At the same time, rates should be increased carefully taking into account the effect on manufacturing operations. The increase of excise tax rates would help to reduce the negative impact of consumption of excise goods».
And the IMF are convinced that the excise tax on oil products can be kept at the current level of 13% and increase of revenues on this item of budget revenues is mainly due to the improvement of the administration of this excise tax. «According to estimates of the market, the excise duty payments avoid about 20% of dealers fuel. Formed various schemes of tax evasion through smuggling, re-marking of fuels, production of counterfeit», — stressed in the IMF. The Fund also paid attention to reduce the effect of such schemes could be through the introduction of electronic administration of excise taxes — the type of electronic VAT administration.
As reported, the excise rates on alcohol, cigarettes and petroleum products were increased from 1 January 2016. The Cabinet of Ministers expects to receive UAH 18.1 bn from higher excise duties. Data on the amount of excise tax paid for 2015 has not yet been reported.
In the event of a change of the Ukrainian government the IMF will take a pause in funding and will continue only through the willingness of new governments to honour the commitments made by their predecessors.
The IMF recommends Ukrainian authorities to increase the excise tax on beer and spirits 09.02.2016