In 2018, all funds under the program 2801580 “State support of agricultural producers” will be directed to partial compensation of the cost of agricultural machinery and equipment for domestic production (Law of 07.12.17 No. 2246-VIII “On the State Budget of Ukraine for 2018“).
UAH 945 million has been allocated from the budget to provide compensation.
WHAT IS COMPENSATED?
The procedure for using the funds provided for in the state budget for compensation was approved by the Resolution of the CMU dated 01.03.17 No. 130 (hereinafter – Procedure No. 130).
Funds are generally allocated to support agricultural producers in obtaining domestic machinery and equipment for the agro-industrial sector. The Ministry of Economic Development’s Commission has approved a list of machinery and equipment eligible for partial budget compensation.
This document can be found on the official website of the Ministry of Agrarian Policy in the “Support to farmers” section.
Currently, the List contains 97 Ukrainian manufacturing plants and more than 2,300 units of machinery and equipment.
WHO CAN RECEIVE COMPENSATION?
Compensation is available to legal entities and individual entrepreneurs whose main activity is supplying agricultural products. According to clause 2.15 of Law No. 1877-IV (06/24/04 “On State Support of Agriculture of Ukraine”), these goods must be produced using the entity’s own or leased assets. To qualify, agricultural goods must make up at least 75% of the total value of all goods supplied during the past 12 consecutive reporting tax periods.
For newly formed enterprises operating for less than 12 months, eligibility is assessed based on each separate reporting period, as outlined in Clause 3 of Order No. 130.
Agricultural goods include those listed in groups 1–24 of the UCTZED under Law No. 584-VII (19.09.13 “On the Customs Tariff of Ukraine”). This applies if the goods are grown, harvested, manufactured, or processed directly by the producer. It also covers products made from these goods, provided they are produced on owned or leased facilities.
WHO CANNOT RECEIVE COMPENSATION?
Agricultural producers do not have the right to receive compensation (paragraph five, clause 10 of Order No. 130):
against whom bankruptcy proceedings have been initiated and/or who have been declared bankrupt;
which are at the stage of liquidation, and have overdue debts to the state budget, the Pension Fund, and the FSS for more than 6 months.
HOW MUCH ARE THEY COMPENSATED
Compensation is provided on a non-refundable basis in the amount (clause 10 of Order No. 130):
20% of the cost (without VAT) for machinery and equipment purchased in December 2017;
25% of the cost (without VAT) for machinery and equipment purchased from 01.01.18.
The cost of the equipment is taken as indicated in the act of acceptance and transfer and other documents confirming its payment.
In addition, in the current year, farms can additionally receive compensation in the amount of 15% of the cost of equipment under another budget program – 2801230 “Financial support for the development of farms”. That is, in fact, in 2018, the amount of compensation for farmers will be 40% (25% + 15%). The procedure for obtaining it is similar, but a copy of the FG statute (for a legal entity) and a copy of the contract on the creation of a family FG is additionally submitted.
Pay attention!
The cost of equipment purchased from December 1 is compensated from the state budget funds planned for the following year. Thus, compensation funds allocated for 2018 could be received for equipment bought before 01.12.18.
This payment must still occur within the budget year, as stated in clause 14 of Order No. 130.
PROCEDURE FOR RECEIVING COMPENSATION
The compensation process requires that equipment purchases and compensation requests go through state banks. These are banks where the state owns at least 75% of the authorized capital (clause 11 of Order No. 130). Therefore, for compensation, applicants can contact PJSC CB “PrivatBank”, PJSC “Oshchadbank”, PJSC “Ukreximbank”, or PJSC AB “Ukrgasbank”.
The process of obtaining compensation is essentially declarative. Let’s look at this procedure step by step.
Step 1. The agricultural producer submits the following documents to the bank through which the machinery and equipment were purchased (clause 11 of Order No. 130):
- an application in the form approved by the order of the Ministry of Agrarian Policy No. 228 dated 04.18.17;
- a copy of the payment order;
- an act of acceptance and transfer of machinery and equipment;
- vehicle and/or machine registration certificate in case such equipment is subject to mandatory state or departmental registration.
- The procedure for such registration was approved by the resolution of the CMU of July 8, 2009 No. 694;
- help about the absence of arrears from taxes/fees/payments controlled by the SFS authorities;
- consent to the disclosure by the bank to the Ministry of Agrarian Policy of information constituting bank secrecy or containing personal data according to the bank’s form.
It is important to know!
The following deadlines for submitting applications and documents have been established: to receive compensation for equipment purchased before December 1, 2018, until December 5 of this year, after December 1, 2018, and until March 1, 2019.
Step 2. The bank provides the Ministry of Agrarian Policy with information about the applicant (full name, EDRPOU code). The type and brand of machinery and equipment, the purchase price, and the number of funds subject to compensation (clause 12 of Order No. 130).
Step 3. The Ministry of Agricultural Policy forms a register of agricultural producers who have purchased machinery and equipment and submits it to the Ministry of Economic Development.
Step 4. Within the scope of open appropriations, the Ministry of Agrarian Policy, guided by the data of the Register, transfers budget funds to the bank within a month.
Step 5. Within three banking days, the bank transfers funds to the current accounts of compensation recipients in proportion to the amounts specified in the Register.
LIMITATIONS ON RECEIVING COMPENSATION
An agricultural producer who receives compensation must meet the requirements in Clause 13 of Order No. 130. Specifically, any machinery or equipment purchased with compensation must not be transferred or sold for three years. It must be used as intended and kept by the owner.
An exception applies to equipment accepted by the bank as collateral, which may be transferred if the borrower defaults on the loan. Otherwise, the equipment must not be sold or gifted during this period.
If this condition is violated, the agricultural producer must return the received funds. Additionally, they will lose the right to claim compensation for the next three years, starting from the date the violation is detected.
Conclusions
Having selected the equipment for purchase from the list, the agricultural producer can receive compensation for it. 25% of its cost (excluding VAT) is compensated for machinery and equipment purchased from 01.01.18. In addition, farms can receive additional compensation in the amount of 15% of the cost of the equipment according to the same algorithm of actions, so together it will amount to 40%.
To receive compensation for equipment purchased before December 1, applications and documents must be submitted by December 5 of the current year, after December 1 – by March 1 of the following year.
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