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Messenger VAT will be repaid with promissory notes
The Cabinet, with the aim of restructuring budget debt, may use treasury promissory notes to repay the accrued VAT refund debt, but only if the taxpayer has chosen this option for settlement.
The Cabinet, with the aim of restructuring budget debt, may use treasury promissory notes to repay the accrued VAT refund debt, but only if the taxpayer has chosen this option for settlement. This procedure became possible thanks to the law signed by the President of Ukraine, which was adopted by the Verkhovna Rada on July 4.
According to the law, the debt will be divided into 5 equal parts and repaid with promissory notes with maturities from one to five years.
In addition, promissory notes can be used to pay obligations to the budget, but it is important that this is not earlier than their maturity date.
Although the government emphasizes that repayment with promissory notes will be entirely voluntary, entrepreneurs and businesses met the new law rather coldly and even appealed to the President to veto the law, because in their view this is simply an opportunity for the state to freeze its obligations for 5 years.
The Federation of Employers of Ukraine believes that such actions will accelerate the growth of the negative trade balance, which will result from a reduction in exports and deterioration of the financial condition of enterprises.
The FEU also notes that granting such powers to control authorities will create fertile ground for the development of corruption schemes in this matter. It is also important that the procedure for handling promissory notes, on which their liquidity entirely depends, must be approved by the Cabinet of Ministers.
In the absence of this procedure and the declared issuance volumes, banks and investment companies find it difficult to predict at what discount and yield the promissory notes will trade; instead they emphasize that the discount and rates will be significantly higher than for VAT bonds that were issued previously.