How agricultural producers circumvent export duties on soybeans and rapeseed: a legal mechanism

How agricultural producers circumvent export duties on soybeans and rapeseed: a legal mechanism

In the conditions of export duties on certain types of agricultural products, Ukrainian agricultural producers find legal ways to minimize costs. One such solution is to change the status of the enterprise from a producer to a processor, which allows exporting products without paying export duties. This applies, in particular, to soybeans and rapeseed - crops that are traditionally in high demand on foreign markets.

The export duty on rapeseed in Ukraine is currently 9%, and on soybeans - 3.5%. These tariffs were introduced to support domestic processing and create added value in Ukraine. However, agribusiness has adapted to the new conditions and found a way to reduce the tax burden without violating current legislation.

According to tax regulations, export duties do not apply to products that are considered the result of primary processing. Thus, if an enterprise officially registers itself as a processor and carries out minimal technological processing (for example, cleaning, drying, calibration, etc.), it receives the right to export products without paying the appropriate fee.

According to experts, one of the most common practices is to create a mini-workshop for primary processing at the enterprise, which allows changing the product code according to the Ukrainian Classification of Goods for Foreign Economic Activity (UKTZED). In particular, instead of the code “unprocessed seeds”, which is subject to duty, the product after processing receives the status of “processed”, which allows avoiding additional payments.

Such a solution requires certain investments in equipment and changes in the technological process, but in the long term it allows significant savings on exports. In addition, it contributes to the development of its own processing capacities in Ukraine, which is a strategic goal of the state’s agrarian policy.

It is worth noting that the described mechanism is not a tax evasion scheme, but fully complies with current legislation. However, its effectiveness depends on the correctness of all documents, compliance with established standards for processing, and the availability of certificates confirming the change in product status.