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Ferrexpo Ukraine

Among them are the blocking of tax invoices, environmental taxation and complicated reporting on assistance to the Armed Forces

Ferrexpo, an iron ore company with assets in Ukraine that is listed on the London Stock Exchange, is facing internal challenges caused by imperfect tax legislation that complicates business operations during the war. This was stated by Iryna Yevsiukova, Head of the Accounting Department at Ferrexpo, at the GMK Center roundtable «Problems of Exporters in Time of War: Regulatory Challenges».

The main problems the company is currently facing include blocking of tax invoices, environmental taxation and complicated reporting on assistance to the Ukrainian Armed Forces.

«Blocking tax invoices is a familiar topic for many companies. Tax authorities block tax invoices of other small companies, and thus the company loses money, cannot control financial planning, especially now, during martial law, when the reserve cushion is not so large and all funds are in circulation,» says Iryna Yevsiukova.

The company also foresees negative consequences from changes in environmental legislation due to the lack of clear terminology.

«Currently, there is a complete inconsistency with the Tax Code, which will lead to significant problems for the company in the future. We already know that in some issues of the new Tax Code, there are drafts that come into force before changes in environmental legislation, which will lead to huge costs for the company,» she added.

Unclear rent payments are also a challenge for mining companies, Ferrexpo said.

«If until 2022 we had a problem with the definition of the monetary indicator, now we have problems with the definition of the object of taxation itself, as there is no clear concept in the tax code. Different interpretations by tax authorities and businesses lead to huge losses and legal costs. It is difficult to defend the company’s position because we have analytical notes and the SBI and additional charges come into effect immediately, sometimes even before we receive the tax audit reports. Even if the company tries to ask the tax authorities for clarification, the tax authorities do not answer clearly and end up with the same thing again. We sit around and think about how best to make accruals and what volumes to choose,» emphasizes the head of Ferrexpo’s accounting department.

The company also points out that reporting on assistance to the Armed Forces of Ukraine is difficult.

«We support the Armed Forces of Ukraine, we donate to the army, but we have no support from the inspection authorities. In particular, there is no simplified document flow in these operations. We have to collect signatures from military units and make them write letters of appeal. The company also provides our mobilized workers with personal protective equipment (bulletproof vests, protective systems), but does not have any benefits from the Tax Code,» summarized Iryna Yevsiukova.

As GMK Center reported earlier, Ferrexpo’s enterprises (Poltava, Yeristovo and Bilanovo Mining) paid over UAH 1.93 billion in taxes and fees to the budgets of various levels in 2023. Poltava Mining paid UAH 1.2 billion in taxes to the budget, Yeristovo Mining paid UAH 723 million, and Bilanovo Mining paid UAH 68 million.