Starting from 1 December 2024, Ukraine will introduce a new export compliance regime for certain types of agricultural products, sparking active discussion among market participants. One of the key innovations is the mandatory registration of VAT payers, which is now a prerequisite for exporting.

Another significant change is the introduction of minimum export prices to prevent underestimating the customs value of goods. Additionally, the process of interaction between customs authorities, the tax service, and the National Bank has been transitioned entirely to an electronic format, aimed at ensuring greater transparency and compliance with legal norms.

These and other aspects were discussed during an online meeting of the Trend&Hedge Club on 27 November, attended by Ukraine's Deputy Minister of Agrarian Policy and Food, Taras Vysotskyi, and the managing partner of Kosovan Legal Group, Anatolii Kosovan.

Registration of Tax Invoices

Taras Vysotsky explained that successful VAT invoice registration requires confirming the origin of goods, being a registered VAT payer, and having a corresponding VAT credit. The main reasons for registration being halted include the risk status of counterparties or the lack of confirmed goods origin.

"Pay special attention to the origin of goods and the reliability of clients to avoid problems with invoice registration. It is critical at the initial stage to avoid working with risky counterparties, as this can lead to delays and financial losses," emphasized Vysotsky.

Kosovan highlighted that the greatest risk lies in the counterparty's risk status: "Unfortunately, the risk status is currently not public, and you cannot know when a counterparty has been deemed risky. This automatically leads to the suspension of invoice registration and, consequently, the inability to issue customs declarations, effectively blocking the execution of export contracts."

Newly established companies are also automatically classified as risky. "In practice, newly created companies registered as taxpayers will never be able to register a large VAT invoice. The tax authorities will simply halt the registration. This has been a consistent practice for years," Kosovan stressed.

Another reason for registration suspension could be insufficient VAT credit. According to Vysotsky, the tax authorities analyze the volumes and amounts specified in the invoice, which must match the registered data. If discrepancies or insufficient credit are identified, the registration will be halted, and customs will not allow the goods to be released.

Regarding the possibility of recognizing registration delays as force majeure, Kosovan noted: "The Chamber of Commerce does not consider situations related to tax authorities' decisions as force majeure if these decisions comply with current legislation. In such cases, it is necessary to seek internal solutions or adjust contractual obligations."

Foreign Currency Revenue Return

The export security regime provides differentiated VAT rates depending on the discipline of foreign currency revenue returns. Taxpayers who return their revenue on time are entitled to apply a zero VAT rate for exports. However, if the amount of unpaid funds from export operations exceeds 20% of the total amount of such operations over the past 12 months, a 14% VAT rate is applied.

According to Kosovan, the new rules for calculating the 20% quota have important nuances. Only goods for which the return control period has ended are included in the calculation. "I emphasize that the comparison involves the amount of goods not just exported, but for which the control period for returning foreign currency revenue has concluded. So, if you exported a large batch of goods yesterday, it still won’t count because the control period hasn’t ended, and it’s important to calculate correctly," noted Kosovan.

Minimum Export Prices

Minimum export prices under the export compliance regime are set by the Ministry of Agrarian Policy based on customs statistics from the previous month, applying a 10% discount. These prices are approved monthly by the 10th and published on the ministry's official website. Exports are permitted only if contract prices are not lower than the established minimum thresholds.

Kosovan noted: "If the invoice price is lower than the minimum, the tax invoice will not be registered. This means the goods cannot leave the country. To avoid such situations, it is advisable to provide for the possibility of adjusting contract terms."

For forward contracts, minimum prices are applied retrospectively—from six months before the start of the export compliance regime. Minimum prices were approved by an order on 10 November and have been in effect since June, meaning contracts signed after 1 June must comply with the minimum prices set at that time.

According to Vysotskyi, if the final price falls below the minimum, this issue cannot be resolved through tax credits or other mechanisms. In such cases, additional agreements must be made to ensure the price aligns with established standards.

Licensing

Taras Vysotskyi stated: "Starting 1 December, licensing and verification will be abolished. They have fulfilled their purpose, and the new export compliance regime will become the primary control mechanism."

On Potential Contract Delays

Regarding concerns that the new regime might lead to delays in contract execution, Taras Vysotskyi explained: "This is a new procedure, and the initial days of its implementation may indeed require more time for standard operations. However, this is not related to currency control but rather the need to adapt to the new rules."