State Support for Agricultural Producers -

In 2018, all funds from program 2801580 “State Support for Agricultural Producers” will be allocated for partial compensation of the cost of domestically produced agricultural machinery and equipment (Law of 07.12.17 No. 2246-VIII “On the State Budget of Ukraine for 2018”).

945 million UAH has been allocated for compensation from the budget.

WHAT IS COMPENSATED
The procedure for using the funds provided in the state budget for compensation is approved by Cabinet of Ministers Resolution No. 130 dated 01.03.17 (hereinafter – Procedure No. 130).

In general, funds are reimbursed for providing agricultural producers with domestic machinery and equipment for the agro-industrial complex.

The Ministry of Economic Development Commission has approved a List of equipment and machinery, the cost of which is partially compensated by budget funds (hereinafter – the List). This document can be found on the official website of the Ministry of Agrarian Policy in the “Agrarian Support” section.

Currently, the List includes 97 Ukrainian manufacturing plants and over 2300 units of machinery and equipment.

WHO IS ELIGIBLE?
Legal entities and individual entrepreneurs whose main activity is the supply of agricultural products (according to the definition provided in Article 2.15 of Law No. 1877-IV of 24.06.04 “On State Support for Agriculture of Ukraine”) and who produce them on their own or leased assets, are eligible for compensation, provided that such goods constitute at least 75% of the value of all goods supplied by them over the last 12 consecutive reporting tax periods. For newly established enterprises, i.e., those that have been operating for less than 12 calendar months, this right is determined based on the results of each reporting period (Clause 3 of Procedure No. 130).

It should be noted that agricultural products are items defined by Groups 1-24 of the Ukrainian Customs Tariff Code, as per Law No. 584-VII dated 19.09.13 “On the Customs Tariff of Ukraine,” if they were grown, caught, harvested, fattened, produced, processed, or manufactured directly by the producer, including processing products derived from these goods on their own or leased assets.

WHO CANNOT RECEIVE COMPENSATION
Agricultural producers are not eligible for compensation (fifth paragraph of Clause 10 of Procedure No. 130) if:

They are undergoing bankruptcy proceedings and/or have been declared bankrupt;
They are in the process of liquidation and have overdue debts to the state budget, the Pension Fund, or the Social Insurance Fund for more than six months.

HOW MUCH IS COMPENSATED
Compensation is provided on a non-repayable basis as follows (Clause 10 of Procedure No. 130):

20% of the cost (excluding VAT) of equipment purchased in December 2017;
25% of the cost (excluding VAT) of equipment purchased from 01.01.18.

The cost of the equipment is determined as stated in the acceptance certificate and other payment-confirming documents.

Additionally, this year, farming enterprises may receive an additional 15% compensation for equipment under another budget program – 2801230 “Financial Support for the Development of Farming Enterprises.” Thus, in 2018, the total compensation for farmers will amount to 40% (25% + 15%). The procedure for obtaining it is the same, but a copy of the statute for legal entities or a copy of the family farming agreement (for farms established without acquiring legal entity status) must also be submitted.

Note: The cost of equipment purchased from December 1 is reimbursed from the funds allocated in the state budget for the following year (fourth paragraph of Clause 10 of Procedure No. 130). Therefore, compensation allocated for 2018 can be obtained for equipment purchased before 01.12.18. Additionally, if the applicant has submitted all required documents to receive compensation but it was not paid due to lack of funds in the current budget period or other reasons, compensation will be paid from the funds allocated for the next period within the fiscal year (Clause 14 of Procedure No. 130).

PROCEDURE FOR RECEIVING COMPENSATION
The unique feature of reimbursement is that the purchase of equipment and receipt of reimbursement must be done through state banks or banks where 75% or more of the capital belongs to the state (hereinafter – the bank) (Clause 11 of Procedure No. 130). Therefore, compensation can be requested from PrivatBank, Oschadbank, Ukreximbank, and Ukrgazbank.

The principle of receiving compensation can be conditionally called declarative. Let’s review this procedure step by step.

Step 1. The agricultural producer submits the following documents to the bank through which the equipment was purchased (Clause 11 of Procedure No. 130):

Application in the form approved by the Ministry of Agrarian Policy Order No. 228 dated 18.04.17;
A copy of the payment order;
The act of acceptance-transfer of machinery and equipment;
The vehicle registration certificate and/or machine certificate, if such equipment requires mandatory state or departmental registration. The procedure for this registration is approved by Cabinet Resolution No. 694 dated 8 July 2009;
A certificate of no tax/debt arrears controlled by the SFS bodies;
Consent to disclose by the bank to the Ministry of Agrarian Policy information constituting banking secrecy or containing personal data as per the bank’s form.

Important! The deadline for submitting applications and documents is as follows: for compensation for equipment purchased by December 1, the application should be submitted by December 5 of the current year; for equipment purchased after December 1, by March 1 of the following year.

Step 2. The bank provides the Ministry of Agrarian Policy with information about the applicant (name, Unified State Register code), type and brand of equipment, purchase price, and the amount to be reimbursed (Clause 12 of Procedure No. 130).

Step 3. The Ministry of Agrarian Policy forms a register of agricultural producers who purchased equipment (hereinafter – the Register) and submits it to the Ministry of Economic Development.

Step 4. Within the open allocations, the Ministry of Agrarian Policy, based on the Register data, transfers budget funds to the bank within a month.

Step 5. The bank, within three banking days, transfers the funds to the recipients’ current accounts proportionally to the amounts specified in the Register.

LIMITATIONS FOR RECEIVING COMPENSATION
An agricultural producer who has received compensation must comply with the condition provided in Clause 13 of Procedure No. 130. Specifically, for three years, machinery and equipment purchased under compensation may not be disposed of and must be used for its intended purpose. An exception is for equipment pledged to a bank and disposed of due to the borrower’s default on credit obligations.

Thus, the equipment or machinery for which compensation has been received may not be sold or given to anyone for three consecutive years. It must remain with the owner and used as intended.

If this condition is violated, the agricultural producer must return the received budget funds and is deprived of the right to receive compensation for the next three years (from the date the violation was discovered).

Conclusions

After choosing equipment from the list for purchase, an agricultural producer can receive compensation for it. 25% of its cost (excluding VAT) is reimbursed for equipment purchased from 01.01.18. Additionally, farming enterprises can receive an additional 15% compensation under the same procedure, bringing the total to 40%.

For equipment purchased by December 1, applications and documents must be submitted by December 5 of the current year; for equipment purchased after December 1, by March 1 of the following year.