Tax Service Blocks Agricultural Giant’s Invoices

Prometey, an agricultural company in Ukraine with a land bank of 20,000 hectares and Hr.123.3 million ($3.14 million) taxes paid in 2023 alone, will delay repayment of bank loans because of what it claims are irregularities on the part of the Ukrainian tax service.

According to the company’s statement, published by Ukraine’s news agency Interfax, the State Tax Service blocked tax invoices worth almost Hr.600 million ($15.3 million), disrupting the company’s sustainable cash flow. If the tax invoice is blocked, firms in Ukraine are unable to get the VAT refund until they send the necessary information regarding their trade to the tax service.

This is not the first time Prometey – along with other enterprises in the country – has had problems with the tax invoices for future refunds. The state claims it did not refund Hr.1.34 million ($34,000) of VAT because the yield of Prometey farmers was higher than the average yield of the 2023 season in the Mykolaiv region.

As a result of the refund delay, the company will in turn delay its payments on bank loans. The money refunded from the state was planned to be used as a payment for the loans, according to the company’s statement.

The chairman of Prometey’s Supervisory Board, Rafael Goroyan, said that the reasons to block VAT refunds are absurd and the State Tax Service is encouraging illegal actions from the taxpayers – though not specifying which.

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“The tax office of large taxpayers has turned into a parliament. The one who pays the most keeps the money. They want from 1 percent to 3 percent of the total VAT amount. If we work this way, there will soon be no grain in the country. The farmer will lose money. He simply will not have anything to sow,” he said in a statement published by Interfax-Ukraine.

Tax problems constitute 40 to 70 percent of complaints filed to Ukraine’s Business ombudsman in 2023, according to the Business Ombudsman Council’s statistics. Tax invoice blocking has become more frequent in the last two years, with companies in Ukraine complaining about absurd reasons for blocking the documents from the tax service.