ArcelorMittal Kryvyi Rih is deeply concerned with the misleading statements by SBU Head Ivan Bakanov regarding the company’s tax payments. The company has already provided the full and correct information to Bakanov in a letter, citing the tax and duties payments made over the past six years. The management of ArcelorMittal Kryvyi Rih hopes that the statements, which media circulated on March 17, were a result of a misinformation of Bakanov by his subordinates.
As all other exporters in Ukraine, ArcelorMittal Kryvyi Rih is benefiting from a value added tax refund scheme provided by the Ukrainian law. The company applied for reimbursements of own funds that were paid as VAT, while importing goods and services or purchasing them locally. VAT refund does not envisage any additional state budget outlays and is simply reimbursing the company for extraneous funds paid to the state. This amount is calculated as the difference between taxes owed and the actual VAT paid to the customs agencies or in-country suppliers.
If this tax is paid in excess, the government reimburses these funds, according to the law. All Ukrainian enterprises that have pre-paid their VAT have de facto financed the state by providing a tax credit.
The government is still paying back VAT refunds owed to ArcelorMittal Kryvyi Rih for the years before 2015. At the moment, the state still owes the company roughly UAH 100 million.
Delays in refunding VAT and partial refunds by the government have led to postponements of capital investment programs and has a negative effect on the country’s investment climate as a whole.
Artem Filipyev, Chief Officer for Legal, GR, PR issues, ArcelorMittal Kryvyi Rih: “As an international company, ArcelorMittal lays out its business processes according to strict rules set by the law. First of all, it is a full and timely payment of all taxes, including VAT, corporate income tax and rental tax. The law also provides for a VAT refund mechanism that applies equally to all Ukrainian businesses, particularly, exporters. Should the government intervene in this process, as was the usual practice prior to 2015, not only will it violate its own law, but also will clamp down on capital investments and reducing exports. In its turn, this will reduce the amount of foreign currency revenues to the country. With statements like this, do the law enforcers even realize what they are pushing the investors to do?” (AMKR/Ukrainian metal)