Ukraine has evidently escaped tax revenues of more than $ 1 billion in 2015-2017 due to dubious tax-saving models in agricultural exports. This is the result of a study commissioned by the Left and Nordic Greens in the European Parliament and the Rosa Luxemburg Foundation.
"The results show that total profit shifting over three years was about $ 1.5 billion," the study said. This would have led to "significant economic losses" for Ukraine. The study will be published this Wednesday.
Less profits that are taxable
Cereals and maize are among the country's most important export goods, and Ukraine is also the world's largest exporter of sunflower oil. Preferred methods of tax avoidance are above all so-called transfer prices. At the same time, in a country with comparatively high taxes, such as Ukraine, a group's subsidiary sells its products to another part of a country in a low-tax country - at a price below the market price. As a result, Ukraine incurs less profits that are taxable.
The authors of the study point out that often oligarchs are the owners of large agricultural companies, which are closely connected with Ukrainian politics.
"The new Ukrainian president should act against those models that only play money in the pockets of the oligarch in the agricultural business," says Left MEP Helmut Scholz. This promised Volodymyr Selenskyj before the election.
In the European Parliament, a number of committees dealt with the findings on Luxembourg tax loopholes ("lux leaks") and those on Caribbean islands ("Panama Papers") in recent years. The situation in Ukraine, on the other hand, is hardly investigated.
The EU has supported the country of crisis with around € 11 billion since the Association Agreement of 2014 - all aid and credits added together. Last year, Ukrainian companies were struck by a similar tax-saving model. At that time it was about the export of iron ore.
Transacted via Switzerland or the Channel Islands
Most of the cheaply sold wheat (64 percent) was transacted in the three years investigated by companies in Switzerland or on the UK-based Channel Islands, according to the study. Eleven percent went through companies based in the United Arab Emirates and Cyprus.
Ukraine's cooperation with the industrialized countries organization OECD has improved in recent years, the study notes. At the end of October, the government had even introduced a bill to implement the so-called BEPS rules against profit cuts and profit shifting. Industrialists interviewed for the study, however, maintain that there are still enough loopholes to shift profits.
