The Verkhovna Rada intends to lower the excise tax rate on beer from UAH 2.78 per liter for producers whose annual production volume does not exceed 200,000 hectoliters to UAH 1.39 per liter and introduce the term “small beer producers”.
At a plenary session of parliament last week, 284 MPs supported the draft law, which was supported in first reading No. 5118 on amendments to Article 215 of the Tax Code of Ukraine, with the required minimum of 226 votes.
According to an explanation of the document, there are 204 breweries in Ukraine with an annual production volume of up to 3,000 hectoliters, who pay 30,000 UAH per year for a wholesale license to trade beer, and 28 breweries with a production volume of up to 200,000 hectoliters (for their annual license is UAH 500,000).
These companies account for 13% of the beer market in Ukraine, while the remaining 87% is split between nine major beer producers. According to the document, the total tax burden per 1 liter of beer produced by small producers is significantly higher than the same indicator for the beer giant companies.
In addition, the authors of the bill stated that all small beer producers face significant regulatory and financial pressures as they pay other tax payments in addition to excise tax. In this context, it is proposed to lower the excise duty rate.
The bill defines the companies that will apply the reduced rate by introducing the term “independent small brewery” – a company that is legally and economically independent from any other brewery and geographically separate from other breweries.
According to the rationale, the draft law brings Ukraine’s tax legislation closer to EU legislation and complies with Directive 92/83 / EEC of the EU Council on the harmonization of excise tax structures for alcohol and alcoholic beverages of October 19, 1992.
As expected, the implementation of Draft Law No. 5118 will lead to a decrease in annual budget revenue of UAH 328.3 million, as excise tax rates on beer have decreased. At the same time, due to the expected growth in beer production of around 20 million liters, the budget will be replenished considerably in the long term with tax revenues in the form of excise taxes, one-off social security contributions, income taxes, etc.
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CRAFT BEER, EXCISE TAX, PRODUCERS